Advanced Taxation - Income Tax Administration

Advanced Taxation - Income Tax Administration

• The Tax Administration Jamaica (TAJ) comprises formerly amalgamated departments, including the Director General's Executive Office (DGEO), Inland Revenue Department (IRD), Taxpayer Audit and Assessment Department (TAAD), Tax Administration Services Department (TASD), Taxpayer Appeals Department (TAD), and the Jamaica Customs Department (JCD).
• The TAJ operates with a Commissioner General (CG) and four Deputy Commissioners General overseeing subdivisions.
• The TAJ has four main sub-divisional departments: Legal Support Division, Operational Division, Management Services Division, and Strategic Services Division.
• The TAJ's mandate includes auditing, assessing, and collecting domestic taxes, promoting voluntary compliance, enforcing tax laws, and managing tax office and revenue centre properties.
• The TAJ aims to improve service delivery, enhance efficiency and effectiveness, simplify administrative processes, and enhance communication channels. Improving voluntary compliance and increasing tax collection are also key goals.

Register with the Companies Office of Jamaica

• An amalgamated form (Super form) allows for registration and application for various elements, including TRN, NIS, HEART, NHT, new business name, new business, and TCC.

TRN

• For individuals, personal TRN's are upgraded to sole proprietor status with a branch number added.
• Companies, partnerships, and other organizations receive a unique TRN with branch numbers for each existing branch.

Tax Compliance Certificate (TCC)

• A TCC is needed to conduct business activities, such as obtaining government contracts (for government organizations), importing goods (for Jamaica Customs), acquiring loans/grants (for lending agencies), and opening business bank accounts (for financial institutions).

Taxpayer Education Unit

• The Taxpayer Education Unit provides various resources, including advisories, seminars, expos, one-on-one education, School's Tax Education Programme (STEP), Special Taxpayer Assistance Programme (STAP), and e-on spot demonstrations.

E-services (Revenue Administration Information System - RAIS)

• The Revenue Administration Information System (RAIS) is accessible via www.jamaicatax.gov.jm.
• The Online Tax Portal offers taxpayers ease of access to online accounts, online filing and payment options, communication with the TAJ, and viewing account information.

Procedure for Filing the Declaration of Estimated Income

• The filing of the declaration of estimated income is submitted concurrently with the actual taxable income.
• An Estimated Income Tax Return (IT07/S04a) should be filed on March 15, June 15, September 15, and December 15 of each tax year.
• The liabilities are payable on a quarterly basis.

Penalties for Different Areas of Taxation

• Penalties apply for not filing income tax returns (Income Tax Act, Section 71B & Education Tax Act, Section 12A) on time. Penalties are 5,000permonth,uptoamaximumof5,000 per month, up to a maximum of 5,000permonth,uptoamaximumof1,000,000.
• The Commissioner General has the power to waive or reduce penalties if justified.
• Failure to declare income can lead to penalties not exceeding 1,000,000(previously1,000,000 (previously 1,000,000(previously10,000).
• Failure to comply within 30 days of a notice leads to a further penalty of $2,000 per day until compliance.

Not Paying an Assessment

• Taxpayers with a tax liability may face enforcement actions like court action or garnishment (usually of salary).
• Interest at 16.623% per annum is charged daily until the liability is settled.

Submitting an Understated Assessment

• If a taxpayer's assessment is understated, the TAJ can charge three times the amount owed within the assessment year or within three years of its expiration.
• The charge won't apply if the understated amount is due to an omission without fraud or gross/wilful neglect.

Deducting Taxes but Not Remitting Them

• Employers owing outstanding PAYE deductions face a 50% penalty per annum, plus a fine not exceeding $1,000,000, or the amount of unpaid tax is treble, whichever amount is greater, with a maximum default period of 12 months.

TAJ's Expectations

• Honesty in dealings with any TAJ department is expected.
• Maintaining sufficient tax records for accurate assessment of tax liability is expected.
• Taxpayers must inform the TAJ of any changes in business or mailing address.
• Full compliance, including timely and online registration, filing of returns, payment of tax liabilities, and accurate reports of tax-related information, is expected.

Your Rights as a Taxpayer

• Taxpayers have the right to be informed, assisted, and heard.
• Taxpayers have the right to appeal any assessment.
• Taxpayers have the right to pay only the amount due.
• Taxpayers are entitled to certainty and confidentiality/secrecy.

Dispute Assessment Procedure

• Taxpayers can object to assessments within 30 days of the assessment being issued.
• The objection process usually resolves within 90 days.
• If the objection remains unresolved, the taxpayer may be referred to the Tax Appeals Unit at the Ministry of Finance and Planning.
• If dissatisfaction persists, the matter can be taken to Tax Court.

Tax Terms

• Fictitious Transaction: A transaction where the parties involved don't intend for it to occur (a sham).
• Artificial Transaction: A commercial transaction designed to avoid income tax, but not genuine.

Tax Avoidance and Tax Evasion

• Tax Avoidance: Using legal methods to lower tax liability.
• Tax Evasion: Using illegal methods to avoid paying taxes, including underreporting income, inaccurate reporting of expenses, or overstating expenses.

Tax Mitigation and Tax Planning

• Tax Mitigation: Using fiscal incentives to reduce tax liability, such as Special Economic Zones (SEZs).
• Tax Planning: Strategically employing financial planning to minimize tax payments, such as managing income and expense timing and investment choices.