SCENARIO

Mason Jones earns $800.00 per week. In May he received a work-related bonus of $800.00. He compared his regular weekly cheque with the bonus cheque and noticed the Canada Pension Plan contribution was a different amount. He emailed the Payroll Department asking why, when the gross earnings were the same.

Write a memo to Mason explaining the difference in the amount withheld for Canada Pension Plan contributions.

In 2016, an individual earned $65, 000 of employment income. Thefollowing deductions were made from her salary: registered pensionplan (RPP) contribution of $5, 000, maximum Canada pension plan(CPP) and employment insurance (EI) contributions of $3, 499 andcharitable donations of $600. (she has made annual donations) Whatwould be her total federal tax? (Round to nearest dollar.)

$7, 228

$7, 402

$8, 253

$9, 718

Please build the answer based on the following text from astudying book:

Reporting Pension Contributions and Adjustments The followingare some general year-end reporting guidelines employers shouldfollow when reporting pension contributions and pension adjustments(PAs):
 employee contributions to a registered pension plan (RPP) are taxdeductible; they are reported in box 20 on the T4 slip

 employee and employer contributions to a defined contributionpension plan are part of the PA that is reported in box 52

 PAs are reported on the T4 slip; however, under certainconditions the PA may be reported on the T4A slip

 employee contributions to a Registered Retirement Savings Plan(RRSP) are not reported by payroll; the employee will receive a taxreceipt from their financial institution

 employer contributions to an employee’s RRSP are reported on theT4 slip in box 14 and in the Other Information area using code 40as they are a cash taxable benefit, subject to CPP contributionsand EI premiums

Question:

Your organization currently has a defined contributionpension plan with employees contributing up to 3% with a companymatch. Effective with the first pay of the new year, new employeeswill no longer be enrolled in that plan. Instead, they will beenrolled in the new Group Registered Retirement Savings Plan (RRSP)with the same contribution options. In your ownwords, explain the difference in the T4 information slipreporting for these two groups of employees.

Understanding the difference between a cash taxable allowance, a cash taxable benefit and a non-cash taxable benefit is critical when explaining the calculation of net pay to an employee. In your own words, explain whether each allowance and benefit is or is not subject to Canada/Québec Pension Plan (C/QPP) contributions, Employment Insurance (EI) premiums, Québec Parental Insurance Plan premiums and income tax. Provide an example of a cash taxable allowance, a cash taxable benefit and a non-cash taxable benefit