AS we approach the income tax March 15 filing deadline, we are often asked the question: Should farmers file an income tax return? The simple answer is yes. However, farmers with income earned exclusively from carrying out prescribed agricultural activities can get relief from income tax under the Income Tax Act, if they are designated as an ‘Approved Farmer’.

What are prescribed agricultural activities?

Prescribed agricultural activities may include:

* Growing of food crops

* Seed growing

* Growing of trees for the purpose of producing timber

* Growing of tobacco

* Fishing and fish farming

* Breeding of beef and dairy cattle, pigs, sheep, horses, and goats

* Horticulture

* Production of fertile eggs for hatching

* Production of table eggs

* Apiculture (bee farming)

What is the procedure for farmers to get an income tax relief?

In order for a farmer to get a relief from income tax, they must do the following:

* Obtain an application form from the Rural Agricultural Development Authority (RADA) parish office.

* Complete an application form in duplicate, stating amongst other things name and address of the farmer, Taxpayer Registration Number, the location of the farm, the land tenure, number of acres, and the agricultural activities being carried out and submit the form to the RADA office for further processing.

* Based on the application, officers from RADA then visit the farm and carry out an assessment to ensure that it is a bona fide operation and that the farmer is involved in a prescribed agricultural activity. This information is forwarded to the Ministry of Agriculture for further processing.

* The Ministry of Agriculture then forwards its recommendations to the Tax Administration Services Department (TASD). The recommendation is assessed and the information is forwarded to the Taxpayer Audit and Assessment Department (TAAD) to investigate and verify if tax returns are filed up to date. The findings of TAAD are then reported to TASD.

* If the application meets all the qualifications, the TASD prepares the relevant Order for the approval of the Minister of Finance. Once the Minister has approved the Order, it is published in the Gazette.

* Once the Order has been published in the Gazette, the farmer is legally designated an ‘Approved Farmer’. This Order is forwarded to all relevant parties — Ministry of Agriculture (who forwards it to the applicant), Inland Revenue Department and Taxpayer Audit and Assessment Department –informing them of the farmer’s exempt status.

Do farmers get the tax relief indefinitely?

No. The tax relief is normally for a period of ten years in the first instance, but may be extended another five years by the Minister. Criteria taken into account in granting any further relief are the potential foreign exchange earnings/ savings, and the viability and profitability of the enterprise.

Does the approved farmer have any obligations to file income tax returns?

Yes. Approved Farmers are required to keep separate books of accounts relating to their prescribed agricultural activities and MUST still file returns by March 15 each year. In the event that any of the terms and conditions imposed are breached, the Minister may revoke the Order, but not before the approved farmer has been given the opportunity to explain the circumstances of his failure to comply with those terms and conditions.

How is an approved farmer to treat losses?

The approved farmer may offset any loss incurred in connection with a prescribed activity against profits or gains arising from any other trade, business, profession, employment or vocation carried on by him.

Where can a person get additional information?

Additional information on this and other tax information are available through the Tax Administration’s Customer Care Centre at 1-888-TAX-HELP (1-888-829-4357) or on-line at www.jamaicatax.gov.jm

Fourth of special eight-part series running up to the March 15 due date for the filing of income tax returns