National Payroll Institute PF1 : Payroll Fundamentals 1Exam

  • Exam Code: PF1
  • Exam Name: Payroll Fundamentals 1Exam
  • Updated: Oct 14, 2026     Q & A: 75 Questions and Answers

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National Payroll Institute PF1 Exam Syllabus Topics:

SectionWeightObjectives
Topic 1: Record of Employment (ROE)20%- Submission and deadlines
  • 1. Electronic vs paper filing
    - ROE completion requirements
    • 1. Block-by-block reporting rules
      • 2. Insurable/pensionable earnings reporting
        Topic 2: Termination and Special Payments30%- Leaves and absences
        • 1. Sick leave, maternity/parental leave payments
          • 2. Vacation pay, statutory holidays
            - Termination payments
            • 1. Wages in lieu of notice, severance pay
              • 2. Retiring allowances, death benefits
                Topic 3: Communication and Compliance10%- Accuracy and documentation
                • 1. Record keeping and audit trails
                  - Stakeholder communication
                  • 1. Employee, government, third-party requirements
                    Topic 4: Individual Pay Calculations40%- Non-regular earnings
                    • 1. Overtime, bonuses, retroactive pay
                      • 2. Allowances, taxable benefits
                        - Regular earnings
                        • 1. Hourly, salary, commission calculations
                          • 2. Pay period types and frequency

                            National Payroll Institute Payroll Fundamentals 1Exam Sample Questions:

                            Question #1

                            Ursula is 17 years old, works in Quebec and earns $750.00 weekly. Ursula pays weekly union dues of $18.00 along with a special weekly union assessment of $10.00 for construction of a new union hall for its members.
                            Ursula also has registered pension plan (RPP) contributions of $20.00 deducted from each pay. Calculate Ursula's net federal taxable income.

                            Reveal Solution  Discussion  0

                            Correct Answer:

                            $712.00
                            Explanation:
                            For payroll income tax purposes, net taxable income starts with the employee's gross taxable income and then subtracts only those deductions that are deductible for income tax and can be recognized at source. CRA payroll guidance shows this approach by subtracting items such as RPP contributions and union dues when determining net taxable income for calculating income tax deductions.
                            Gross taxable income (weekly): $750.00.
                            RPP contributions are deductible (the amounts reported from box 20 of the T4 are generally deductible).
                            Regular union dues are deductible; however, the CRA states that deductible annual union/professional dues do not include special assessments or charges for anything other than ordinary operating costs. A levy specifically for constructing a new union hall is a special assessment, so it is not deductible as union dues.
                            So the deductions that reduce federal taxable income here are: $18.00 (union dues) + $20.00 (RPP) = $38.00.
                            Net federal taxable income = $750.00 # $38.00 = $712.00.

                            Question #2

                            An organization pays the premiums for a sickness or accident plan for their president only. This would be considered:

                            • A. A non-cash taxable benefit
                            • B. A taxable allowance
                            • C. None of the above
                            • D. A cash taxable benefit
                            Reveal Solution  Discussion  0

                            Correct Answer: A  🗳️

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                            Question #3

                            Duncan Drapak was employed in Ontario. Upon termination of his employment, he will be paid $7,760.00 legislated wages in lieu of notice together with his final weekly pay of $875.00. Calculate Duncan's Canada Pension Plan (CPP) contribution if the yearly maximum contribution will not be exceeded.

                            Reveal Solution  Discussion  0

                            Correct Answer:

                            $509.78
                            Explanation:
                            Legislated wages in lieu of notice are treated as pensionable employment earnings for CPP purposes, so they are included with the employee's final regular pay when calculating CPP deductions (assuming no CPP exemption applies).
                            Step 1: Determine total pensionable earnings for the week:
                            $7,760.00 + $875.00 = $8,635.00.
                            Step 2: Subtract the CPP basic exemption (Year's Basic Exemption is $3,500 annually). For a weekly payroll, the basic exemption is prorated:
                            $3,500 ÷ 52 = $67.31.
                            CPP contributory earnings for the week:
                            $8,635.00 # $67.31 = $8,567.69.
                            Step 3: Apply the 2026 CPP employee contribution rate of 5.95% (base CPP). The question states the annual maximum will not be exceeded, so no capping is required in this calculation.
                            CPP contribution:
                            $8,567.69 × 5.95% = $509.7777..., rounded to $509.78.

                            Question #4

                            The authorization for hiring form should contain a checklist to ensure the organization obtains all required information. What is an example of an item that could be on that checklist?

                            • A. All of the above
                            • B. A completed T1213
                            • C. A clearance certificate
                            • D. A benefit enrollment form
                            Reveal Solution  Discussion  0

                            Correct Answer: D  🗳️

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                            Question #5

                            Paula is granted a pay increase. The paperwork informing the payroll department of the pay increase is two pay periods late. What method would be used to calculate income taxes on the separate retroactive payment?

                            • A. Lump-sum tax method
                            • B. Retroactive tax method
                            • C. Tax table method
                            • D. Bonus tax method
                            Reveal Solution  Discussion  0

                            Correct Answer: B  🗳️

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