First we want know payroll tax A payroll tax is a type of tax that an employer deducts from an employee's salary and pays it to the government.

 

The first question we have Who pays the tax and how is it calculated?

Employers having employees working in Nunavut have to pay payroll taxes. Nunavut tax is deducted at the time of payment by employers from all employees to whom the employer pays the remuneration.

These employers calculate taxes based on the gross employment income of their employees. The amount of tax is then deducted from the employee's income.

The tax rate is 2% of the gross employment income. The gross employment income includes allowances, taxable benefits, wages, and salaries.

 

Are there any special considerations or challenges for the calculation of the payroll tax for the guides brought in from Alberta, Saskatchewan and Québec?

If the employees work outside Nunavut and earn not more than $5000 in Nunavut then no tax is payable by them, but the earning is more than $5000 in a calendar year in Nunavut so they are liable to pay tax on whole amount.

The employee brought in from Alberta, Saskatchewan and Quebec working for 10 days will earn $4000 (400*10) which is below the limit so need not to pay any tax.

 

But the employee brought in from Alberta, Saskatchewan and Quebec working for 15 days will earn $6000 (400*15) as we know 6000 is grater the limit of 5000 so 6000*2% equal to $120 as tax.

 

What are the reporting and remitting requirements during the year

The reporting and remittance requirements depend on the annual remuneration. The tax collected by the employers must be paid or remitted to the government of Nunavut.

The reporting period will be decided on the basis of annual gross remuneration paid to the employees working in Nunavut Office.

If the employer is seasonal then the remittances will be annual, which is in the case of Sophie ball

An Individualised remittance return is required to be sent by employer one month before the remittance due date.

The remittance of the payroll tax which is deducted by the employer must be deposited to the government of Nunavut on or before the 20th day of the month following the end of reporting period.

 

What are the reporting requirements at year-end? Example

All employers operating in Nunavat has to file annual return for the year on or before 8th February of the following year.

All employers with employees working in Nunavut are required to collect taxes and remit to the department of finance with annual taxable remuneration and annual return. This annual return must contain the names of employees, their annual remuneration, their social insurance numbers, their taxable remuneration, and the amount of payroll tax paid. The annual return is required to be reported regardless of whether the employee is eligible for payroll tax or not. Annual return form are provided to all employers at December each year.