Advanced Taxation - Income Tax Administration - PDF

Advanced Taxation Income Tax Administration  Presentation Outline  Explain the structure of the Tax Administration Jamaica (TAJ)  Examine the duties of the Commissioner of Tax Administration Jamaica (TAJ) on the assessment of a taxpayer.  Examine the relationship of the TAJ to ot...

Advanced Taxation Income Tax Administration  Presentation Outline  Explain the structure of the Tax Administration Jamaica (TAJ)  Examine the duties of the Commissioner of Tax Administration Jamaica (TAJ) on the assessment of a taxpayer.  Examine the relationship of the TAJ to other Revenue departments.  Explain the procedure of filing of the declaration of Estimated Income.  Penalties for different areas of taxation  Dispute Assessment Procedure  Structure and role of the Tax Administration of Jamaica (TAJ) The Tax Administration Jamaica (TAJ) structure comprises formerly amalgamated departments: 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) Jamaica Customs Department (JCD)  Structure and role of the Tax Administration of Jamaica (TAJ) TAJ operates with Commissioner General (CG) as its directorship and four (4) Deputy Commissioner General that oversea subdivisions of TAJ. There are four (4) main sub-divisional departments which are: a) Legal Support Division b) Operational Division c) Management Services Division d) Strategic Services Division  Tax Administration of Jamaica Mandate  Audit, assess and collect domestic taxes  Promote voluntary compliance  Enforce tax laws  Provide property management services for tax office and revenue centres.  Role and focus of TAJ  Improve service delivery, efficiency and effectiveness.  Simplify administrative and business processes.  Enhance communication and information channels.  Improve voluntary compliance.  Increase collection. Register with the Companies Office of Jamaica An amalgamated form (Super form) which allows the registration of and application for:  TRN  NIS  HEART  NHT  New Business Name  New Business  TCC  TRN Individuals: Your personal TRN will be upgraded to that of a sole proprietor and a branch number added. Companies, Partnerships and other Organizations: These entities will be given their own TRN, with branch numbers for each existing branch.  Tax Compliance Certificate (TCC) A TCC is needed to transact certain business activities for example  Government Organizations - National Contracts Commission (NCC):- To obtain government contracts  Jamaica Customs:- Clearance of imports  Lending Agencies: to obtain loans and grants  Financial Institutions: To obtain bank accounts for businesses  Taxpayer Education Unit  Advisories  Seminars  Expo’s  E-one-on-one  School’s Tax Education Programme (STEP)  Special Taxpayer Assistance Programme (STAP)  E-On Spot Demonstrations  E-services Revenue Administration Information System (RAiS) Website: www.jamaicatax.gov.jm Online Tax Portal provides added value to taxpayer through; ease of access to online accounts  file and pay online Communicate with TAJ View accounts etc. Procedure for filing of the declaration of Estimated Income Filing of the declaration of Estimated Income  The filing of the declaration of estimated income is filed at the same time as the actual taxable income.  An Estimated Income Tax Return (IT07 / S04a) should be filed on March 15 each year  Liabilities paid on a Quarterly basis for the  March 15,  June 15,  September 15, and December 15 Penalties for different areas of taxation  Not filing a return  Income Tax returns are due on or before March 15th, immediately following the year of Assessment for which it is due  Every person who fails to file a return under the Income Tax Act (Section 71B) and the Education Tax Act (Section 12A) within the time required shall be liable to pay a penalty of five thousand dollars ($5,000) for each month or part thereof for all the months the return has been outstanding up to a maximum of $1,000,000.  The legislation also gives the Commissioner General the power to waive or reduce penalties if he is satisfied that there are circumstances that justify doing so. Not making a declaration of Income  TAJ is cognizant of tax dodgers and has in recent years relied on third party information to include these persons in the tax net who had no previous filing history.  On failing to comply the taxpayer becomes liable to a penalty of an amount not exceeding one million dollars (previously ten thousand dollars) determined by the Commissioner General.  If he fails to comply within 30 days of the notice being served on him, he is liable to a further penalty of two thousand dollars for each day on which his default continues, including days before the service of that notice Not paying an Assessment  Taxpayers who have been assessed by the Tax Department and deemed to have a tax liability will face the possibility of enforcement action such as court action or garnishment (usually placed on salary) for not paying the assessment.  Interest of 16.623% per annum is also charged daily in addition to the assessment for as long as the liability remains outstanding. Submitting an understated Assessment  Within the year of assessment or within three years after the expiration, TAJ can charge that person with three times the amount in respect of the excess owed.  If the taxpayer proves to the satisfaction of the TAJ that “the omission by him did not proceed from any fraud or any gross or wilful neglect, than there will be no charge. Deducting taxes but not remitting them  The employers are liable to an increase of tax (penalty) of 50% per annum on all outstanding PAYE deductions, and also a fine for not exceeding one million ($1,000,000) or treble unpaid tax; whichever is the greater or a term not exceeding (12) months in default of payment. Expectati ons  TAJ’s Expectations Honesty You should be honest in your dealings with any department of Tax Administration  TAJ’s Expectations Record Keeping You should keep sufficient records to enable your tax liability to be ascertained accurately Keeping TAJ informed You should keep then informed if you have a change of business or mailing address or business  TAJ’s Expectations Full Compliance Complete registration for all tax types On-time and preferably online filing of all returns. Complete and preferably online payment of tax liabilities Complete and accurate report of tax related information Your Rights as a Taxpayer The Taxpayer has the right to: Be informed, assisted and heard Appeal Pay no more than the amount due Certainty Confidentiality and secrecy Dispute Assessment Procedure  The taxpayer has the right under section 75 to object to the assessment within thirty (30) of service of the Assessment.  This aspect of the objection is meant to be resolved within ninety (90) days of receipt of objection letter but can take longer to be resolved.  The taxpayer may then be referred to the Tax Appeals Unit located at the Ministry of Finance and Planning if the outcome of the initial objection the taxpayer is still in dispute.  Finally, if the taxpayer is still dissatisfied then the matter may be taken to Tax Court. Tax terms  A fictitious transaction and an artificial transaction Fictitious:  Fictitious transaction is one which those who are allegedly the parties to it never intended that it should be carried out; in other words, it is a sham. Artificial:  Transactions are artificial if not a genuine commercial transaction, but one designed to avoid income tax. Tax avoidance and tax evasion Avoidance:  Tax avoidance is the use of legal methods to modify an your financial situation to lower the amount of taxes owed. Evasion:  Tax evasion are illegal intentional means not to pay taxes owed including under reporting of income, reporting expenses not allowed or overstating of same Tax mitigation and tax planning Mitigation:  Tax mitigation is the use of fiscal tax incentive made available in legislation to reduce tax ones tax liability. e.g. establishing a business in the Special Economic Zone (SEZ). Planning:  Tax planning is the use of financial strategies in advance by individuals or entities to minimize tax payments e.g. timing of income and expense cycle, type of investments pursued. Questions & Answers THE END