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Nunavut imposes payroll taxes on gross remuneration of all employees who work in Nunavut.
Rates of Tax
The rate of tax is:
- 2% of taxable remuneration of each employee who normally works in Nunavut.
Collection of Tax
Tax is deducted at source by employers from each employee to whom the employer pays remuneration. Currently we have approximately 1,000 employers registered for the Payroll Tax. This deduction is made at the time of payment. No tax is payable by an employee who normally works outside of Nunavut and does not earn more than $5000 in Nunavut. If the employee earns more than $5000 in a calendar year in Nunavut, tax is payable on the full amount of remuneration earned while in Nunavut.
If an employee normally works in Nunavut, tax is payable on the full amount of remuneration paid to the employee both in and out of Nunavut.
An employee is considered to normally work in Nunavut if the employee works, performs duties or provides services in Nunavut for more than half of the number of days worked for an employer in the year.
Employers who remit more than required may be given a refund, without application any overpayment made on their account under the Payroll Tax Act for an applicable year. The employer shall pay, from the refund, such excess amount or amounts to the employees as were collected from them.
Employers must register with the Government of Nunavut within 21 days of their first remuneration paid to an employee and remit based on their reporting frequency.
The Minister may require collectors to deposit a bond by way of cash or other security.
Employers are required to retain detailed records for a period of at least six years from the time the tax is remitted to the Minister. In making an assessment the Minister shall not consider a period or periods of time greater than six years prior to the date of commencement of the inspection, audit or examination of the books of account, records or documents unless there is evidence that the person has committed fraud where no limitation applies.
Penalties and Fines
The Minister may assess a penalty equal to 10% of the amount that should have been collected.
Failure to remit or pay as when required
- 10% of the amount which should have been remitted
- 20% of the amount which should have been remitted, where the person had been assessed a penalty in respect of a previous failure during the 12 month period preceding the date of the failure
- A person who fails to collect any amount as required shall pay to the Minister interest on the amount at the rate prescribed under subsection 17(1) of the Financial Administration Act.
Failure to Apply
Every person who fails to apply for registration in accordance with a demand is liable to a penalty of $250 for each failure.
Failure to File Annual Return
$100 for failure to file or late filing of the Annual Return.
Failure to Answer Demand
Every person who fails to file a return when required pursuant to a demand issued is liable to a penalty equal to the greater of $250 and 5% of the amount of tax payable or remittable by the person for the period specified in the demand that was unpaid or unremitted on the day the return was due.
Failure to Provide Information
$100 for each failure. Unless, in the case of information required in respect of another person, a reasonable effort was made by the person to obtain the information.
False Statements or Omissions
Liable to the greater of $250 and 25% of the difference in taxes owing or refund applied for.