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Employee 2% withholding tax in Nunavut / NWT

In case of income tax on the payroll earned by the employees, there exists a mechanism of tax deduction at source. Under this mechanism, the employer who employs the individuals on payroll is required to deduct the tax from payroll of the employees at the time the payment is made. The employer is responsible to deduct and remit the tax on payroll to the government.

Can this be claimed as a deduction on Ontario income tax return as the employer has NOT included it in Box 22 on the T4 slip.

I called CRA Agent ID 201603PAC who was no help at all.

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Best answer June 02, 2020

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Level 1

Employee 2% withholding tax in Nunavut / NWT

With regards to the Nunavut 2% payroll tax, it does not appear on the T4 and the taxpayer will not receive credit for the amount paid on his/her tax return.

This is a territorial (NT and NU) tax that all employees are required to pay via their employer.  The employer remits the tax to the appropriate government - NT or NU .

In a nutshell the tax was created to capture some of the money that is paid out to workers who do not reside in the territory for which they are employed.

Residents of the territories receive a  credit at line 479 to help offset some of the payroll tax paid.

View solution in original post

1 Comment
Highlighted
Level 1

Employee 2% withholding tax in Nunavut / NWT

With regards to the Nunavut 2% payroll tax, it does not appear on the T4 and the taxpayer will not receive credit for the amount paid on his/her tax return.

This is a territorial (NT and NU) tax that all employees are required to pay via their employer.  The employer remits the tax to the appropriate government - NT or NU .

In a nutshell the tax was created to capture some of the money that is paid out to workers who do not reside in the territory for which they are employed.

Residents of the territories receive a  credit at line 479 to help offset some of the payroll tax paid.

View solution in original post