Question

Sally Beauchamp, the Director of Finance 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.

Sally 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

a) Who pays the tax and how is it calculated?

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

The rate is fixed at 2% of the remunaration of each employee.

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 employee works outside Nunavat and earns not more than $5000 in Nunavat then no tax is payable by them, but if they earn more than $5000 in a calender year in Nunavat, they are liable to tax on the whole amount.

Here in this case, the emplyees brought in from Alberta, Saskatchewan and Québec working for 10 days will earn $(400*10)=$4000 which is below the limit, so they need not pay any tax.

However for the emplyees brought from Alberta, Saskatchewan and Québec and working for 15days will earn $(400*15)=$6000, hence they will pay a tax of $6000*2%=$120.

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

The reporting periods are decided based upon the annual gross remuneration paid to all employees working in Nunavat.

However for seasonal employer it is Annually ending December 31st, which is in the case of Sally Beauchamp.

The remitances of the Payroll taxes which are deducted from the employees must be deposited to the Government of Nunavat on" or before the 20th day of the month following the end of the reporting period. "

An individualized remittance return is required to be sent by each employer one month before the remittance due date. It will contain the total amount of remuneration paid to all employees in Nunavut and the total amount of payroll tax deducted from the employees. Each of the remittanceswill be having a remittance return.

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

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

Even if there is no remuneration paid a nil return must be submitted. Annual return forms are provided to all emplyers at December each year.

The emplyers operting in Nunavat need to disclose in their return -

1)employee’s name,

2) social insurance number,

3)the total amount of remuneration paid,

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