Payroll Tax Amendments for 2020
The budget statement delivered on Friday, February 21, 2020 by the Hon. Curtis L. Dickinson, JP, MP resulted in the following amendments to Payroll Tax.
E-tax
It is mandatory for all taxpayers with payrolls of $350,000 or more per annum to e-file starting from the returns for the quarter April – June 2020 which must be filed on or before July 15, 2020. Penalties will be levied where tax is not submitted in the required format. To register please visit www.etax.gov.bm. The Office of the Tax Commissioner encourages all taxpayers to e-file for fast and easy reporting.
New Hire Relief 2020
The New Hire relief has been extended to all Employers whose remuneration is $500,000 to no more than $1 million per annum. Qualifying Employers are those who engage New Hires between April 1, 2020 thru March 31, 2022 and who increase the number of full time equivalents from those reported in the baseline period of January thru March 2020. Employers who were not in operation prior to March 31, 2020 will receive the relief if they hire one or more full time persons after April 1, 2020 and have total remuneration of at least $500,000 per annum or $125,000 p/qtr. Full time persons refers to employees who work for more than 15 hours a week.
Employers benefiting from the relief will pay an Employer portion of 0% on the remuneration paid to qualifying employees up to and including the tax period January thru March 2022. The Employee portion will be payable at the progressive tax rates.
The 2020 New Hire Relief is in addition to the New Hire Relief 2018 which was extended to all Exempted Companies and Employers with gross annual remuneration of $1 million or more. Employers who qualify for the 2018 Relief are those whose number of full time employees increased from that in the baseline period of January thru March 2018.
Employers must keep adequate books and records in accordance with the Tax (Accounts and Records) Regulations 1991 to verify the declarations made on each tax return. Any person who submits false returns, fails to keep adequate records or to present them to the Office of the Tax Commissioner when requested, or evades tax payment in any way commits an offense and is subject to fines up to $500,000. The Tax Commissioner reserves the right to assess a value for undeclared remuneration under section 16 of the Taxes Management Act for any person to which in his opinion such person is chargeable.
Tax Calculation - Employer Portion
The employer is required to pay tax on gross taxable remuneration as defined in the Payroll Tax Act 1995 based on the following rates:
|
CLASS OF TAX PAYER |
RATE 2020/21 |
|
The Government, Parish Councils, Government Boards, the Bermuda College, approved schools, registered charities, religious and cultural organizations and the Bermuda Festival Ltd., New Start-up businesses (4 quarters) and an employer in an Economic Empowerment Zone (9 quarters). |
0.00% |
|
New Hire remuneration and remuneration, (excluding dividend and bonus payments) paid to employees in Special Situations e.g. persons on jury duty or on duty with the Bermuda Regiment or Bermuda Volunteer Reserve, persons employed as farmers, fishermen or horticulturists, hotel and restaurant employees from November – March, retail employees from January – March, employees with permanent disabilities and persons hired as entertainers or musicians. |
0.00% |
|
Taxpayers with an annual payroll less than $200,000, educational, sporting, or scientific institutions, associations or societies, farmers, fishermen or horticulturists. |
1.75% |
|
Taxpayers with annual remuneration of not less than $200,000 and not more than $350,000 and the Bermuda Hospitals Board and the Corporations of Hamilton and St. George’s |
3.50% |
|
Taxpayers operating a restaurant or hotel with an annual payroll of $200,000 or greater. |
6.00% |
|
Taxpayers with annual remuneration of more than $350,000 and not more than $500,000. |
6.50% |
|
Retail Establishments with annual remuneration over $500,000 and whose primary business is the sale of fashion, shoes, jewellery and perfume. |
7.00% |
|
Taxpayers with an annual payroll greater than $500,000 and up to $1,000,000. |
9.00% |
|
Taxpayers with an annual payroll greater than $1,000,000 and exempt undertakings. |
10.25% |
Employee Portion
The EMPLOYEE portion of payroll tax is a separate amount and must be calculated separately from the employer portion.
Employers have the option to deduct the employee portion of payroll tax from employees however the responsibility to pay the full amount of tax (i.e. employer plus employee portions) to the Office of the Tax Commissioner still rests with the employer.
The EMPLOYEE portion will be calculated using the marginal or progressive tax rate structure as follows:
|
ANNUAL REMUNERATION BANDS |
EMPLOYEE PORTION TAX RATES APRIL 2019 – MARCH 2020 |
EMPLOYEE PORTION TAX RATES APRIL 2020 – MARCH 2021 |
|
0 - $48,000 |
4.00% |
2.00% |
|
$48,0001 - $96,000 |
6.50% |
8.50% |
|
$96,001 - $235,000 |
7.75% |
9.00% |
|
$235,001 - $900,000 |
8.75% |
9.50% |
Employee portion calculators can be found under ‘Resources’ on this page.
The marginal tax rate is the rate of tax that employees incur on each additional dollar of earnings. As earnings rise, each dollar of earnings above the previous level is taxed at a higher rate.
It is important to note that marginal tax is applied to each persons annual rate of pay. For employees that earn fluctuating amounts per pay period, the annual rate of pay must be recalculated each pay period so that the payroll tax can be adjusted accordingly. The pay period calculators found under Resources on this page can assist you when calculating the EMPLOYEE portion.
Note that the year must coincide with the financial year as defined in the Payroll Tax Act 1995 (1 April – 31 March)