Lesson 38

Commissions & Net Pay Text: Chapter 1, section 5 & 6

Graduated Commission – You are paid only commission but your commission rate increases at various levels of sales.

Example: Barry earns a graduated commission as a furniture salesperson. He earns 9% on the first $10 000 worth of sales and 12% on any sales exceeding $10 000. In April, Barry’s sales were $21 675. What are his gross earnings for the month of April?

Example: Jocelyn is offered a job at two different companies. The first company offers to pay her $7.25 per hour and she will work 160 per month. The second company offers to pay her $800 per month with 4% of her sales. Which store offers the highest potential earnings?

Net Pay Net Pay – Gross pay minus deductions; sometimes called the take home pay. Deductions MUST include: CPP (Canada Pension Plan) EI (Employment Insurance) Income Tax (Provincial and Federal) Deductions MAY include: RPP (Registered Pension Plan) RRSP (Registered Retirement Savings Plan) Canada Savings Bonds Union Dues Life Insurance Health Insurance Disability Insurance ETC.

$ EI and CPP are deducted from the gross pay total.

$ Income Tax is based on your taxable income…what is taxable income you ask?

$ TAXABLE INCOME is your gross pay minus all deductions.

$ Current Rates for (2008) are: CPP 4.95% to a maximum contribution of $2049.30 EI 1.73% to a maximum contribution of $711.03 Federal Income Tax: If your income is ≤ $37 885 the rate is 15% If your income is > $37 885 but ≤ $75 769 the rate is 22% If your income is > $75 769 but ≤ $123 184 the rate is 26% If your income is > $123 184 the rate is 29% Provincial (Manitoba) Income Tax: If your income is ≤ $30 544 the rate is 10.9% If your income is > $30 544 but ≤ $66 000 the rate is 12.75% If your income is > $66 000 the rate is 17.4%

Example: Courtney earns $21.75 per hour and works 36 hours last week. She pays $18.25 in union dues and she contributes $50 to an RRSP. She has a federal and provincial claim code of 1. Calculate her NET PAY using the 2008 tax tables.

Basic Personal Exemption is: Federal - $9600

Provincial - $8034