Payroll Tax Amendment and Validation (No.2) Act 2022

What this bill does

This bill changes how Bermuda calculates payroll tax by clarifying what counts as "remuneration" (income that gets taxed). The main change is that tips and gratuities paid directly by customers to employees, or given to employees from a tip pool, will no longer be subject to payroll tax.

If passed (voted YES)

• Tips and gratuities from customers will be excluded from payroll tax, reducing tax burden for businesses in hospitality, restaurants, and service industries
• Businesses and self-employed people will get broader exemptions for payments made under pension, health insurance, and other approved benefit schemes
• Previous tax decisions made by the Tax Commissioner since April 2021 regarding these changes will be legally validated

If rejected (voted NO)

• Tips and gratuities would continue to be subject to payroll tax as they currently are
• The current narrower rules for benefit scheme exemptions would remain in place
• Some previous Tax Commissioner decisions could remain in legal uncertainty

Who it affects

This primarily affects employers and employees in Bermuda's service industries like restaurants, hotels, and tourism where tipping is common, as well as businesses that provide employee benefits like health insurance and pensions.