- When do I have to register my business with the Tax Commissioner?
Every person liable for tax must register with the Office of the Tax Commissioner within seven days of the end of the first tax period in which he/she commences business. Please note tax periods are quarterly, ending March, June, September, and December with payroll tax due by the 15th of the following month.
- Is there a fee for registration?
There is no fee for registration.
- Can my secretary sign my registration form?
Yes, if acting as your representative. Partnerships require the signatures of all the partners.
- Part Time vs. Full Time Employment
- I work part time for myself and full time for someone else. Shouldn't my full time employer have to pay tax?
Your employer is liable for tax on remuneration he pays to you. However, if you also employ yourself, you are liable for tax from your part time employment because you are considered self-employed.
- If a person works for me part time, do I have to report him or her?
It depends on the number of hours and the type of employment. The remuneration of full time students is not subject to taxation if they work on Saturdays, public holidays or vacation periods. The remuneration of part time employees employed for 16 hours or less in any one calendar month is not subject to taxation. However, this does not apply to musicians, entertainers or salesmen.
- Why isn't my caregiver considered self-employed?
A person who renders services to you is considered to be your employee. However, if such a person is carrying on business as a self-employed person providing services for several other persons but is not subject to the direction or control of any one such other person, he/she is deemed to be self-employed.
- Notional Remuneration
- What is notional remuneration?
Notional remuneration is the fair and equitable valuation of services rendered by an individual to a business. It applies to self-employed persons or deemed employees. It is assessed on the basis of services rendered to a business.
- If I do not pay myself a salary, why do I have to report notional remuneration?
Services which a self-employed person or deemed employee provides to the business have a value which is subject to tax. Additionally, a self-employed person or deemed employee has access to resources of the business other than salaries.
- Who is required to pay tax on notional remuneration?
Every person who owns a business and works in that business is deemed to earn a salary. Examples of such self-employed persons include farmers, taxi operators, consultants, doctors, partners, members of the Governing Body of an Association and shareholders of a company.
- How is notional remuneration calculated?
A value for notional remuneration is determined in the first instance by the taxpayer. The taxpayer establishes a value by looking at such factors as:
- the nature and extent of the services he provides to the business including any such services which directly or indirectly affect or influence the financial viability of the business,
- his own experience and special skills,
- the nature of the business,
- the emoluments of:
- persons engaged in other businesses who render services to those businesses similar to those rendered by himself,
- persons engaged in the business who render services similar to those of himself and
- persons engaged in the business other than those previously mentioned and
- the financial records of the business, which show his services which generate revenue for the business and the allocation to him of benefits from the business. The Tax Commissioner has the authority to adjust the taxpayer's determination of notional remuneration if it is found to be unreasonable. Notional remuneration should be evaluated annually and adjusted at least by the increase in the Consumer Price Index.
- Approved Schemes
- If I got my retirement/health scheme from any of the major insurers, isn't it approved?
A scheme is only approved for the purpose of Payroll Tax when approved by the Minister of Finance.
- How do I get my scheme approved?
In order to get a scheme vetted for approval Taxpayers must submit an 'Application for Approval of a Retirement Scheme' or an 'Application for Approval of a Life Insurance Scheme' to the Office of the Tax Commissioner along with a copy of the scheme. These forms can be downloaded from this website or can be picked up from the Office of the Tax Commissioner. You must contact your insurance provider to request for an 'Application for Approval' for a Health Insurance Scheme to be submitted to the Office of the Tax Commissioner on your behalf. Once vetted, a letter will be mailed to you indicating whether or not approval has been granted for your particular scheme.
- What happens if I do not get my retirement/life insurance/health scheme approved?
Taxpayers with non approved schemes must pay tax on the employer's contribution to the scheme.
- Can I get my Training Scheme approved?
Training schemes may also be sent to the Office of the tax Commissioner for approval. An 'Application for Approval' of a training scheme must be submitted to the Office of the Tax Commissioner along with a detailed description of the scheme. These schemes will be vetted by the National Training Board and are approved by the Minister of Finance.
- What is the affect of an approved Training Scheme?
The remuneration paid by an employer to a Bermudian employee on an approved training scheme is not subject to payroll tax.
- What is a reasonable amount to report if we provide rent free accommodation for our employees?
You are required to report at least the rental value as determined under the Land Valuation and Tax Act 1967 and in the absence of such valuation, a fair monthly market rent.
- Are employee benefits such as the granting of Share Options and Stock Options taxable at the grant date or the date of vesting?
The value of shares issued to an employee by an employer, as part of his/her benefits package is taxable remuneration within the meaning of Section 7(1)(h) of the Payroll Tax Act 1995. An option is subject to tax once it has vested or exercisable. Tax is payable within fifteen days of the end of the quarter in which the option has vested or has become exercisable. The taxable benefit is determined as the difference between the fair market value of the stock and the option price at the date of vesting or exercise. For publicly traded stock, the closing price on the day the option has vested or is exercised is acceptable as market value. Where stock is not publicly traded, either the book value of the shares as determined by currently audited financial statements or the value determined by an independent valuation would be acceptable.
- Musicians or Entertainers
- If someone is engaging a musician or entertainer and strongly believes that this will not be done on a continuous basis, does the person engaging the musician have to register?
Yes. Any person who engages a musician or entertainer is considered to be their employer and is liable for Payroll Tax irrespective of the musician or entertainer's age or number of hours engaged.
- Are motivational speakers considered entertainers?
Motivational speakers are generally considered to be entertainers and as such payroll tax is applicable on the remuneration paid by the individual/ business hiring the speaker.
- Are directors of company boards liable for Payroll Tax?
The remuneration of Directors who provide services to a local company is subject to tax. The remuneration of Directors for Exempt companies is not subject to tax unless the Director is under a contract of service and regularly performs managerial functions in connection with the day-to-day conduct of the exempt undertaking's affairs.
- Tax Returns
- Does the Office of the Tax Commissioner keep track of deductions made on behalf of individual employees?
The OTC does not keep track of individual employees. Taxpayers report remuneration on an aggregate basis by declaring the number of employees not the identity of the employees.
- What is the maximum amount that can be deducted from an Employee's salary?
Employers can deduct up to 5.25% from an employees' salary.
- Am I still liable to pay payroll tax if I have to close my business for a period of time?
Taxpayers are allowed to file nil returns for quarters where there has been no service provided. A Taxpayer must contact the Office of the Tax Commissioner if filing more than 2 (two) nil returns.
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