Annie Chong, manager of Carswell’s payroll consulting group, fields questions from readers
QUESTION: How is the term “day” or “work day” defined for employment and labour standards?
ANSWER: Since employment/labour standards are governed by each province and territory — and the Canada Labour Code for federally regulated employees — the definition may vary as the following list shows:
Canada Labour Code: The term “day” refers to any period of 24 consecutive hours.
Alberta: The Employment Standards Code defines the term “work day” as being a 24-hour period that ends at midnight or a 24-hour period as established in the workplace through the “consistent practice of an employer.”
British Columbia: The Employment Standards Act defines the term “day” as either a 24-hour period that ends at midnight or, for an employee’s shift that continues over midnight, as a 24-hour period that starts at the beginning of the employee’s shift.
Manitoba: The Employment Standards Code does not define “day.”
New Brunswick: The Employment Standards Act does not define “day.”
Newfoundland and Labrador: The Labour Standards Act does not specifically define the term “day,” but Labour Standards refers to a day as a 24-hour period on its website.
Northwest Territories: The Employment Standards Act defines a “day” as any period of 24 consecutive hours.
Nova Scotia: The Labour Standards Code does not define the term “day,” but information on the Labour Standards website refers to a period of 24 hours in relation to a day.
Nunavut: The Labour Standards Act defines “day” as any period of 24 consecutive hours.
Ontario: The Employment Standards Act, 2000, defines the term “regular work day” for an employee who normally works the same number of hours each day, as a day of that many hours.
Prince Edward Island: The Employment Standards Act does not define “day.”
Quebec: The Act respecting labour standards does not define “day.”
Saskatchewan: The Labour Standards Act does not define “day.”
Yukon: The Employment Standards Act defines the term “day” as any period of 24 consecutive hours after the start of work.
Calculating income tax on bonus payments
QUESTION: We are giving bonuses to some partial-year employees for some temporary work they did. These employees earned very little — about $3,000 — while working for us. Do we still use the bonus formula to calculate the amount of income tax to deduct?
ANSWER: The bonus method is a formula used to calculate the amount of income tax to deduct from a bonus, incentive or award. The formula is T=P(B – A), where T is the income tax due on bonus, incentive, or award; P is the number of pay periods in a year; A is the tax on usual earnings for the pay period; and B is the tax on usual earnings for the pay period, plus the amount of the bonus (incentive or award) divided by the number of pay periods in the year.
Whether or not an employer must use the bonus method to calculate income tax deductions depends on the employee’s total annual earnings. If the employee’s total earnings for the year, including the bonus (less deductions for registered pension plan contributions, union dues, living in a prescribed zone and other deductions that the Canada Revenue Agency authorizes), do not exceed $5,000, you would not use the bonus method.
Instead, deduct 15 per cent tax from the bonus payment. Use the bonus method if the total annual earnings are more than $5,000. For Quebec provincial income tax purposes, if the employee’s total earnings for 2011, including bonuses and retroactive pay, do not exceed $13,300 do not use the bonus method. Instead, deduct eight per cent provincial income tax.
For federal income tax, deduct 10 per cent rather than the 15 per cent mentioned earlier if the total earnings for the year, including bonuses and retroactive pay, do not exceed $5,000. Bonus payments are also subject to Canada Pension Plan and Quebec Pension Plan contributions, employment insurance premiums and Quebec Parental Insurance Plan premiums.
Status of legislation terms
QUESTION: What is the significance of terms such as “second reading” and “royal assent”?
ANSWER: The terms “first reading,” “second reading,” “third reading” and “royal assent” are used to describe the stage at which a bill is at in the legislative journey that it must take to become a law. Here is a brief rundown of the terms:
First reading: The stage where a member of Parliament (MP) or a member of a provincial legislative assembly, as applicable, who is sponsoring the bill introduces it and explains the purpose of the bill. MPs (or provincial members) then vote whether or not to accept the bill for further debate. If accepted, the bill is given a number and moves to second reading.
Second reading: The stage where members debate the bill, including sending it to a committee to study it in detail. Amendments can be made at this stage. When study is complete, the committee reports back to the House (or legislative assembly).
Third reading: This is the last stage of debate before a final vote is called on whether or not to pass the bill with any amendments that may have been made to it. If the bill passes, it goes to the “royal assent” stage.
Royal assent: This is the final stage a bill must complete before becoming a law. For federal legislation, a bill cannot receive royal assent unless it has been passed by both the House of Commons and the Senate in an identical form. Royal assent involves a special ceremony whereby the Queen’s official representative in Canada or in the particular province or territory, such as the governor general or lieutenant governor, signs the bill.
There may also be a more traditional ceremony that takes places in the Senate or provincial chamber. Once a bill receives royal assent, it becomes law and comes into force on that date or on a date specified in the bill. Sometimes, a bill does not come into force until a special order is written proclaiming it in effect. The phrase “Awaiting proclamation” is used to denote such bills.
Annie Chong is manager of the payroll consulting group at Carswell, a Thomson Reuters business, which publishes the Canadian Payroll Manual and operates the Carswell Payroll Hotline. She can be reached at [email protected] or (416) 298-5085.
