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A new income tax threshold of $592,800 per annum comes into effect in the New Year on January 1, 2016, moving up from the current tax-free amount of $557,232.
The increase in the threshold means that the corresponding tax-free portion to be used by employers, as of January 2016, in making periodic payments is as follows:
$ 22,800.00 Fortnightly
$ 49,400.00 Monthly
Employers are advised to make the necessary adjustments to their payroll system to reflect the increase in the threshold, so that all employees may benefit from the increase.
In addition to employees, all individuals resident in Jamaica, whether self-employed or pensioners will also benefit from the increase in the income tax threshold.
With the increase in the threshold, the tax paid per annum by each individual will reduce by $8,892.00 (i.e. 592,800 – 557,232 = $35,568 x 25%), while the net effect for each individual per quarter will be a reduction in tax of $2,223.00 and $741.00 per month. The public is reminded that income in excess of the threshold will continue to be taxed at 25%.
Self-Employed individuals are advised that the new threshold of $592,800 is to be used to file their estimated income tax return for the 2016 year of assessment, due March 15 and to make payments for the same year in four equal instalments by March 15, June 15, September 15 and December 15 of each year. However, the threshold of $557,232 is to be used in filing the annual tax return for year of assessment 2015, which is also due on March 15, 2016. Pensioners and persons sixty-five and over are reminded that in addition to the threshold they are entitled to a pension exemption of $80,000 and an age exemption of $80,000 respectively.
Source: Tax Administration Of Jamaica
Jamaica Chamber of Commerce (JCC)
Newsletter Jan. 8, 2016.
Transfer pricing involves the price that one department or subsidiary of a Group of Companies charges for the goods or services that it provides to another department or subsidiary of the same Group. The Organization for Economic Cooperation and Development (OECD),in an effort to provide guidance as to how to value cross.. .
Please be reminded that Environmental Protection Levy (EPL) Returns are now due for manufactured goods and goods imported from CARICOM (i.e., with the exception of food production for immediate consumption)..Please note that if the EPL is included in the price of the product, GCT becomes payable on the full selling price including the EPL.
I have attached some useful reading material on TAJ recent Updates and you will notice that online filing are required for additional services including monthly SO1 filing.
Please note that the introduction or RAiS will require taxpayer's to be more vigilant about record-keeping, accuracy, timely payments and reporting as the system is designed to immediately identify anomalies and impose onerous interest and penalties and trigger audits and investigations..
As part of our tax management and tax risk assessment process we ask that you insist on getting periodic statements from major suppliers and ensure that all import documents and any dealings with government, insurance companies etc. are accurately recorded and source records kept, as the TAJ has advanced their third party verification process and we want to ensure that the risk of penalty for our clients is very low.
Excerpt from JCC bulletin d/d 10/12/15.
KPMG has shared the following valuable tips on taxation of gifts to staff, clients and charities during the Christmas season…
During the holiday season businesses are bursting with excitement, decorating the office, rewarding employees who have performed well, giving gifts to valuable customers and planning that end of year staff function. We thought it appropriate to provide general guidance for common tax questions that come up at this time of year.
Cash awards, gift vouchers and non–monetary gifts to staff members
It is customary for employers to treat their employees with a cash award, gift voucher or non-monetary gift at Christmas time. These gifts may attract the standard payroll taxes and statutory contributions.
Employees will generally be taxed on cash awards. The same treatment will be applied where a gift voucher or non-monetary gift (for example, appliances, paintings and jewelry) is given to the employee (for example, for a long service award or other performance based award). The employee may be taxed on the full value of the voucher or the cost incurred by the employer in providing the gift. Companies may wish to reduce the tax cost to the employee when giving these gifts and should consult with their tax advisors for any suggestions to achieve this.
The costs incurred by the company in providing the gifts will be tax deductible for income tax purposes. However, the General Consumption Tax (“GCT”) on the expenses incurred in providing the gift is generally not recoverable as an input tax credit or a refund.
In addition, if the gifts are taken by the business owner or family members for personal use, the GCT costs of those gifts cannot be claimed as input tax credits or a refund. Further, where the business owner takes items from inventory which form part of his taxable activity, for personal use and/or gifts to family members, the business owner must account for output GCT on the cost of the item.
Staff appreciation function
Many companies tend to have a staff party, luncheon or other function at Christmas time. A company will incur some GCT on the items for the staging of such an event, such as rental of the venue, catering, decorations etc. While the expenses are deductible for income tax purposes, the GCT on the expenses may not be recoverable as an input tax credit or a refund.
Gifts provided to customers
It is customary for companies to give their most valuable customers gifts at this time of the year. This is ordinarily done to maintain the business relationship. The costs incurred to provide such gifts are deductible expenses in arriving at the company’s income tax liability. The GCT on the expenses, would also be recoverable as input tax credits.
Most companies tend to be engaged in some form of charitable contribution throughout the year, however, this is usually done in a more expansive way at this time of the year. To be tax deductible for income tax purposes, charitable contributions must be made to a registered charitable organization. It should be noted that the maximum amount of aggregate charitable contributions allowed as an income tax deduction for the tax year is restricted to 5% of the donor’s taxable net profit (excluding the contribution). This benefit is available to companies and self-employed persons alike. With some planning, it is possible to make generous donations while gaining tax benefits during the season.
In just under a month Tax Administration Jamaica (TAJ) will be rolling out phase two of its Revenue Administration Information System (RAiS), scheduled for December 7, 2015. This involves improved web services related to Income, Education, Minimum Business, Asset and Payroll Taxes, including NIS, NHT, and HEART contributions. The improvements will also accommodate online applications for Tax Registration Number (TRN) and Tax Compliance Certificates.
To facilitate the upgrade, several services will be impacted during the period December 2 -6 as the tax authority converts data and makes the necessary preparations for the smooth implementation on December 7. As a result, during this transition period, services relating to
TRN, TCC, Zero-rating and access to TAJ’s web services will either be suspended or limited.
Additionally, the Portmore Tax Office will be closed for business on Saturday, December 5 to facilitate transition activities.
Taxpayers are therefore being encouraged to conduct related transactions before or after the transition period, as TAJ puts the necessary systems in place to improve service efficiency.
Following these service upgrades with the rollout of RAiS phase 2, taxpayers will be able to:
view their filing and payment history
request a Payment Agreement
request a refund and check its status
object to an assessment
make automated direct bank payments
generate statement of accounts
apply for Income Tax exemption
request approval to pay tax-free travel allowance
submit TRN applications and supporting documents online
apply for a Tax Compliance Certificate
As part of the new way of doing business TAJ will no longer issue a TCC, instead a letter will be generated advising of the tax compliance status. However persons will now be able to access and validate TCC details using the enhanced web services. In relation to TRN persons will be able to submit their applications online, however they would still be required to visit a tax office to have their identification and other relevant documents validated prior to the number being issued.
The new tax system will greatly improve the operational efficiency by helping TAJ personnel to manage tax arrears, generate letters and assign work items related to the additional tax types.
Phase one of RAiS was implemented on February 9, 2015, simplifying web services, including e-filing and e-payment, relating to General Consumption Tax, Special Consumption Tax, Telephone Call Tax and Guest Accommodation Room Tax on the new platform. It also
allowed access to a range of other features including verifying tax withholding and zerorated entities, and granting third party access to taxpayer accounts. These changes are all geared towards improving the taxpayer experience and the efficiency and effectiveness of
customer service delivery.
A series of stakeholder sensitization sessions, as well as staff training activities have been underway. Further stakeholder sessions will be conducted across the island, ahead of the rollout of this second of three phases.
Source: Tax Administration Of Jamaica