As we enter the “Tax Season” for submitting income tax returns, due March 15, it is very important that persons understand how this time impacts them. During this period persons frequently ask questions such as – Who files, When, What, Where, Why and How do they go about doing it? 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:

* Self-Employed persons (including partners)

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

* Companies

* Partnerships and Other Bodies

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

* Every individual whose income for last year (2010) was more than $441,168 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 currently do not need to file a Return.

* If you are employed but you also have a business on the “side”, you are required to declare this income and 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;

* Architects, surveyors, etc, 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.

WHEN, WHAT & WHERE SHOULD I FILE?

By March 15 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 (2010) and also file a tax return indicating estimated or projected income and the tax payable for the current year (2011) at any of the 29 Tax Offices located island wide or online at www.jamaicatax.gov.jm.

The final income tax payment for 2010 should be made by March 15. Additionally, income tax is to be paid on the estimated or projected income for 2011 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.

Part 1 of a special series which will run up to the March 15 due date for the filing of income tax returns.