THERE are many persons who operate a business in partnership with others, sharing the profits or losses. If this is the case, it is important to understand how the income tax law applies. Partnerships should be registered and have a Taxpayer Registration Number (TRN). It should be noted that while a partnership is not taxable, each individual partner is taxable on his or her share of any profit from the partnership arrangement. The following are some of the frequently asked questions about partnerships.

My brother and I operate a garage together; do we need to file income tax returns?

Yes. All registered partnerships are required to submit Returns under the Income Tax Act. The Income Tax Return Form (ITO3) is to be used to file your partnership return showing the total income and expenses of the business and how the profit is shared. Additionally you and your brother need to file separate tax returns using an Income Tax Return Form (ITO1) showing the share of profit each person receives, plus any taxable income from other sources. In addition, estimated income tax returns (IT07) should be filed showing projected income for the partnership, as well as the individual partners.

Please note that even if your partnership business is not registered, both partners still need to file individual returns, showing income from the partnership arrangement, plus income from any other source.

When should we submit our income tax returns?

Similar to other types of businesses, a Final Partnership Return and each partner's Final Income Tax Return is due by March 15 each year. Additionally, Estimated Annual Returns are also due by March 15 for the partnership and the individual partners. Based on the Estimated Return, tax is to be paid quarterly by individual partners on March 15, June 15, September 15, and December 15.

Do we need to attach any other document to the partnership return?

Yes. You should submit the "combined" income statement or profit and loss statement of the "complete" business operations for the year along with the Partnership Return Form (IT03). The return should include:

* Name and address of the partners and

* The share of net profit/loss of each partner

Section 4 of the IT03 return should not be filled in by a partnership as it is the individual partners that are liable to pay any tax based on their share of partnership profit. The share of net profit/loss that is received by each partner is to be used to calculate the income tax to be paid (after deduction of NIS and Threshold), or determine any loss to be carried forward.

I have another business beside the partnership; how should it be treated?

If you earn income from any source other than your partnership, such as salary, fees, rent, interest, profit or income received locally or from overseas you should disclose this in the relevant sections of the same individual tax return form (IT01). Your Total income from all sources should be reflected on your individual Income Tax return IT01 and the appropriate tax paid. Your share of profit from the partnership may be stated as "other income"; and financial statements should also accompany the return where relevant. Remember to attach any document supporting income taxed at source, such as a Certificate of Pay and Tax Deducted (P24) from your employer or withholding tax certificate, which will be given as a credit.

I operate a business in partnership with someone overseas; how is this to be treated?

If a partnership arrangement exists between someone who resides in Jamaica and someone who resides abroad, the "Precedent Partner", ie the partner who is resident in the Island is responsible to prepare and submit a partnership return (ITO3) for the year of assessment.

Where no partner is resident in the island, the return should be prepared and submitted by an attorney, agent, manager, or factor of the firm who is resident in the Island.

Each partner, whether resident or non-resident, must also file a return (IT01).

Where can I get additional information?

You may call the Tax Administration's Customer Care Centre at 1-888-Tax-Help (1-888-829-4357) toll-free; visit any of the 29 Tax Offices island wide or visit the website www.jamaicatax.gov.jm