Question

To accommodate continued growth of the organization, we have hired two new salespeople to service our most northerly locations in the Northwest Territories and Nunavut. As the organization has not previously had employees working from these jurisdictions, management would like to ensure that the payroll department is aware of the additional payroll tax that will be applicable to the new employees. You have been asked to prepare a memo to be distributed to the payroll employees providing a brief explanation of the Northwest Territories and Nunavut Payroll Tax to help ensure they are aware of this tax and the organization's obligations with respect to its remittance.

Answer 1

MEMO

To: Payroll Department

From: XYZ

Date: 12-11-2018

Subject: Employee Payroll Tax for Northwest & Nunavat.

This memo is drafted to explain the payroll tax to be withheld from the employees working in the Northwest Territories and Nunavat. There is a direct imposition of payroll tax in these territories. Employees working in the stated territories must be registered in the respective jurisdiction and have the obligation to file the return and pay the taxes.

Payroll tax:

• Any employee working in the Northwest Territories and Nunavat is subject to 2% of the payroll tax on the gross remuneration which includes salary, wages, bonuses, taxable allowance benefits and retirement allowance or severance pay should be withheld by the employer and remitted to the respective jurisdiction. This is applicable for the employees serving and providing duties in these areas.
• The tax does not apply if the gross remuneration is less than $5,000 in the calendar year in these territories however, the tax is payable on all the earnings if the employee earns more than half of his employment earning in Northwest Territories.

Fines & Penalties:

• Failing to comply with the legislation attract a penalty of up to 20% of the tax that should have been collected and remitted.