Licences, Taxes and Fees

Payroll Tax for Employers

Who is required to register for the payroll tax?

If you have a “fixed place of business” in the NWT and pay “remuneration” to an employee, you are required to register with Treasury Division of the GNWT Department of Finance for payroll tax. Once registered, you will be assigned a reporting period for remitting payroll tax that you have collected from your employees.

You can register to pay the Payroll Tax by completing the Payroll Tax Registration Form.

Please refer to section 1 of the Payroll Tax Act for the definition of “fixed place of business” and “remuneration”. In general, remuneration includes all payments, and the value of all benefits and allowances, that you receive for work performed and/or services provided in the NWT.

Income subject to payroll tax includes:

  • salaries and wages, bonuses, gratuities;
  • commissions and honoraria;
  • vacation travel assistance;
  • employee stock options;
  • value of allowances and benefits taxable under the federal Income Tax Act;
  • contributions by employers to registered retirement savings plans (RRSP); and
  • retiring allowances or severance pay.

When am I required to register?

You are required to register within 21 days after you first pay remuneration to an employee.

How often do I have to report?

You are assigned a schedule based on your business’s estimated total remuneration for the calendar year.

If your payroll is:

  • greater than $1,000,000, you must report monthly (on the last day of the month);
  • between $600,000 and $1,000,000, you must report quarterly (each 3-month period ending Mar 31, June 30, Sep 30, and Dec 31);
  • between $200,000 and $600,000, you must report semi-annually (each six month period ending June 30 and Dec 31); or
  • equal or less than $200,000, you must report annually (each year ending Dec 31).

Seasonal employers must report monthly during their season of operation (on the last day of the month).

Can my reporting period change?

Your reporting period may change in one of the following situations:

  • Your payroll size changes, or
  • You have applied for a different reporting period and your application is approved [Reg. 8(4)].

When is the remittance return due?

Your reporting period dictates when you must submit your remittance return and the payroll tax that you have withheld from your employees for the period. Even if you have no payroll tax to remit, you are required to file your remittance return by the 20th day of the month following the end of your reporting period, or the next business day if the 20th is a Saturday, Sunday or statutory holiday.

You can submit your Payroll Tax remittance return by completing the Payroll Tax Remittance Return form.

What is the annual return and when is it due?

Your annual return is intended for you to report your employees, their overall payroll tax liabilities for the year, and their tax payments. If there is a difference between these two amounts for an employee:

  • of a tax underpayment then you are required to collect and remit extra tax from the employee; or
  • of a tax overpayment then you can apply to us for a refund of the excess tax on behalf your employee and you are required to pay the refund amount to the employee without delay.

The due date for your annual return is February 28 of the following year or the next business day if February 28 is a Saturday, Sunday or statutory holiday.

You can submit your Payroll Tax Annual Returnby completing the NWT Payroll Tax Annual Return form.

What is the penalty if I fail to register?

If you fail to register when demanded, you are liable to a penalty of $250 for each failure [s. 39(5)].

What is the penalty if I fail to collect payroll tax from my employees?

If you fail to collect payroll tax from your employee, you are liable to a penalty, plus interest on the amount you have failed to collect, of:

  • First violation: 10% of payroll tax that should have been collected,
  • Subsequent violation within a 12-month period since the first violation: 20% of payroll tax that should have been collected.

Failure to collect also makes you liable for the tax on behalf your employee [s. 11].

What is the penalty if I fail to remit payroll tax that I collect from my employees?

If you fail to remit payroll tax collected from your employee as and when required, you are liable to a penalty, plus interest on the amount you have failed to remit, of:

  • First violation: 10% of payroll tax that should have been collected,

  • Subsequent violation within a 12-month period since the first violation: 20% of payroll tax that should have been collected.

Failure to remit also makes you liable for the tax on behalf of your employee [s. 12].

What is the penalty if I fail to file a remittance return or an annual return?

You are subject to a penalty of $100 [s. 13].

What is the penalty if I fail to file a return when demanded?

You are subject to a penalty equal to the greater of:

  • $250, and
  • 5% of the amount of uncollected or unremitted tax for the period specified in the demand [s.14].

Besides penalties, can I be prosecuted for violations of the Payroll Tax Act or Regulations?

You may also be prosecuted by summary conviction. The following are examples of offences and their penalties if you are found guilty by the court of law:

  • Failure to file a return or maintaining adequate books and records: a fine between $1,000 and $25,000, or a combination of this fine and imprisonment for a term not exceeding 12 months [s. 57];
  • Failure to register: a fine between $1,000 and $5,000 [s.60];
  • Failure to collect or remit payroll tax: a fine from 50% up to 200% of the amount of tax that should have been collected or remitted, or a combination of this fine and imprisonment for a term not exceeding 2 years [s.59];
  • General violation of any provision of the Act or Regulation for which no other penalty is provided under the Act: a fine not more than $1,000 [s. 62].