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1 |
PURPOSE |
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1.1 |
The purpose of this directive is to advise
you of an error in the calculation of the Northwest Territories (N.W.T.)
Payroll Tax on supplementary payments and the recovery process required
to correct the error. |
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1.2 |
A notice of information to employees concerning
the above subject has been included with this Compensation Directive.
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2 |
BACKGROUND |
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2.1 |
The Government of the N.W.T. announced that
the payroll tax would be increased from 1% to 2% effective January 1, 2005.
A problem has been discovered with the calculation of the payroll tax on
supplementary payments. For the period from January 1, 2005,
to March 22, 2005, the payroll tax on supplementary payments
has been calculated and collected at 1% instead of 2%. |
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2.2 |
For additional information on the N.W.T. Payroll
Tax, refer to Compensation
Directive 1993-019 dated November 29, 1993.
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3 |
POLICY |
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3.1 |
Effective January 1, 2005, the Payroll
Tax Act requires that all employers in the N.W.T. collect from employees
working in the N.W.T., regardless of residency, two percent (2%) of all
gross employment income earned in the N.W.T.
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4 |
PROCEDURES/INSTRUCTIONS |
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4.1 |
A manual recovery of the under deducted payroll
tax, using the arrears code "974-NWT Payroll Tax-ARR", for the
period from January 1, 2005, to March 22, 2005, will
be calculated and input by the pay offices. Pay offices will advise clients
of the pay period in which the recovery will commence. Clients may negotiate
a different recovery date with the pay office if required. |
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4.2 |
The recovery period will be based on the total
amount that must be recovered. If the amount calculated is $25 or less,
the payroll tax will be recovered as a one time lump sum deduction. If
the amount calculated is between $25 and $50 inclusive, the payroll tax
will be recovered over two pay periods. Amounts calculated over $50 will
be recovered over four pay periods. All amounts recovered will be reflected
on the bottom portion of the cheque stub under "Entitlements and other
deductions". |
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4.3 |
To identify the accounts that are subject to
the payroll tax arrears, two listings will be generated. One listing will
reflect the breakdown of the supplementary payments issued to the employee
during the period from January 1, 2005, to March 22, 2005,
identifying the gross remuneration subject to the payroll tax. The second
listing will reflect the corresponding applicable payroll tax to be collected
for each employee. The pay offices will retain one copy of the listings
and forward the other copy to the clients. |
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4.4 |
It should be noted that the recovery transaction
of the payroll tax that is input on temporarily struck off strength (T-SOS)
accounts will remain on the Master Employee Record (MER) and will be collected
by the pay office upon the employee's return to duty. |
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4.5 |
Further action may be required concerning employees
in struck off strength (SOS) status and clients will be notified if applicable.
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5 |
INQUIRIES |
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5.1 |
Any inquiries on the information
contained in this document should be addressed to your Public Works and
Government Services Canada (PWGSC) Compensation Services Office. |
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