Dear Editor,

Come December 31, 2016, businesses that have salaried personnel who earn monthly no more than $796,536 and no less $592,800 after allowable deductions such as national insurance and pension (statutory salary) will have employees who should apply for a tax refund if they have no other source of income. Employees who have other source(s) of income are, we believe, accustomed to filing a tax return.

Usually a tax refund can be made during the payroll year (January to December) by the employer. This can only be accommodated if there is enough income tax liability (PAYE) to offset the refund. With the current form (S01) a negative amount in line 17 means that there will be short payment on the other statutory payments.

In the grand scheme of things, this may not be a bad idea for taxpayer to get into the habit of filing a tax return, and it will be a welcome change if the refunds are speedily dealt with. Refunds take an inordinately long time and oftentimes discourage the applicant.

On the other hand, employees who have statutory salary above $796,536 for the tax year 2016 will have liability for PAYE come July 31, 2016. This liability can be offset by the PAYE tax payable to the Tax Administration of Jamaica.

An employee earning $796,536 after allowable deductions would have paid $8,489 too much for each of the six months to June 2016. This is a total of $50,934. If, however, as opined above, there is not sufficient PAYE (Line 17 of the S01 Form) this refund cannot be given by the employer using statutory payment reduction during the year of assessment.

An employee earning a statutory salary of $1,000,000 monthly will have a tax liability of $8,477.67 at the end of July 2016. Such an employee will also be due a refund of $8,489. The question is should such employee be reimbursed from the refund leaving a net balance claimable of $11.13 ($8,477.67 minus $8,489)? Or should the lower paid employee be considered first in any scheme of reimbursement? These issues may not exist in large companies where the salary ranges are wide.

Management science through Decision Theory offers a plethora of tools to the student of management science. Among the box of tools of the management scientist are the criteria Maximin, Leximin, Maximax, and one this writer would submit RLPEF (Refund Lowest Paid Employee First). This principle is in keeping with the Leximin criterion which is egalitarian in character. It simply says offer priority to the worse off.

Neville Robinson

Partner

A&N Robinson & Associates

Spanish Town, St Catherine

robinson_associates@cwjamaica.com