Payroll Tax Amendments for 2022
The budget statement delivered on Friday, February 25, 2022 by the Premier and Finance Minister, the Hon. David Burt, JP, MP resulted in the following amendments to Payroll Tax.
New Hire Relief
The New Hire tax incentives offered in 2018 and again in 2020 have been extended through to March 31, 2024.
Employers who are eligible for the New Hire relief 2018 include all Exempted Companies and those other employers who have gross annual remuneration of greater than $1 million. 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. Full time persons refers to employees who work for more than 15 hours a week. For example if you engaged one full time person in January – March 2018 and now hire a second full time person – the remuneration of the second person is taxed at 0% on the Employer portion.
The New Hire relief 2020 is relevant to employers whose gross annual remuneration is between $500,000 and $1 million. Qualified employers are those whose number of full time employees increases in relation to the baseline period of January – March 2020.
Employers benefiting from the 2018 and 2020 New Hire tax 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 2024. It is important to note that the Employee portion will be payable at the progressive tax rates. Applicants must be up-to-date with tax payments or on an approved payment plan.
Both application forms can be found under ‘Resources’’ on this page. Approved Employers are eligible for relief starting from the quarter in which the application is received.
For full details on the New Hire Relief incentives visit www.bermudalaws.bm and review section 9 of the Payroll Tax Act 1995.
Hotels/Bars/Restaurants
In order to spur economic recovery, the Payroll tax relief offered to Hotels and Bars & Restaurants has been extended. These groups will benefit from a rate of 0% on both the Employer and Employee portions of payroll tax for the period April 1, 2022 – September 30th, 2022.
All employers who wish to benefit from this concession must be either current with tax payments or on an approved payment plan to satisfy outstanding debt.
Tax returns must be filed online with the full declaration of remuneration paid. A $1 online payment is required in order to facilitate e-filing. In addition, completed employee portion calculators (reflecting total remuneration paid) must be submitted to taxenquiry@gov.bm. Please include tax id number, tax quarter and business name in the subject line.
Taxpayers who have already applied and have been approved for the Hotel and the Bar and Restaurant relief previously and who have no outstanding tax liabilities need not reapply. New applicants must complete the Hotel, Bar & Restaurant Tax Relief Application found under ‘Resources’ on the right hand side of this page. Relief will be applied starting from the quarter in which the application is received or the quarter in which approved payment plans have been established.
Tax Calculation - Employer Portion
There have been no changes to the Employer Portion tax rates. 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 2022/23 |
|
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 (or less than $50,000 p/qtr.), 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 (or >$50,000 p/qtr.); 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 (>$50,000 p/qtr.). |
6.00% |
|
Taxpayers with annual remuneration of more than $350,000 and not more than $500,000 ((>$87,500 up to $125,000 p/qtr.). |
6.50% |
|
Retail Establishments with annual remuneration over $500,000 p/a (or >$125,000 p/qtr.) and whose primary business is the sale of fashion, shoes, jewelry and perfume. |
7.00% |
|
Taxpayers with an annual payroll greater than $500,000 and up to $1,000,000 (>$125,000 up to $250,000 p/qtr.). |
9.00% |
|
Taxpayers with an annual payroll greater than $1,000,000 p/a (>$250,000 p/qtr.) and exempt undertakings. |
10.25% |
Tax Calculation - 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 |
MAXIMUM PORTION OF REMUNERATION WICH IS TAXABLE PER BAND |
EMPLOYEE PORTION TAX RATES APR 2021 – MAR 2022 |
EMPLOYEE PORTION TAX RATES APR 2022 – MAR 2023 |
|
0 - $48,000 |
$48,000 |
2.00% |
1.50% |
|
$48,0001 - $96,000 |
$48,000 |
8.50% |
9.00% |
|
$96,001 - $235,000 |
$139,000 |
9.00% |
9.00% |
|
$235,001 - $900,000 |
$665,000 |
9.50% |
9.50% |
|
MAXIMUM TAXABLE REMUNERATION |
$900,000 |
|
|
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. For example, based on the rates for 2022-2023, a person who earns $49,000 a year would pay an employee portion tax rate of 1.50% on the first $48,000 and 9% on the balance of $1,000 which falls in Band 2.
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)
Reminders
E-tax
All taxpayers with payrolls of $200,000 or more per annum are reminded of the requirement to e-file with effect from the quarter April – June 2021. 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. Register at taxenquiry@gov.bm to be invited to the next online tutorial.
Tax Filing Dates:
Payroll Tax is due quarterly with a 15 day grace period at the end of the quarter. Employers and Self-employed persons who file late will be subject to late penalties and assessments. Please take note of the quarters and filing dates below:
- Remuneration earned between January – March must be declared and filed anytime between April 1st to the deadline of April 15th.
- Remuneration earned between April – June must be filed between July 1st to the deadline of July 15th.
- Remuneration earned between July – September must be filed between October 1st to the deadline of October 15th, and
- Remuneration earned between October – December must be filed between January 1st to the deadline of January 15th.
Books and Records:
Employers must keep adequate books and records in accordance with the Tax (Accounts and Records) Regulations 1991 in order 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.