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Under section 29 of the Income Tax Act, the Lieutenant-Governor in Council makes the following Regulation:

1This Regulation may be cited as the Tax Deduction Regulation - Income Tax Act.

2In this Regulation

“Act” means the Income Tax Act;

“employee” means any person receiving remuneration who reports for work at an establishment of an employer in New Brunswick;

“relevant fraction” means the fraction obtained when the relevant percentage is divided by the sum of

(a) 1,

(b) the percentage referred to in paragraph 180.1(1)(a) of the Federal Act, as applicable, and

(c) the relevant percentage;

“relevant percentage” means, with respect to the 1983 and subsequent taxation years, the percentage referred to in subsection 2(3) of the Act as applicable to the taxation year.

3Every person who makes a payment provided for in section 11 of the Act in a taxation year shall deduct or withhold from that payment and remit to the Receiver General of Canada the amount, if any, that is determined in accordance with this Regulation.

4(1)Except as otherwise provided by this Regulation, the amount to be deducted or withheld by an employer in a taxation year from any payment of remuneration to an employee in the taxation year shall be determined by

(a) calculating the notional provincial tax for the taxation year by multiplying the relevant percentage by the notional tax for the year determined under paragraphs 102(1)(a) to (e) of the Federal Regulations,

(b) dividing the notional provincial tax for the taxation year calculated under paragraph (a) by the maximum number of pay periods for the year in respect of the appropriate pay period, and

(c) rounding the amount determined under paragraph (b) to the nearest multiple of five cents or, if such amount is equidistant from two such multiples, to the higher multiple.

4(2)Where an employee has elected under subsection 107(2) of the Federal Regulations and has not revoked that election, the amount to be deducted or withheld by an employer in a taxation year from any payment of remuneration to the employee in the taxation year that is

(a) in respect of commissions or is a combined payment of commissions and salary or wages, or

(b) in respect of salary or wages where the employee is remunerated by a combination of commissions and salary or wages,

shall be determined by

(c) calculating the notional provincial tax for the taxation year by multiplying the relevant percentage by the notional tax for the year determined under paragraphs 102(2)(a) to (f) of the Federal Regulations, without reference to the elements F, G and H in the formula referred to in paragraph 102(2)(f) of the Federal Regulations,

(d) computing a decimal fraction by dividing the notional provincial tax for the taxation year calculated under paragraph (c) by the mid-point of the range of total remuneration referred to in paragraph 102(2)(e) of the Federal Regulations and where the quotient results in more than two digits after the decimal point in the decimal fraction

(i) the second digit shall be rounded to the nearest multiple of one hundredth, and

(ii) where the third digit is equidistant from two such multiples, the second digit shall be rounded to the higher multiple, and

(e) multiplying the payment referred to in paragraph (a) or (b) by the appropriate decimal fraction computed in paragraph (d).

4(3)Where the notional provincial tax referred to

(a) in paragraph (1)(a) exceeds $13,500, the amount to be deducted or withheld under subsection (1) shall be increased by the quotient that is obtained when eight per cent of the amount by which the notional provincial tax exceeds $13,500 is divided by the number of the pay periods, and

(b) in paragraph (2)(c) exceeds $13,500, the notional provincial tax shall be increased by eight per cent of the amount by which the notional provincial tax exceeds $13,500.

5(1)Where a payment in respect of a bonus or retroactive increase in remuneration is made by an employer to an employee whose total remuneration from the employer, including the bonus or retroactive increase, may reasonably be expected not to exceed $5,000 in the taxation year of the employee in which the payment is made, the amount to be deducted or withheld by the employer from the payment is the relevant fraction of fifteen per cent of that payment.

5(2)Where a payment in respect of a bonus is made by an employer to an employee whose total remuneration from the employer, including the bonus, may reasonably be expected to exceed $5,000 in the taxation year of the employee in which the payment is made, the amount to be deducted or withheld by the employer from the payment is

(a) the amount determined under section 4, in respect of an assumed remuneration equal to the sum of

(i) the amount of regular remuneration paid by the employer to the employee in the pay period in which the remuneration is paid, and

(ii) an amount equal to the bonus payment divided by the number of pay periods in the taxation year of the employee in which the payment is made,

minus

(b) the amount determined under section 4, in respect of the amount of regular remuneration paid by the employer to the employee in the pay period,

multiplied by

(c) the number of pay periods in the taxation year in which the payment is made.

5(3)Where a payment in respect of a retroactive increase in remuneration is made by an employer to an employee whose total remuneration from the employer, including the retroactive increase, may reasonably be expected to exceed $5,000 in the taxation year of the employee in which the payment is made, the amount to be deducted or withheld by the employer from the payment is

(a) the amount determined under section 4, in respect of the new rate of remuneration,

minus

(b) the amount determined under section 4, in respect of the previous rate of remuneration,

multiplied by

(c) the number of pay periods in respect of which the increase in remuneration is retroactive.

5(4)Subject to subsection 103(5) of the Federal Regulations which applies with the necessary modifications, where a lump sum payment as defined in subsection 103(6) of the Federal Regulations is made by an employer to an employee who is a resident of New Brunswick, the amount to be deducted or withheld by the employer from the payment is the relevant fraction of

(a) ten per cent of the payment, where the payment does not exceed $5,000;

(b) twenty per cent of the payment, where the payment exceeds $5,000 but does not exceed $15,000; or

(c) thirty per cent of the payment, where the payment exceeds $15,000.

6(1)Where section 104 of the Federal Regulations applies, no amount shall be deducted or withheld under section 4 or 5.

6(2)Subject to subsection (1), subsection 102(5) and sections 106 to 109 of the Federal Regulations apply with the necessary modifications.

7New Brunswick Regulation 83-166 under the Income Tax Act is repealed.

8This Regulation shall be deemed to have come into force on November 10, 1983.

N.B. This Regulation is consolidated to June 30, 1993.

93-100 - Tax Deduction

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