Employment Tax Act 1973

[25 April 1973]

[preamble and words of enactment omitted]

PART I
INTRODUCTORY

Interpretation

1 In this Act, unless the context otherwise requires—

"agent" includes every person who, in Bermuda, for or on behalf of another person outside Bermuda, holds or has the man agement or control of the business of that other person;

"approved hospital or health insurance scheme" means a hospi tal or health insurance scheme approved by the Minister of Labour and Immigration;

"approved life assurance scheme" means a life assurance scheme approved by the Minister for the purposes of this Act;

"approved retirement scheme" means a retirement scheme ap proved by the Minister for the purposes of this Act;

"approved training scheme" means a training scheme approved by the Minister of Labour and Immigration after consultation with the Apprenticeship and Training Council for the pur poses of this Act;

"business" includes a profession, calling, trade, manufacture or undertaking of any kind whatever, and includes an adventure or concern in the nature of trade, but a person shall not be deemed to be carrying on business merely by reason of hav ing been the author of a literary, dramatic, musical or artistic work and having assigned or granted an interest in the copy right of such work for a consideration;

"Commissioner" means the person holding office as Tax Com missioner under this Act;

"domestic service" includes all personal service rendered by an employee to an individual employer in respect of such em ployer or a member of his household otherwise than in con nection with a business carried on by such employer, or

other person, for gain;

"employment tax" means employment tax chargeable under this Act and any further employment tax or additional tax as sessed or assessable in respect thereof and includes a penalty for late payment of tax;

"farmer or horticulturist" includes any person who at any farm, orchard, garden, plant nursery, greenhouse or structure used for the growing or raising of any plants, livestock or poultry, cultivates the soil or raises or harvests any agricultural or horticultural commodity including the raising, feeding, caring for, training and management of livestock, bees and poultry, but shall exclude a person operating or managing a livery stable, as well as a person engaged in the business of land scape gardening or landscaping;

"financial year" means the period of twelve months extending from the first day of April in any year to the thirty-first day of March in the year next following;

"fisherman" means a commercial fisherman or a charter boat fisherman;

"liquidator" means the person who, whether or not appointed as liquidator, is the person required by law to carry out the winding-up of a body corporate;

"Minister" means Minister of Finance;

"member of the governing body" means a person entitled to vote at a general meeting of the governing body;

"person" includes any company, partnership, association, or body of persons, whether corporate or unincorporate;

"profit sharing scheme" means a scheme under which an em ployee in his capacity as such shares in whatever manner the profit of his employer;

"rental value" means the rental value of the premises calculated on a monthly basis as valued under the Land Valuation and Tax Act 1967 [title 14 item 31], and in the absence of such valuation means a fair monthly market rent;

"tax" means employment tax;

"taxing Act" means an Act for the purpose of setting out the rate of employment tax to be charged pursuant to this Act and other matters ancillary thereto;

"tax period" means each and every calendar month, commencing with the month of May, 1973;

"trustee" includes an executor, administrator, guardian, receiver, liquidator, trustee in bankruptcy or other person having the control of property in any fiduciary capacity.

Tax Commissioner

2 (1) There shall be a Tax Commissioner who shall have the gen eral administration of this Act.

(2) [repealed by 1976:20]

3 [repealed by 1976:20]

Exemptions from employment tax

4 (1) Employment tax shall not be charged on —

(a) a Government Board;

(b) the Bermuda Hospitals Board;

(d) [omitted] [spent]

(e) any school operated with the consent of the Minister for Education under the Schools Act 1926 [title 12 item 5];

(f) the Corporations of Hamilton and St. George's;

(g) parish councils;

(h) an educational, sporting, cultural or scientific institu tion, association or society which in the opinion of the Minister is carried on otherwise than for the purpose of profit or gain by the individual members thereof;

(i) any body of persons corporate or unincorporate which, in the opinion of the Minister, is established principally for religious purposes in relation to any activities of such body other than the carrying on of a business of a com mercial character;

(j) any farmer or horticulturist in relation to any activities
attributable to the carrying on of a farming or horticul tural enterprise;

(k) any fisherman holding a fishing boat licence issued un der the regulations under the Fisheries Act 1972 [title 25 item 8] in relation to any activities attributable to the carrying on of the business of a fisherman;

(l) the Bermuda National Trust;

(m) any operator of a public carriage (as defined in the Pub lic Carriage Act 1949 [title 21 item 9]) in relation to any activities attributable to the carrying on of the business of a public carriage operator;

(n) a foreign or Commonwealth government or any agency thereof;

(o) contractors being nationals of the United States of America employed in the construction, maintenance or operation of the Bases (as defined in the United States Bases (Agreement) Act 1952 [title 7 item 41]) in relation to any activities attributable to such employment.

(2) [omitted] [spent]

(3) [omitted] [spent]

PART II
EMPLOYMENT TAX ON EMPLOYERS

Employers to be liable in respect of employee's remuneration

5 (1) Subject to this Act, employment tax at the rate prescribed by the taxing Act shall be charged on every employer in respect of the remuneration paid or given by him to, or with respect to, each of his em ployees during any tax period on account of services performed by the employee wholly or mainly in Bermuda, whether or not the remuneration is paid in Bermuda.

(2) Employment tax shall not be charged on any person under this section in respect of any remuneration in respect of which tax is to be charged under Part III.

Determination of the employer

6 For the purposes of this Part, "employer" means the person for whom an employee performs any service, of whatever nature, as em ployee of such person, except that —

(a) if the person for whom the employee performs the ser vice does not have control of the payment of remunera tion for such services, the term "employer" means the person having control of the payment of remuneration;

(b) where a person pays remuneration to an employee on behalf of a person outside Bermuda the term "employer" means the person so paying remuneration.

Meaning of employee

7 (1) For the purposes of this Part, "employee" means—

(a) any director, officer or member of the governing body of a body corporate;

(b) any individual natural person who has entered into or works under a contract of service or apprenticeship with an employer, whether by way of manual labour or oth erwise;

(i) as an insurance salesman; or

(ii) as a salesman engaged in the solicitation on be half of another person of orders from third par ties.

(2) Notwithstanding subsection (1) the following shall not be employees for the purposes of this Part —

(a) persons under the age of sixteen years of age;

(b) persons employed by the employer for not more than sixteen hours in any tax period;

(c) persons ordinarily employed outside Bermuda if their period of employment in Bermuda does not exceed thir teen consecutive weeks during any financial year.

Chargeable remuneration

8 Remuneration for the purposes of this Part includes —

(a) any wages, salary, leave pay, commission, gratuity, fee, perquisite or allowance;

(b) any amount paid with respect to an employee to a pen sion or provident fund, scheme or society or under a hospital or health insurance scheme, other than any amount paid under an approved retirement scheme, an approved life insurance scheme or an approved hospital or health insurance scheme;

(d) where a place of residence is provided at a rent less than the rental value, the excess of the rental value over such rent;

(e) the value of meals, board, lodging and other benefits of any kind whatever and whether received in cash or in any medium other than cash;

(f) any moneys paid under a profit sharing scheme;

(g) any gain realised by the exercise of, or by the assign ment or release of, a right to acquire shares or stock in a body corporate obtained by an employee and arising out of services rendered (whether in the capacity of director or otherwise) by such employee to such body corporate,

but does not include —

(i) payments with respect to an employee under the Contributory Pensions Act 1970 [title 18 item 7], the Hospital Insurance Act 1970 [title 18 item 9], under an approved retirement scheme, under an approved life insurance scheme, or under an approved hospital or health insurance scheme;

(ii) any moneys paid to an employee under the Workmen's Compensation Act 1965 [title 18 item 3], or otherwise on account of sickness or injury or of medical or hospital expenses in connection with sickness or injury but excluding leave pay for sick-leave granted in accordance with the contract or terms of employment;

(iii) remuneration paid by an employer to an em ployee in respect solely of domestic service in the residence of the employer or in respect solely of service as a gardener in the garden or grounds of such residence;

(iv) any moneys paid by an employer who is carrying on the business of a hotel, restaurant, boarding house or other like business out of a fund en tirely constituted of the proceeds of any service charge imposed upon accounts rendered;

(v) the cost of passages provided at the commence ment and termination of his contract for a per son engaged outside Bermuda for employment in Bermuda under a contract for a fixed period and the cost of such passage for his dependants;

(vi) remuneration paid or given by an employer to an employee, being a person possessing Bermudian status within the meaning of the Bermuda Im migration and Protection Act 1956 [title 5 item 16] who is receiving training under an approved training scheme while in the employment of such employer;

(vii) remuneration paid or given to an employee who is employed to drive a motor taxi lawfully oper ated under any provision of law and attributable to such employment;

(viii) remuneration paid or given to an employee who is a full-time student at any school, training in stitution university or other similar body, and who is employed on a Saturday, a public holi day, or during any period of vacation including a half-term holiday;

(ix) remuneration paid or given by an employer who is a contractor employed in the construction, maintenance or operation of the Bases (as de fined in the United States Bases (Agreement) Act 1952 [title 7 item 41]) to an employee so em-

ployed and attributable to such employment;

(x) remuneration paid or given by an employer to a registered nurse within the meaning of the Nurses Act 1969 [title 30 item 12] in respect of personal services rendered to such employer or a member of his household;

(xi) remuneration paid or given to an employee who is a member of the Bermuda Regiment or Bermuda Volunteer Reserve in respect of any period of training (including annual camp) or while serving with the Regiment or the Reserve during any period when they are embodied;

(xii) remuneration paid or given to an employee in respect of any period of jury service within the meaning of the Jurors Act 1971 [title 8 item 14]

PART III
EMPLOYMENT TAX CHARGEABLE IN RESPECT OF OWNER-MANAGERS, SELF-EMPLOYED PERSONS, ETC.

Liability to tax

9 Subject to this Act employment tax at the rate prescribed by the taxing Act shall be charged on every person (hereinafter in this Part called "the taxpayer") —

(a) being an individual natural person who is an individual to whom this section applies, in respect of remuneration which is deemed by section 11 to be paid to such tax payer during any tax period;

(b) being other than an individual natural person in respect of remuneration which is deemed by section 11 to be paid to an individual to whom this section applies being remuneration deriving from the taxpayer.

Persons in respect of whom tax payable

10 Section 9 applies to any individual —

(a) who, either alone or with others, carries on business for gain in Bermuda or outside Bermuda from a place of business in Bermuda, otherwise than as an employee as defined in section 7; or

(b) who, whether or not he is an employee as defined in section 7 and whether or not by virtue of an agreement—

(i) manages or assists in the management of any business carried on for gain in Bermuda or out side Bermuda from a place of business in Bermuda; or

(ii) renders personal services to any such business, and who benefits directly or indirectly from the profits or income of such business otherwise than by way of remuneration for the purpose of Part II or in addition to receiving such remuner ation.

Remuneration deemed to accrue to a self-employed person

11 For the purposes of this Part the remuneration deemed to be paid to an individual to whom section 9 applies shall be—

(a) the remuneration, for the purpose of Part II (if any) paid or given; or

(b) the notional remuneration assessed under section 12,

whichever is the greater amount.

Assessment of notional remuneration

12 (1) For the purposes of this Part, the notional remuneration of an individual to whom section 9 applies shall be assessed at an amount considered to be fair and equitable valuation of the services rendered by such individual to the business in respect of which the taxpayer is chargeable to tax under this Part.

(2) The notional remuneration shall be assessed in the first in stance by the taxpayer who shall have regard to and only to —

(a) the nature and extent of the services rendered by the in dividual whose notional remuneration is being assessed to the business in respect of which the taxpayer is chargeable to tax under this Part;

(b) the experience and special skill of that individual;

(d) the remuneration of persons engaged in the business —

(i) of persons other than the taxpayer, and render ing similar or comparable services;

(ii) of the taxpayer, and rendering similar or compa rable services;

(iii) of the taxpayer, other than such persons as are mentioned in subparagraph (ii).

(3) The Commissioner may make such inquiries as he thinks fit for the purpose of ascertaining whether the assessment by any taxpayer under subsection (2) is adequate and the Commissioner may thereafter, if he is of the opinion that the assessment is inadequate, increase the as sessment and, in so doing, he shall have regard to that subsection.

(4) The maximum assessment of notional remuneration of any one individual shall, in relation to any one business, be such amount as may be prescribed in the taxing Act; and for the purposes of this sub section two or more bodies corporate which are deemed to be associated under section 43 of the Taxes Management Act 1976 [title 14 item 40] shall be deemed to be one business.

(5) Subject to subsection (6), an assessment by the taxpayer under subsection (2) shall be made in the return furnished by him for the purposes of section 7 or, as the case may be, section 8 of the Taxes Management Act 1976 [title 14 item 40].

(6) Where an assessment has been made by the taxpayer or the Commissioner of any person's notional remuneration during any tax pe riod, that assessment shall be deemed to be the taxpayer's or Commis sioner's assessment, as the case may be, of such person's notional re muneration during subsequent tax periods, being tax periods in which such person renders services to the business carried on by the taxpayer, until such assessment is varied by a further assessment under this sec tion:

Provided that —

(a) no such further assessment by the taxpayer shall have the effect of reducing any assessment deemed to be the Commissioner's assessment under this subsection;

(b) the taxpayer may at any time within three months of the last day of a tax period in respect of which the Commis sioner has been so deemed to have made an assessment apply in writing to the Commissioner to have such as sessment re-assessed by him and the Commissioner may, thereupon, confirm or vary such assessment.

(7) The assessment of the Commissioner under subsection (3) shall be retrospective to such tax period as he may determine:

Provided that the Commissioner shall not exercise his powers under this subsection to assess tax retrospectively after the expiration of two years from the date when the last return for the financial year in which the tax period occurs was furnished for the purposes of section 7 or, as the case may be, section 8 of the Taxes Management Act 1976 [title 14 item 40].

(8) There shall be deducted from the notional remuneration of an individual to whom section 9 applies who is carrying on the business of a motor taxi operator, and who drives a motor taxi in pursuance of such business, the notional remuneration attributable to the services rendered by such individual in driving such motor taxi.

PART IV
EXEMPTIONS, REFUNDS AND REMISSIONS

General exemption

13 (1) Subject to this section, for the purpose of ascertaining the employment tax payable by a person chargeable to employment tax there shall be deducted from the amount of the remuneration in respect of which such person is chargeable included in a return furnished in ac cordance with section 7 or, as the case may be, section 8 of the Taxes Management Act 1976 [title 14 item 40] (including any remuneration which is deemed by section 11 to be paid to any individual) —

(a) where the return relates to one tax period, the amount prescribed in the taxing Act; or

(b) where the return relates to a period of more than one tax period, for each tax period to which the return relates, the amount so prescribed.

(2) For the purpose of ascertaining the employment tax payable by a person chargeable to employment tax who was so chargeable during part only of a tax period, the amount to be deducted for that tax period from the amount of the remuneration in respect of which such person is chargeable included in a return relating to that tax period shall be such amount which bears to the amount prescribed for the purposes of sub section (1) the same proportion as the number of days in that tax period during which the person chargeable to tax was
so chargeable bears to the total number of days in that tax period.

(3) The provisions of this section shall apply to two or more bodies corporate deemed to be associated under section 43 of the Taxes Management Act 1976 [title 14 item 40] as if such bodies corporate were a single person.

Refunds and remissions

14 (1) Where the aggregate of the remuneration in respect of which any person is chargeable to employment tax under Part II or Part III does not exceed —

(a) in the case of a person who is chargeable to employment tax during the whole of any financial year, such sum as may be prescribed by the taxing Act; or

(b) in the case of a person who is chargeable to tax during part only of any financial year, such amount as bears to such sum the same proportion as that part of the year bears to a year,

the Commissioner shall refund to that person the amount of tax paid by him in respect of any tax period during that year or such part of that year and shall remit any tax which has not been paid.

(2) Notwithstanding anything to the contrary in this Act, if the aggregate of the remuneration in respect of which a person is chargeable to employment tax under Part II or Part III exceeds —

(a) the sum prescribed for the purposes of subsection (1)(a), in the case of a person who is chargeable to tax during the whole of a financial year; or

(b) the amount determined in accordance with subsection (1)(b), in the case of a person who is chargeable to tax during part only of the financial year,

employment tax shall be charged on such person at the rate of 100 per centum of such excess if thereby the tax otherwise chargeable under this Act is reduced, and the Commissioner shall refund to that person any employment tax paid by him in respect of that year in excess of the tax hereby charged in respect of any tax period during that year or such part of that year and shall remit any such excess which has not been paid.

15 to 51 [repealed by 1976:20]

Commencement

52 [repealed by 1976:20]

[this Act was brought into operation on 1 May 1973 under former section 52]

[Amended by
1974 : 106
1975 : 77
1976 : 19
1976 : 20]

Bermuda Consolidated Legislation

Employment Tax Act 1973