PRESS
RELEASE
(December 2008)
New Levy Threshold and Bonuses Paid in December
Members of the general public (particularly employers and employees) are advised of the New Levy Threshold and the rules for dealing with bonuses paid in the month of December.
In regards to the new Levy Threshold (which became effective 1st November 2008) the Amendment that was recently made to the Housing and Social Development Levy Act provides that if a person’s annual wage is $16,640.00 or less such a person will be exempt from payment of Levy. Once someone passes over that threshold, they will be liable to pay the Levy.
The Inland Revenue Department and Social Security have calculated the various figures that apply to different payment schedules as follows:
· For persons who are weekly paid no Levy will be deductible from wages up to and including $320.00.
· For persons who are paid every 2 weeks, no Levy will be deductible from wages up to and including $640.00
· For persons receiving wages twice per month or every half month, no Levy will be deductible from wages up to and including $693.33.
· For persons being paid on a monthly basis, no Levy will be deductible from wages up to and including $1,386.66.
Now, here are the rules for dealing with bonuses paid in the month of December.
The first thing to note is that there are no Social Security contributions payable in respect of bonuses paid in the month of December. I reiterate that when it comes to bonuses paid in December, no Social Security contribution will be payable on such bonuses.
However, Housing and Social Development Levy andSeverance Payment Contribution are payable in relation to such bonuses. Having said that, we must note that there are some stipulations in relation to earnings above and below a certain amount.
· Persons receiving bonus who earned an average of $1500 (or more) per month during the year will pay Levy from the bonus at the rate of 8%. The employer is entitled to deduct this from the amount of the bonus
· Persons receiving bonus who earned an average of less than $1500 per month during the year will be exempt from paying any levy from their bonus. This means that in such cases, the employer is not entitled to deduct Levy from the bonus payment
· The Employer’s portion of the levy is also exempt in respect of bonuses paid.
· The Employer will pay Severance Payment Contribution as normal at the rate of 1% in respect of any monies paid to employees including bonus
If you have any questions regarding these matters, you may contact your Social Security Offices in Basseterre and Charlestown and ask for the Compliance Department or any other officer for guidance.
