Payroll Tax Act 1995

WHEREAS it is expedient to repeal the law relating to employment tax and hospital levy and replace that tax and that levy with a single tax on employers in respect of their payroll, and to make provision for those and connected purposes:

[Words of enactment omitted]

Short title

1 This Act may be cited as the Payroll Tax Act 1995.

Interpretation

2 (1) In this Act, unless the context requires otherwise—

"approved", in relation to a health insurance scheme or a hospital scheme or a life insurance scheme or a retirement scheme or a training scheme, means approved by the Minister under section 23;

"business" means business carried on for gain in Bermuda, or outside Bermuda from a place in Bermuda;

"the Commissioner" means the Tax Commissioner;

"the Companies Act" means the Companies Act 1981 [title 17 item 5];

"employer", "employee" and "deemed employee" have the meanings respectively assigned to them in sections 4, 5 and 6;

"exempt undertaking" has the meaning assigned to it by subsections (3) to (6);

"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 does not include a person operating or managing a livery stable, or a person engaged in the business of landscape gardening or landscaping;

"financial year" means the period beginning on 1 April in any year and ending on the 31 March next following;

"fisherman" means one holding a fishing boat licence issued to him under the regulations under the Fisheries Act 1972 [title 25 item 8];

"the Management Act" means the Taxes Management Act 1976 [title 14 item 40];

"member", in relation to a governing body, means a person entitled to vote at a general meeting of that body;

"the Minister" means the Minister of Finance;

"option A" and "option B' have the meanings respectively assigned to them in sections 16 and 17;

"payroll"—

(a) in relation to an employer, means the sum of—

(i) the remuneration, or, in the case of an employer who is an exempt undertaking under option A, the assumed remuneration, of the employer's employees; and

(ii) the deemed remuneration of the employer's deemed employees, if the employer has deemed employees;

(b) in relation to a self-employed person, means the sum of—

(i) his own deemed remuneration; and

(ii) the sum of the remuneration of his employees, if he has employees;

"profit-sharing scheme" means a scheme under which an employee qua employee in any way shares his employer's profit;

"the Rates Act" means the Payroll Tax Rates Act 1995 [title 14 item 35];

"remuneration" means "actual remuneration" as defined in section 7, but—

(a) "assumed remuneration" has the meaning assigned to it in subsection (2) of section 16;

(b) "deemed remuneration" has, in relation to a deemed employee, the meaning assigned to it in subsection (2) of section 11 and, in relation to a self-employed person, the meaning assigned to it in subsection (2) of section 14;

"self-employed person" has the meaning assigned to it in subsection (3) of section 14;

"the standard rate" has the meaning assigned to it in subsection (2) of section 3;

"tax" means payroll tax;

"tax period" has the meaning assigned to it in section 21.

(2) For the purposes of this Act, to pay remuneration to a person means to pay or give it to him, or to pay or give it with respect to him; and cognate forms of "pay" have corresponding meanings.

(3) Subject to subsections (4) and (5), the following are exempt undertakings for the purposes of this Act—

(a) an exempted undertaking;

(b) a permit company.

(4) Subject to subsection (5), the following are not exempt undertakings for the purposes of this Act—

(a) an exempted company which, in respect of any of its business, requires either a licence under the Companies Act or authority under some other public Act to carry on business;

(b) an exempted company incorporated by a private Act, being a company which, but for some provision to the contrary in its private Act, would require such a licence or authority;

(i) if the partnership or company were an exempted company, it would require a licence under the Companies Act; or

(ii) it requires authority under some other public Act,

to carry on.

(5) Where a body is not an exempt undertaking by reason of subsection (4), the Commissioner—

(a) if he is satisfied that the business referred to in subsection (4) is insignificant compared with the other business of the body, shall direct that the body is an exempt undertaking for the purposes of this Act;

(b) if he is satisfied that the business referred to in subsection (4) is carried on as an enterprise distinct and separate from the body's other business, shall direct that the body is an exempt undertaking for the purposes of this Act in relation to that other business;

and this Act shall then have effect in relation to the body in accordance with the Commissioner's direction.

(6) In subsections (3) and (4)—

(a) "exempted company", "exempted undertaking" and "permit company" have the meanings assigned to them in subsection (1) of section 2 of the Companies Act; and

(b) "exempted partnership" has the meaning assigned to it in section 1 of the Exempted Partnerships Act 1992 [title 17 item 26].

Payroll tax

3 (1) Subject to this Act, a tax, to be known as payroll tax, shall be charged in accordance with this Act on—

(a) every employer at the standard rate in respect of—

(i) remuneration paid by him to every employee; and

(ii) deemed remuneration paid by him to every deemed employee,

of his during any tax period for services rendered by the employee or the deemed employee during that tax period wholly or mainly in Bermuda, whether or not the remuneration is paid in Bermuda;

(b) every self-employed person at the standard rate in respect of his deemed remuneration during any tax period.

(2) In this Act, the expression "the standard rate" means, in relation to an employer, the rate prescribed by the Rates Act for the purpose of paragraph (a), and, in relation to a self-employed person, that so prescribed for the purpose of paragraph (b), of subsection (1).

(3) In the application of sub-paragraph (i) of paragraph (a) of subsection (1) to an exempt undertaking which is an employer, "remuneration" means assumed remuneration if the exempt undertaking is under option A and actual remuneration if the exempt undertaking is under option B.

Meaning of "employer"

4 For the purposes of this Act, the employer of a person (call the employer "A" and the latter "B") is the person to whom B renders services as A's employee within section 5 or as A's deemed employee within section 6, except that—

(a) where A does not have control of B's remuneration, then the person having that control is B's employer; and

(b) where A resides outside Bermuda and B's remuneration is paid on A's behalf by someone else who resides in Bermuda (call this person "C"), then C is B's employer,

for the purposes of this Act.

Meaning of "employee"

5 (1) An individual who, whether by way of manual labour or otherwise, renders services to another person under a contract of service or apprenticeship is an employee of that other person for the purposes of this Act.

(2) An individual who solicits orders for, or renders other services to, another person as an insurance or other salesman is an employee of that other person for the purposes of this Act.

(3) A musician or other entertainer (whether or not, apart from this subsection, he is the employee of any other person) is for the purposes of this Act, as respects any performance for which he is engaged by any person (regardless of the terms of the engagement), the employee of the latter person and not of any other person.

(4) A person who, in accordance with a marketing method approved by the owner or user of a trade mark or trade name, solicits orders for goods bearing that mark or name which are to be delivered at a future date, is for the purposes of this Act the employee of the owner or user of that mark or name, as is any person who (whether directly or indirectly) transmits any such orders to any such owner or user in consideration of a commission or profit.

(5) Subsection (4) does not apply in relation to a salesman who solicits orders for goods to be re-sold by the purchaser at any shop, warehouse or other trade premises.

(6) An individual who is a director, officer or member of the governing body of a body corporate is an employee of that body corporate for the purposes of this Act.

(7) An individual who is a director, officer or member of the governing body of an exempt undertaking is not for the purposes of this Act an employee of that exempt undertaking, but he is for those purposes such an employee if under a contract of service he regularly performs managerial functions in connection with the day-to-day conduct of the exempt undertaking's affairs.

(8) A person is not an employee for the purposes of this Act if—

(a) he is under sixteen years of age; or

(b) he is employed by an employer for sixteen hours or less in any one calendar month; or

(c) he is ordinarily employed outside Bermuda and his period of employment in Bermuda, whether with one or more employers, does not exceed four consecutive weeks;

but nothing in this subsection restricts or limits subsection (3) or (4).

[Section 5 amended by 1996:4 effective 1 April 1996]

Meaning of "deemed" employee

6 The persons described in the left-hand column of the Table below are deemed employees, and the bodies specified in the right-hand column opposite to them are respectively the employers of those persons, for the purposes of this Act—

Table

Deemed Employee		Employer
(a) partner in a partnership, being a partnership which is carrying on business, who renders services to the partnership and otherwise than as an employee participates directly or indirectly in income or profits of the partnership:		the partnership
(b) shareholder of a company (as defined in subsection (1) of section 2 of the Companies Act), being a company which is carrying on business, who renders services to the company and otherwise than as an employee participates directly or indirectly in income or profits of the company:		the company
(c) member of the governing body of an association (whether incorporated or not), being an association which is carrying on business, who renders services to the association and otherwise than as an employee participates directly or indirectly in income or profits of the association:		the association.

Remuneration

7 (1) Subject to this Act, the remuneration of a person for the purposes of this Act is his actual remuneration, that is to say, remuneration of any kind paid to him, including—

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

(b) any money paid under a profit-sharing scheme;

(c) any money or other thing of value paid or given to him as an employee or an ex-employee in connection with the permanent termination of his employment on account of redundancy or otherwise, whether or not so paid or given in a lump sum or in a series of payments or in respect of one or more tax periods, being, money or a thing paid or given for services to the employer wholly or mainly in Bermuda; and it shall be assumed that any money or thing paid or given by an employer to, or with respect to, an employee or ex-employee of his at, or within three years of, the permanent termination of the employment is remuneration for the purposes of this Act unless the contrary is proved;

(d) any amount paid with respect to him to a retirement or provident fund, scheme or society, or under a hospital or health insurance scheme;

(e) the value of any meals, board, lodging or other benefit of any kind whatever, and whether provided in cash or otherwise than in cash;

(f) the rental value of any place of residence provided rent-free.

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

(h) any gain obtained by the exercise by him of, or the assignment or release by him of, a right to acquire shares or stock in a body corporate, being a right arising out of services rendered by him (whether in the capacity of director otherwise) to that body corporate.

(2) Remuneration for the purposes of this Act does not include—

(a) 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] or under an approved health insurance, hospital, life insurance or retirement scheme;

(b) any money 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;

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

(d) the cost of passages provided at the commencement or termination of his contract for a person engaged outside Bermuda for employment in Bermuda under a contract for a fixed period, and the cost of such passages for his dependants;

(e) the value of any right to airline concessionary travel, that is to say, any right to travel by air free of charge or at a reduced rate granted to any employee of any employer carrying on an air transport service, or to any relation of such an employee, as part of that employee's contract of service or apprenticeship with that employer;

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

(g) remuneration paid or given as a lay-off allowance to an employee whose employment is temporarily discontinued because of seasonal or other short-term reasons.

Exemptions

8 Tax shall not be charged on—

(a) an employer who is a foreign or Commonwealth government or an agency of such a government; or

(b) an employer in respect of remuneration which the Minister is satisfied was paid to an employee for caring for, or helping to care for, a person (whether or not that person is the employer) at that person's home in connection with a physical or mental illness or incapacity of that person.

[Section 8 substituted by 1996:4 effective 1 April 1996]

Rate where employees are in special situations

9 (1) An employer is not chargeable to tax at the standard rate in respect of remuneration paid to any employee of his who is in a special situation, but is chargeable to tax instead at the rate prescribed by the Rates Act for the purpose of this section.

(2) An employee is in a special situation for the purposes of subsection (1)—

(a) while, having Bermudian status, he is undergoing training under an approved training scheme; or

(b) while he is doing jury service within the meaning of the Jurors Act 1971 [title 8 item 14]; or

(d) while he is on duty with the Bermuda Regiment; or

(e) if he is employed—

(i) as a taxi-driver, a fisherman or a farmer or horticulturist; or

(ii) as a hotel employee in December, January or February.

(3) Paragraph (a) of subsection (2), but nothing else in that subsection, applies in relation to an exempt undertaking under option A.

Rates for certain classes of employer

10 (1) An employer who falls within a prescribed class is not chargeable to tax at the standard rate in respect of remuneration paid to any employee of his, but is chargeable to tax instead at the rate prescribed in relation to that class.

(2) "Prescribed" in subsection (1) means prescribed by the Rates Act for the purpose of this section.

Remuneration of deemed employees

11 (1) A deemed employee is deemed for the purposes of this Act to be employed and be paid deemed remuneration.

(2) A deemed employee's deemed remuneration is—

(a) his actual remuneration; or

(b) his notional remuneration,

whichever is greater.

Notional remuneration

12 (1) For the purposes of this Act, the notional remuneration of a deemed employee, in relation to his employer's business, is that amount which represents a fair and equitable valuation of his services to the business.

(2) That amount shall be assessed in accordance with the following provisions of this section.

(3) The assessment shall be made in the first instance by the employer ("the taxpayer"), who shall have regard to the following factors only—

(a) the nature and extent of the services of the deemed employee to the business, including any such services which directly or indirectly affect or influence the financial viability of the business;

(b) the deemed employee's experience and any special skill;

(d) the emoluments of—

(i) persons engaged in other businesses who render to those businesses services similar to those rendered by the deemed employee to the employer's business;

(ii) persons engaged in the business who render to the business services similar to those rendered by the deemed employee;

(iii) persons engaged in the business other than those mentioned in sub-paragraph (ii);

(e) the financial records of the business which show—

(i) the services of the deemed employee which generate revenue for the business; and

(ii) the allocation to him of benefits from the business.

(4) The Commissioner may make such enquiries as he thinks fit for the purpose of ascertaining whether an assessment under subsection (3) is adequate; and he may increase the assessment if he concludes that it is not adequate.

(5) The taxpayer shall include an assessment made by him under subsection (3) in the return made by him under section 7, or, as the case may be, section 8, of the Management Act.

(6) An assessment under subsection (3) or (4) of the notional remuneration of a person in relation to a business in respect of a tax period has effect in respect of any later tax period until varied by a further such assessment, but so that—

(a) a further assessment under subsection (3) may not reduce an assessment made and in force under subsection (4); and

(b) the taxpayer may, at any time within three months beginning on the last day of a tax period in respect of which there is an assessment under subsection (4) in force affecting him, in writing require the Commissioner to review the assessment; and the Commissioner shall thereupon confirm or vary the assessment.

(7) An assessment by the Commissioner under subsection (4) or (6) shall—

(a) have regard to the factors specified in subsection (3) and no others; and

(b) be retrospective to such tax period as the Commissioner may determine;

but the Commissioner shall not exercise his powers under paragraph (b) after the expiry of two years from the date on which the last return was furnished for the purposes of section 7 or 8 of the Management Act.

Indexing of notional remuneration

13 (1) This section has effect for the purpose of facilitating the determination under section 12 of a deemed employee's notional remuneration.

(2) Subject to subsections (5) and (6), where the statutory conditions obtain in relation to a deemed employee, his notional remuneration is deemed to be the greater of the following two amounts—

(a) the amount arrived at by the operation of the indexing mechanism set out in the First Schedule;

(b) the amount of his notional remuneration in financial year 2, as assessed by the taxpayer.

(3) The statutory conditions referred to in subsection (2), in relation to a deemed employee, are that in respect of financial year 1—

(a) the taxpayer made an assessment of his notional remuneration under subsection (3) of section 12; and

(b) the Commissioner did not make an assessment of the deemed employee's notional remuneration under subsection (4) or (6) of that section.

(4) In this section and the First Schedule—

"financial year 1" means the financial year immediately preceding financial year 2;

"financial year 2" means the financial year in question.

(5) Subsection (2) does not have effect in relation to an employer where the taxpayer, by application in writing setting forth his reasons, requests the Commissioner to determine the deemed employee's notional remuneration in financial year 2 on a basis different from that provided for in that subsection and the Commissioner accedes to the taxpayer's request.

(6) This section does not restrict the Commissioner's power to make under subsection (7) of section 12 a retrospective assessment of a deemed employee's notional remuneration, except where the Commissioner has determined the deemed employee's notional remuneration under subsection (5) of this section.

Remuneration of self-employed persons

14 (1) A self-employed person is deemed for the purposes of this Act to employ himself and pay himself deemed remuneration.

(2) A self-employed person's deemed remuneration is—

(a) his actual remuneration; or

(b) his notional remuneration,

whichever is greater.

(3) For the purposes of this Act, a self-employed person is an individual who carries on business otherwise than as an employee and benefits from the income or profits of that business otherwise than by way of, or in addition to, being paid actual remuneration.

(4) The provisions of sections 12 and 13 and the First Schedule have effect mutatis mutandis in relation to a self-employed person as if—

(a) references in those provisions to a deemed employee were references to the self-employed person in his character as an employee; and

(b) references there to the employer or taxpayer were references to the self-employed person in his character as an employer or taxpayer.

Exempt undertakings

15 (1) Where an employer is an exempt undertaking, it may make an election under this section as to the remuneration on which it is to be charged to tax under this Act.

(2) The election referred to in subsection (1) is an election between option A and option B.

(3) Unless the requirements of subsection (2) of section 17 and the Second Schedule are fulfilled in relation to an exempt undertaking in respect of a tax period, that exempt undertaking is deemed to have made an election under this section in favour of option A in respect of that tax period.

(4) In this Act, an exempt undertaking that has, or is deemed to have, made such an election in favour of option A is referred to as an exempt undertaking under option A; and an exempt undertaking that is not under option A is referred to in this Act as an exempt undertaking under option B.

Exempt undertakings: option A

16 (1) Subsection (2) has effect in relation to an exempt undertaking under option A.

(2) Such an exempt undertaking is not chargeable to tax with reference to the actual remuneration paid by it to any of its employees for services performed wholly or mainly in Bermuda, but is chargeable to tax instead on the assumption that every such employee is paid for such services during every tax period, as remuneration, such amount (in this Act called "assumed remuneration") as is prescribed by the Rates Act for the purpose of this section.

Exempt undertakings: option B

17 (1) Where an exempt undertaking is under option B, this Act, apart from this section and the Second Schedule, has effect in relation to the exempt undertaking as if it were not an exempt undertaking.

(2) The Second Schedule has effect as to the procedure for making an election under section 15 in favour of option B, the consequences of making such an election, and otherwise in relation to such an election.

Commissioner may obtain information

18 (1) Any person carrying on business in Bermuda or who employs any other person in Bermuda may be required by the Commissioner by notice in writing to furnish information to assist him in the exercise of his powers of assessment under section 12 as extended by section 14; but this subsection does not empower the Commissioner to require any person to furnish information relating to an exempt undertaking.

(2) Where the Commissioner by a notice under subsection (1) requires a person to furnish him with information set out in the notice, that person shall furnish the Commissioner with the information not later than the time stated by the Commissioner in the notice, being a time reasonable in the circumstances or such extended time as the Commissioner in his discretion may allow.

(3) A person who—

(a) without reasonable cause refuses or neglects to furnish information which he is required under subsection (2) to furnish ; or

(b) without reasonable cause refuses or neglects to furnish information when and as it required of him under that subsection,

commits an offence and is liable on summary conviction to a fine not exceeding $1,000.

(4) A person who furnishes material information under this section which he knows to be false commits an offence and is liable on summary conviction to imprisonment for a term not exceeding 6 months or to a fine not exceeding $2,500.

Recovery of tax from employee

19 (1) An employer may deduct and retain from any salary or wages paid by him to an employee of his during any tax period the statutory proportion of the remuneration paid by him to the employee during that tax period:

Provided that—

(a) where an employee is paid salary or wages more than once during a tax period, the employer shall as far as may be reasonably practicable ensure that equal amounts are deducted from each payment;

(b) if an employer fails to make a deduction for tax, or fails to make the full amount of such a deduction, from any payment referred to in paragraph (a) of this proviso, he is not entitled to make that deduction from any later payment; and

(c) where an employer is an exempt undertaking under option A, it shall not, in making under this subsection a deduction for tax from any salary or wages, deduct a greater amount than it could have deducted under this subsection if it had been an exempt undertaking under option B at the time.

(2) The statutory proportion mentioned in subsection (1) is, in relation to remuneration, such proportion of the remuneration as is prescribed by the Rates Act for the purpose of this subsection.

(2A) If an employer—

(a) deducts an amount under this section in a tax period; and

(b) does not within fifteen days beginning on the last day of that tax period pay to the Commissioner, in respect of the employer's tax liability under this Act in respect of that tax period, an amount equal to or exceeding that amount,

he commits an offence.

(2B) A person who commits an offence under subsection (2A) is liable—

(a) on summary conviction to imprisonment for a term not exceeding 6 months or to a fine not exceeding $2,500;

(b) on conviction on indictment to imprisonment for a term not exceeding 5 years or to a fine not exceeding $10,000.

(3) Subject to subsection (1), tax charged on an employer under this Act is not recoverable by him from salary or wages paid by him to an employee of his, notwithstanding any agreement to the contrary.

[Section 19 amended by 1996:4 effective 1 April 1996]

Refunds and remissions

20 (1) Where the payroll in respect of which any person is chargeable to tax under this Act does not exceed—

(a) in the case of a person who is chargeable to tax during the whole of any financial year, such sum as may be prescribed by the Rates 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 that 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 that part of a year, and shall remit any tax which has not been paid.

(2) This section applies to two or more bodies corporate deemed to be associated under section 43 of the Management Act as if those bodies corporate were a single person.

Tax period

21 For the purposes of this Act "tax period" means each period of three months commencing on the first day of April, July, October or January.

Reduction of tax period in certain cases

22 (1) Subject to subsection (3), the Commissioner may, on application made to him for the purpose by a person chargeable to tax (hereafter in this section called a "taxpayer"), grant permission in writing for that taxpayer's tax period to be each and every month for such time not exceeding twelve months, subject to such conditions, as may be specified in the permission.

(2) Subject to subsection (3), a permission granted by the Commissioner may be renewed by him for such further time not exceeding twelve months (whether or not continuously with the time of an earlier permission granted to that taxpayer), and as often, as in the Commissioner's opinion the circumstances warrant.

(3) The Commissioner shall not grant or renew a permission under this section unless he is satisfied that the taxpayer in question will suffer hardship if the permission is not granted or renewed.

(4) Where a permission granted or renewed under this section is in force, the provisions of this Act respecting tax periods shall have effect as respects that taxpayer subject to the terms of the permission.

(5) A decision made by the Commissioner under this section is not a decision in relation to which Part IV of the Management Act applies.

Approval of schemes

23 (1) The Minister may by order made under this section approve for the purposes of this Act a scheme of any of the following kinds, that is to say, a health insurance scheme, a hospital insurance scheme, a life assurance scheme, a retirement scheme and a training scheme.

(2) An order under this section may be made subject to such terms and conditions as the Minister thinks fit.

(3) The power to make an order under this section includes power to revoke or vary by another such order an order previously made in the exercise of that power, but before the Minister makes an order varying or revoking an order under this section he shall give notice of his intention to any person who the Minister thinks will be affected by the variation or revocation, and take any representation made by that person into account.

(4) The Statutory Instruments Act 1977 [title 1 item 3] does not apply in relation to an order made under this section.

Responsibility for collection of tax

24 The Commissioner is responsible for the collection of tax.

Commencement

25 This Act comes into operation on 1 April 1995 ("the commencement day").

Repeals and consequential, transitional and saving provisions

26 (1) Subject to this section—

(a) the provisions of Parts II to IV of the Miscellaneous Taxes Act 1976 [title 14 item 46] and every other provision of that Act referring to those Parts or to employment tax or hospital levy are repealed; and

(b) every provision of the Miscellaneous Taxes (Rates) Act 1980 [title 14 item 47] prescribing or otherwise relating to a rate for that tax or that levy is also repealed.

(2) A provision mentioned in subsection (1) is referred to in this section as "a repealed provision".

(3) Consequentially upon the enactment of this Act—

(a) the Management Act is amended by adding to the list of taxes specified in the First Schedule to that Act the following—

"Payroll Tax"; and

(b) the remainder of the Management Act is deemed amended so as to reflect the inclusion of payroll tax in the list of taxes to which that Act applies, except that for the avoidance of doubt it is declared that section 36A of that Act has no application to payroll tax.

(4) Without prejudice to section 16 of the Interpretation Act 1951, the repeals made by subsection (1) above ("the above repeals") do not affect any right of any person (including the Commissioner) or any obligation of any person (including the Commissioner), being a right or obligation that had arisen in relation to a matter regulated by a repealed provision before the commencement day and was in existence immediately before that day.

(5) Subsection (4) above has effect only so far as it may be needed for the exercise or enforcement, on or after the commencement day, of a right or obligation under a repealed provision as in force immediately before that day.

(6) Notwithstanding the above repeals—

(a) any matter requiring registration under a repealed provision before its repeal that was accepted by the Commissioner as being registered immediately before the commencement day shall continue to be accepted by him as being duly registered for the corresponding purposes of this Act until its registration is discontinued by the Commissioner; and the Commissioner may effect such a discontinuance by issuing under this paragraph a notice in writing for that purpose to such person or persons as may be concerned; and

(b) any approval or determination by the Minister or the Commissioner that was given or made by the Minister or the Commissioner under a repealed provision as respects a matter for which similar provision is made under this Act shall, if the approval or determination was in force immediately before the commencement day, continue in force for the purposes of this Act until discontinued by the Minister or the Commissioner; and the Minister or the Commissioner may effect such a discontinuance by issuing under this paragraph a notice in writing for that purpose to such person or persons as may be concerned.

FIRST SCHEDULE (Section 13)

Indexing of Notional Remuneration

1 Paragraphs 2 and 3 of this Schedule state the manner of operation of the indexing mechanism mentioned in section 13.

2 If the Bermuda Consumer Price Index published by the Government ("the Index") for the December next preceding financial year 1 differed from the Index for the December next preceding that December, then—

(a) the amount of the taxpayer's notional remuneration in financial year 1, as assessed by him but altered to an extent equal to the extent, in percentage terms, of that difference, is the amount to be taken for the purposes of subsection (2)(a) of section 13; but so that

(b) if in any case the result obtained by a calculation under sub-paragraph (a) is not a multiple of $5, that result shall be rounded up to the nearest amount that is such a multiple.

3 If however the Index for the December next preceding financial year 1 did not differ from the Index for the December next preceding that December, then the amount of the taxpayer's notional remuneration in financial year 1, as assessed by him, is the amount to be taken for the purposes of subsection (2)(a) of section 13.

SECOND SCHEDULE (Sections 15, 16, 17)

Election by Exempt Undertaking under Section 15

Election in favour of option B

1 An exempt undertaking wishing to make an election under section 15 in favour of option B must deliver to the Commissioner a notice in writing in a form approved by him.

2 A notice under paragraph 1 must specify a financial year as that as from which option B arrangements are to commence in relation to the exempt undertaking, and must be received by the Commissioner on or before the 31 December next preceding that financial year.

3 An election in favour of option B takes effect as soon as the relevant notice is received by the Commissioner under paragraph 2.

Duration of operation of option B

4 (1) Where an election in favour of option B has once taken effect under paragraph 3, that election may not be cancelled except with effect from—

(a) the beginning of the third financial year next following the financial year in relation to which the option B arrangements commenced; or

(b) the beginning of some later financial year.

(2) An exempt undertaking wishing to cancel an election that it has made in favour of option B must deliver to the Commissioner a notice in writing in a form approved by him.

(3) A notice under sub-paragraph (2) must specify a financial year as that as from which option A arrangements are to commence in relation to the exempt undertaking, and must be received by the Commissioner on or before the 31 December next preceding that financial year.

(4) A notice once received by the Commissioner under sub-paragraph (3) may not be withdrawn.

Duty to inform employees

5 An exempt undertaking which delivers a notice to the Commissioner under paragraph 1 or 4(2) shall within fifteen days of delivering the notice inform in writing each person who is at the time an employee of the exempt undertaking of the rights that the delivery of the notice will confer upon that exempt undertaking as employer to make deductions from his salary or wages.

Offence

6 If an exempt undertaking contravenes paragraph 5 in relation to a person, it commits an offence in relation to him and is liable on summary conviction to a fine not exceeding $1,000.

Bermuda Consolidated Legislation

Payroll Tax Act 1995