Meera Ramdin, the People Manager of your Northern Lights Adventures company, has advised that the...

Question

Meera Ramdin, the People Manager of your Northern Lights Adventures 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.

Meera 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.

Sandeep · Accepted Answer

NUNAVUT PAYROLL TAX RULES
Answer
Who pays the tax 
All Employers who have employees employed in Nunavut and Northwest Territories are obligated by the law to deduct a payroll tax from each employees on all Gross employment income earned as working in these jurisdiction or territories and remit to the government of province . The Tax applies to all employees who make living from delivering services in Nunavut. 
Tax Rate:
Tax rate applicable under the law is 2% payroll tax of the entire wage or on employee’s gross employment income when working in Nunavut province. Employers must register business with Government of NU and pay 2%.
**Important to state that obligation for this tax arises only when income is earned within the province of Nunavut.
Exempted Employment and Remuneration:
Payroll tax in Nunavut does not apply to certain class of individuals as below:
· Salary/wages paid to individuals belonging to members of religious order who have taken vows of poverty , entitling them to exemption under FIT Act;
· Employees usually working outside the boundary of Nunavut  for
· ½ number of days worked for an employer in an year and;
· Not earning  $ 5000 annually and works outside Nunavut have their income taxed. 
How it is calculated:

Meera Ramdin, the People Manager of your Northern Lights Adventures company, has advised that the company will be opening an office in Nunavut this year. The office will offer guided northern trips to...

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