As the March 15 due date for the filing of income tax returns approaches, it is very important that persons understand what they need to do in order to submit their Income Tax returns on time and to pay their fair share of taxes – no more, no less. During this period there are a number of questions that persons frequently ask to find out whether or not they should file a tax return and how do they go about doing so. Here are a few of the questions and the answers.

WHO MUST FILE A RETURN?

Anyone who operates a business or receives income which has NOT been taxed at source is required under the Income Tax Act to file an Income Tax return on or before March 15 each year. The categories of persons include:

o Self-Employed persons (including partners)

o Employed persons with other sources of income (such as rent, a “side” business)

o Companies

o Partnerships and Other Bodies

AS AN INDIVIDUAL HOW DO I KNOW IF I SHOULD BE FILING RETURNS?

o Every individual whose income for last year (2009) was more than $270,504 should file a tax return. However, if your only sources of income are from employment and/or bank interest and the income was already taxed at source by your employer under the Pay As You Earn (P.A.Y.E.) system and/or by the bank under the withholding tax system then you do NOT need to file a Return.

o However if you are employed but you have a business on the “side”, you are required to declare this income and file a tax return. This applies to persons such as:

o Teachers who receive money for extra lessons;

o Government Doctors who also have a private practice;

o Architects, surveyors, etc, employed by a firm, but who also provide their services independently for a fee;

o Lawyers employed in the public or private sector who also provide their services independently for a fee;

o Employed persons who rent out all/part of their house(s);

o Employed persons who do hairdressing, dress making, etc. for a fee;

The total income, including the income from employment, is to be reported and a credit will be given for any tax already paid under the PAYE system.

WHEN & WHAT SHOULD I FILE?

All companies, self-employed individuals, other bodies such as partnerships and Provident Societies and employees with other sources of income must file by March 15 an Income Tax Return for last year (2009) and also file a return indicating estimated or projected income and the tax payable for the current year (2010).

The final income tax payment for 2009 should be made by March 15. Additionally, income tax is to be paid on the estimated or projected income for 2010 in quarterly instalments to the Collector of Taxes, Inland Revenue Department (IRD) by March 15, June 15, September 15, and December 15.

SHOULD I STILL SUBMIT AN INCOME TAX RETURN EVEN IF MY BUSINESS SUFFERS A LOSS?

Yes, an Income Tax Return should be filed even if your business suffers a loss; the tax to be paid in this case would be zero. It should be noted that your loss can be used in future years to cover future income tax payment(s).

WHAT HAPPENS IF I FAIL TO FILE MY RETURN?

The Commissioner (TAAD) may send you an estimated assessment which may also include a penalty. The estimated assessment may also be automatically generated from the Tax Administration’s computer system using available information about you or a similar type and size business. Alternatively, the Commissioner (IRD) may issue a Court Summons for the outstanding return(s). The Court may fine you an amount not exceeding $10,000 for each outstanding return, plus you would still owe any outstanding tax assessed.

WHERE CAN I GET ADDITIONAL INFORMATION?

You may get additional information about income tax by calling the Tax Administration Customer Care Centre at 1-888-TAX-HELP (1-888-829-4357); logging on to the website at www.jamaicatax.gov.jm or visiting the Taxpayer Service Unit at any of the 29 Tax Offices located across the island.