Social Security Five (ThursdayDecember 6th 2007)
Good Day Radio listeners and welcome to another edition of Social Security Five: your Social Security Information programme. In this edition, we will be discussing the matter of Bonus paid in December. There are some special rules that every employer must be aware of in dealing with deductions from wages and bonus paid in the month of December.
At this time therefore, we take the opportunity to share the text of a press release which explains how this matter is to be treated. Here’s Damian Audain of our Public Relations Department.:
Damian:
Members of the general public (particularly employers and employees) are advised of the rules for dealing with bonuses paid in the month of December.
There are no Social Security contributions payable in respect of bonuses paid in the month of December.
However, Housing and Social Development Levy and Severance Payment Contribution are payable in relation to such bonuses, subject to the following stipulations:
· 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. 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
Employers in particular should note that the amount of the bonus must be shown on the Form C3 at the fifth column and it should be noted in the Remarks column that it refers to bonus.
Please contact the Social Security Offices for any clarification needed.
Chesil:
OK, Let’s take this again. The first thing to note is that there are no Social Security Contributions payable.
Damian:
But you must remember the next part to that is that while there are no Social Security Contributions, LEVY (that is Housing and Social Development Levy) is payable at the rate of 8% on the bonus. But it goes a little further in that persons who earn lower level wages during the year will not have to pay any levy on their bonuses.
Chesil:
That’s right. If during the year, the average monthly wage of the employee is less than $1500 such an employee will not pay any levy on his/her bonus. Which also means that if the average wage is $1500 or more, such a person will in fact pay levy on his/her bonus at the rate of 8%.
Damian:
This is where it will be important for employers and employees to check with the Compliance Department on St. Kitts or the Branch Office on Nevis to clarify any mis-understandings about this matter
Chesil:
Finally it is noteworthy that employers portion of the Levy on the Bonus paid will be exempt but the employer will pay severance Payment Contribution as normal on all wages paid.
That’s correct: To sum it up:
· No Social Security on bonus paid in December.
· Levy will be paid on bonus if average monthly wage during the year is $1500 or more
· Bonus exempt from Levy if average monthly wage during the year is less than $1500
· Employer is exempt from Levy on the bonus
· And finally Employer will pay Severance Payment Contributions as usual on all wages including Bonus
Chesil
Well that’s all for today on Social Security Five. On behalf of Damian Audain, this is Chesil Hamilton saying, So Long Until Next Time ……………
