National Payroll Institute Payroll Fundamentals 1Exam : PF1

PF1 real exams

Exam Code: PF1

Exam Name: Payroll Fundamentals 1Exam

Updated: Oct 10, 2026

Q & A: 75 Questions and Answers

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National Payroll Institute PF1 Exam Syllabus Topics:

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

                            National Payroll Institute Payroll Fundamentals 1Exam Sample Questions:

                            Question #1

                            Anthony earns $750.00 per week. He has a cash taxable benefit of $25.00 per week. Anthony is exempt from CPP contributions. Calculate the net taxable income for the week.

                            Reveal Solution  Discussion  0

                            Correct Answer:

                            $775.00
                            Explanation:
                            "Net taxable income" for payroll withholding purposes is the amount of income on which income tax is calculated for the pay period. It generally starts with the employee's gross taxable earnings for the period (regular wages plus any taxable benefits/allowances that must be included in income), then subtracts only those deductions that are deductible for tax at source (for example, certain registered pension plan contributions, union dues, etc., if applicable). A cash taxable benefit is treated like additional remuneration and is included in taxable income. (canada.ca) Here, Anthony's weekly taxable earnings are:
                            $750.00 wages + $25.00 cash taxable benefit = $775.00.
                            Being exempt from CPP contributions affects whether CPP is deducted, but CPP is not a "net taxable income" subtraction in this question (and in any case, no CPP is being deducted). The question also does not mention any other tax-deductible payroll deductions (like RPP contributions), so there is nothing to subtract from taxable earnings.
                            Therefore, Anthony's net taxable income for the week is $775.00.

                            Question #2

                            Jasmine works for a Saskatchewan employer and earns $500.00 weekly. Calculate her Employment Insurance (EI) premium.

                            Reveal Solution  Discussion  0

                            Correct Answer:

                            $8.15 (employee EI premium for the week)
                            Explanation:
                            For employees whose province of employment is outside Quebec (including Saskatchewan), EI premiums are calculated by multiplying the employee's insurable earnings by the employee EI premium rate for the year, up to the annual maximum insurable earnings. For 2026, the employee EI premium rate outside Quebec is $1.63 per $100 of insurable earnings (which is 1.63%).
                            Jasmine earns $500.00 weekly and (based on the question) we assume all earnings are insurable and she has not reached the annual maximum. Her EI premium is:
                            $500.00 × 1.63% = $500.00 × 0.0163 = $8.15.
                            This amount is deducted from the employee's pay and later remitted to the CRA as part of the employer's regular payroll remittance. The maximum insurable earnings for 2026 is $68,900, but at $500 per week she would only hit the maximum later in the year (if at all), so the weekly premium calculation above applies.

                            Question #3

                            An interruption of earnings occurs when there is a period of how many days with no insurable earnings?

                            • A. Seven calendar days
                            • B. Seven business days
                            • C. Five calendar days
                            • D. Five business days
                            Reveal Solution  Discussion  0

                            Correct Answer: A  🗳️

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                            Question #4

                            An employee who lives in Ontario and reports to work at a permanent establishment of the employer in Quebec will have income tax deducted based on which province?

                            • A. Employee's choice
                            • B. Ontario
                            • C. Ontario & Quebec
                            • D. Quebec
                            Reveal Solution  Discussion  0

                            Correct Answer: D  🗳️

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                            Question #5

                            An employee-employer relationship is deemed to exist when:

                            • A. The employee refuses the right to be recalled to work
                            • B. The employee continues to participate in some of the benefit plans that were available while they were employed
                            • C. There is no expectation of work to be performed by the employee
                            • D. The employee continues to accrue benefits in the organization's pension plan
                            Reveal Solution  Discussion  0

                            Correct Answer: D  🗳️

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