Bonus Paid In December
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.
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.
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.
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.
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