Facts about Income Tax
ONCE again it is "tax season" and persons should be preparing to submit their Income Tax Annual Returns, due March 15. During this period persons frequently ask questions about who, what, where, when and why file and pay income tax? Here are a few of the answers.
Who must file and pay income tax?
Anyone who operates a business or receives income which has not been taxed at source is required to file an Income Tax return each year. These include:
* Self-Employed persons (including partners)
* Employed persons with other sources of income
* Partnerships and Other Bodies
In respect of individuals:
* Every individual whose income for last year (2011) was more than $441,168 should file a tax return. However, if the only source of income was from employment and/or bank interest and the income was already taxed at source then there is no need to file a Return, unless the individual is directed by the tax authority to do so.
* If the individual is employed but has a business on the "side", he/she is required to file a tax return. This applies to persons such as:
* Teachers who receive money for extra lessons;
* Government Doctors who also have a private practice;
* Professionals employed by a firm, but who also provide their services independently;
* Lawyers employed in the public or private sector who also provide their services independently for a fee;
* Employees who rent out all/part of their house(s);
* Employees who do hairdressing, dressmaking, etc for a fee;
The total income, including the employment income, is to be reported and a credit will be given for the tax paid under the PAYE system.
What is to be filed and paid?
All companies, self-employed individuals, other bodies such as partnerships and Provident Societies and employees with other sources of income must file an Income Tax Final Return for last year (2011) and also file an Estimated Income Tax Return indicating estimated or projected income and the tax payable for the current year (2012).
The taxpayer must ensure that the correct form is used to file their annual Income Tax Annual Return and a Declaration of Estimated Income and Tax Payable. For example a self-employed person or an employed person with additional income would use Form IT01, while a company would use a Form IT02. All categories of persons would use a Form IT07 to declare their estimated income and tax payable. All forms are available online at www.jamaicatax.gov.jm or at any Tax Office.
Where are returns to be filed and payments made?
Income tax returns and applicable payments are made:
1. Online: at www.jamaicatax-online.gov.jm
To use the online option to file, persons must first be registered to use the Jamaica Tax Portal. This may be done through the Customer Care Centre at 1-888-TAX-HELP (829-4357) or at a tax office. Payments can be made using a credit card or by Direct Bank Transfer in relation to larger sums; or
2. In line: At any of the 29 Tax Offices located across the island.
At the tax offices, persons may use cash, credit card, debit card or cheque to pay. If persons are paying by cheque or filing a "nil" return (no tax due), they may use the manual drop box facility in any tax office or electronic drop boxes located in the larger offices.
When are income tax returns and payments due?
Returns: Income Tax returns — Annual and Estimated — MUST be filed by March 15.
Payments: The 2011 final income tax payment should be made by March 15. Additionally, income tax is to be paid on the estimated or projected income for 2012 in quarterly instalments by March 15, June 15, September 15, and December 15.
Why is it necessary to file and pay income tax?
It is important to file and pay income tax as failing to do so may result in:
* The Commissioner General issuing an estimated assessment which may also include a penalty.
* An estimated assessment being generated automatically using available information about the person or a similar type and size business.
* A Court summons being issued for the outstanding return(s). The Court may impose a fine of an amount not exceeding $10,000 for each outstanding return, plus any outstanding tax assessed would still be owed.
Additionally, it is a person's civic responsibility to pay their fair share — no more, no less — to help to provide funds for schools, hospitals, national security, roads/infrastructure, government services, welfare programmes, etc.
First of a special series of Tax Administration Jamaica articles running around the March 15 due date for the filing of income tax returns
For additional information:
Call the Tax Administration's Customer Care Centre at 1-888-TAX-HELP (1-888-829-4357); log on to www.jamaicatax.gov.jm; or visit the Customer Service Unit at any of the 29 Tax Offices.