Question

Sophie Ball, the Director of Human Resources of your Northern Expeditions company, has advised that the company will be opening an office in Nunavut this year. The office will offer guided northern trips to hunters and adventurers. It expects to mainly employ local guides (40 days over the summer period) but the company will also be periodically bringing in guides from its offices in Alberta, Saskatchewan and Québec. Some of the guides from outside Nunavut may work 10 days, others could work 15 days over the summer depending on the number of bookings; they normally work in their home province for 60 days every year. The average daily rate paid to these guides is $400.

Sophie is asking for information on the Nunavut Payroll Tax. Who pays the tax and how is it calculated? Are there any special considerations or challenges for the calculation of the payroll tax for the guides brought in from Alberta, Saskatchewan and Québec? What are the reporting and remitting requirements during the year? What are the reporting requirements at year-end? Provide examples based on the information provided in the assignment to clarify.

Answer 1

Answer a) Who pay the tax and how it is calculated?

Nunavut tax is deducted at the time of payment by employers from all employees to whom the employer pays the remuneration.

The rate of deduction is 2 % of the remuneration of each employee.

Answer b)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.

In the given question the employee brought in from Alberta, Saskatchewan and Quebec working for 10 days will earn (400*10) equal to $4,000 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 (400*15) equal to $6,000 hence they have to pay 6000*2% equal to $120 as tax.

Answer c)What are the reporting and remitting requirements during the year

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

For seasonal employees it is annually ending 31st December. which is in the case of Sophie ball.

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.

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

Answer d) What are the reporting requirements at year-end?

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

If no remuneration paid also Nil return must be submitted . Annual return form are provided to all employers at December each year.

In this return employers has to disclose the things given below,

Employee's Name

Social insurance Number

The total amount of remuneration paid

The total amount of remuneration paid on which tax is owing and the amount of tax collected.

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