ABOUT PAYE

The Pay-As-You-Earn System, popularly referred to as PAYE, was introduced in St. Lucia in 1965.  The legislation dealing with its operation is contained in the Fourth Schedule of the Income Tax Act Chap. 15.02, as well as sections 75, 76, 77, 78 and 143.

PAYE is not a method of assessment of income tax, but merely a system of withholding tax from emoluments as they are paid. Therefore, although tax has been deducted by way of PAYE from emoluments, an employee must, nevertheless, file an Income Tax Return.

“Emoluments” means all salary, wages, bonus, overtime, perquisites or privileges which include house allowance and entertainment, commission or other amounts for services, director’s fees, pensions arising or accruing in, derived from or received in St. Lucia, and which is liable to income tax.

This does not include, however, salary or share of profits arising from a trade, profession or vocation carried on by any person either by himself or in partnership with another person.

COMPUTING PAYE

The Tax Deduction Table is designed to show the tax to be deducted from employees’ emoluments. The Tables are divided into columns showing amounts of pay and the amount of tax to be deducted by reference to Code Numbers each number consisting of a number and a letter.

Example 1:

Code Number 184M - Monthly Pay $1,500.00

Monthly                                                    $ 1,500.00

less       Employee’s contribution to NIC  $      75.00

                                                                  $ 1,425.00

a) Refer to “Monthly Tax Deduction”

b) Look down the left hand “Monthly Pay” column for $1,525 or next higher amount.

c) Follow this line across to Code 184M. The tax to be deducted that month is where these two columns intersect.

If the Monthly, Fortnightly and Weekly pay of an employee exceeds $8,015, $4,000 and $2,005 respectively deduct thirty cents (30c) from every dollar in excess of these amounts calculated on $8,015, $4,005 and $2,005.

Where the Code Number exceeds that shown on the tables use the annual tables.

Example 2:

Code Number 320M - Monthly Pay $7,000.00

a) Multiply pay by number of pay periods in a year i.e. $7000.00 x 12 = $84,000. In the case of monthly paid employees multiply by 12 pay periods. In the case of fortnightly paid employees multiply by 26 pay periods. In the case of weekly paid employees multiply by 52 pay periods.

b) Deduct allowances according to the employee’s Code number

                320 x 100 = 32,000

                84,000 - 3,000 (NIC for the year) = 81,000

                84,000 - 32,000= 49,000 (chargeable income)

c) Look down the annual table and use the nearest amount in column 1, i.e. $49,000

d) Follow across to column 2 “Tax for Year” for the amount to be deducted yearly - ($10,200). The next column gives the amount to be deducted monthly.

                Deduct Monthly: $850