Your Tax Dollar$ Build

Trinidad & Tobago

Inland Revenue Division

Trinidad House

St. Vincent Street

PORT OF SPAIN

TEXT PREPARED BY INLAND REVENUE

2012

(i)

MISSION STATEMENT

To Promote and Foster Voluntary Compliance with the Tax Laws and Regulations by: Providing quality customer service and education Improving our employees’ welfare, knowledge, skills and attitudes Applying the Tax Laws effectively and efficiently with fairness and integrity within an atmosphere of mutual respect.

Inland Revenue Division

‘Changing the way we interact with people’

visit us at our website

www.ird.gov.tt

Telephone: 623-2981 ext. 321, 431, 432

Fax: 624-3903

(ii)

Ministry of Finance

Inland Revenue Division

This booklet serves as a guide to the Small

Business Person and in no way is it intended to

be a substitute for the tax laws of Trinidad & Tobago.

It briefly outlines the rights and responsibilities

of the small business person. This term includes

the sole trader, proprietor, self-employed individual

and partners within a partnership.

(iii)

YES, YOU are a Small Businessperson!!!!!!

Vendor

Accountant

Medical Practitioner

(iv)

Attorney

Partnership

Mechanic

(v)

Designer

Hair Consultant

Caterer

(vi)

CONTENTS Page

Initial Contact with the Inland Revenue Division 1

Registration

Definitions … … … … … … 2

Total Income

Allowable Deductions

Chargeable Income

Employer

Employee

Emolument Income

Business Records… … … … … … … … … 3

Purchases Book

Sales Book

Record of Expenses

Stock Sheets

Wages and Salaries Book

Debtors and Creditors Ledgers

Asset Register

Income … … … … … … … 6

Types of Income

Rent

Dividends

Capital Gains

Business Expenses … … … … … … … … … 9

Wear and Tear Rates (Seventh Schedule) … … … … 11

Balancing Charge/Allowance … … … … … … 18

Calculations

Acquisitions

Disposal

Private use of an asset

(vii)

CONTENTS Page

Other Deductions/Allowances … … … … 20

Human Resource Development

Promotional Expenses

Deductions as a Resident Individual … … … 21

Computation of Chargeable Profit … … … 22

Taxes … … … … … … … 22

Income Tax

Tax payment on both Non-Emolument and

Emolument Income

Business Levy

Green Fund Levy

Health Surcharge

Other Taxes … … … … … … 29

Withholding Tax … … … … 29

Rates of Withholding Tax w.e.f. 01.01.08

Relief in Cases of Double Taxation

Hotel Accommodation Tax … … … 31

Definitions

Tax Authority

Final Statements… … … … … … 34

Loss Relief … … … … … … 34

Who Should File … … … … … … 35

PAYE System … … … … … … 36

The Income Tax Audit… … … … … 36

Objection of Assessment… … … … … 37

(viii)

CONTENTS Page

Penalties Under the Income Tax Act … … … 38

Administrative

Specific Offences

General penalty

Other Measurers

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INITIAL CONTACT WITH THE INLAND REVENUE DIVISION

Registration- The small businessperson including the partners in a

partnership and the partnership should register for the following at the

Registration Unit of Inland Revenue Division:

BIR Number-(Individual) (a) Submit a copy of the Certificate of Registration the Registrar

General(if a Trade Name is registered) and a completed application

form.

A file number will be assigned after the taxpayer is interviewed and

provides all pertinent data. This number, unique to the taxpayer,

will be issued to him once and should be quoted in all

communications with the Inland Revenue Division. This number is

also used when making payments in respect of quarterly instalment

of Tax, Business Levy and Health Surcharge for the small

businessperson.

BIR Number-(Partnership)

(b) Where the business is to be conducted as a partnership,

the partnership is also required to have a BIR file number,

which can be obtained by submitting the completed

application form, a copy of the Certificate of Registration and

a list of the names, addresses and file numbers of all partners.

(Each partner is required to have a BIR file number. If there

is none the procedure at (a) above applies.)

PAYE Number-

(c) If you are going to employ staff, you are also required to

have a PAYE Account No. Where possible this number

should be applied for at the same time as the BIR

number. This number is to be used when remitting

deductions made in respect of PAYE and Health Surcharge

from the salary/wages of your employees. This number is

different from the sole proprietor‟s Board of Inland Revenue

file number (it will be preceded by the letters PYE).

VAT Number-

(d) Where the gross annual income/sales of the business exceeds

$360,000, the person must register for Value Added Tax

(VAT). See our booklet “Guide to Value Added Tax” for

details.

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DEFINITIONS

“Total Income” means the aggregate amount of income under Section 5 of

the Income Tax Act before allowing any deductions other than those under

Section 10, 11, 16 and Income Tax (In Aid of Industry) Act.

“Allowable Deductions” means any deduction allowed in accordance with

the Income Tax Act in determining a person‟s chargeable income.

“Chargeable Income” for the purposes of a person, whose sole source of

income is from an office or employment, means the total emoluments of the

person for the year of income less the appropriate deductions and exemptions

granted under the Income Tax Act.

“Employer” means any person paying emoluments whether on his own

account or on behalf of another person to an employee, and shall be deemed

to include any person paying emoluments whether on his own account or on

behalf of another person, to the holder of an office.

In relation to an employee or officer, “employer” means the person from

whom the employee or officer receives his remuneration.

“Employee” means any person, not being the holder of an office, in receipt

of emoluments.

“Emoluments” means all salary, wages, bonus, overtime, remuneration,

perquisites, including value of board or lodging, stipend, commission or other

amounts for services, directors fees, retiring allowances or pensions, arising

or accruing in or derived from or received in Trinidad and Tobago and which

are assessable to income tax, but shall not include any salary or share of

profits arising from a trade, profession or vocation carried on by any person

either by himself or in partnership with any other person.

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BUSINESS RECORDS

The Income Tax Act [Section 116(i)] requires every person engaged in any

trade, business, profession or vocation to keep proper records and books of

accounts, including records of annual inventory (stock).

These records must be kept-

*in the English Language

*at the place of business or at the residence of the proprietor

*in T&T currency

*in such a form that provides necessary information that enables the

Board to determine the correct tax liability.

If a proprietor finds it necessary to keep his records at a place other than his

business place or residence, he must apply to the Board of Inland Revenue for

prior approval. The Board will not give approval for the records and books

of accounts of a business to be kept in any country other than Trinidad and

Tobago.

Where a person fails to keep adequate records, the Board may require him to

keep such books and accounts and records which it may specify and that

person is required to comply.

Required Records for each financial Period

(1) Purchases Book

Used to record all purchases (stock) for the business.

(2) Sales Book

Used to record all business sales on a daily basis.

(3) Record of Expenses

Used to record details of all business expenses (other than purchases)

incurred.

Expenses, which relate to the proprietor‟s private affairs, must not be

charged against the profits of the business.[See page 11]

-4-

Example: If rent/mortgage is paid by a proprietor for a property, which

he uses both for operating a business and as his private residence, only

that portion of the rent applicable to the business venture is

deductible as an allowable expense for income tax purposes.

No deduction shall be allowed from the income, in respect of rental

payments incurred for the purposes of the production of income unless

information relating to such payments and to the payee is furnished to the

Board in a form approved by the Board. The relevant schedule on the

Tax return must also be completed. Other such expenses include

Telephone, Electricity and Motor Vehicle.

(4) Stock Sheets

An inventory of items of stock on hand may be prepared periodically

during the year, but must be prepared at the end of the financial period.

The stock on hand that has been counted should be valued on the basis of

lower of cost or net realisable value.

The method of stock valuation should be consistent, as the value of

closing stock will become the figure for opening stock in the succeeding

year. If the method of valuation is changed at any time during the

accounting period, the Board will require both opening and closing

stocks to be valued on the new basis.

(5) Wages and Salaries Book

A record of salaries and wages paid to employees, including casual

workers, must be kept. Where salary is paid in cash, the employees

should certify in a salary record book or pay sheet that they received the

emoluments stated. A record of Income Tax, Health Surcharge and NIS

deductions must be kept.

Employers are also required to keep on file TD1 Forms/Certificates of

Approval submitted by all their employees. These should show all

allowable (approved) deductions.

-5-

Proprietor’s salary: Salary paid to the proprietor of a small business is

not allowed as a deduction for income tax purposes. Where the

proprietor of a business makes such a deduction, the amount will be

added to the net profit.

Spouse’s salary: Salary paid to one‟s spouse who is employed in the

business is an allowable expense, provided that the amount paid is

reasonable for the type of duty performed.

(6) Debtors and Creditors Ledgers

Ledgers which show transactions with debtors and creditors.

(7) Assets Register

Record of all assets owned by the business. This will show

(i) in the case of acquisitions- a description of the asset,

serial number etc. and

the date and cost of acquisition;

(ii) in the case of disposals- the date of disposal and

proceeds of disposal.

The information in this register will be useful in computing Wear and Tear at

the end of each income year.

Where plant and machinery or a building used exclusively to house such plant

and machinery is acquired on or after 1/1/95, the asset is required to be placed

into one of the four classes, A, B, C, or, D in accordance with the 7th schedule

and Wear and Tear is to be computed on the value of the assets in the pool at

the rate applicable to that class.

With effect from January 01, 2006 assets acquired prior to 1995 must be

placed into a class specified in Schedule Seven and the relevant percentage

rate must be applied to the written down value to date to determine the Wear

and Tear Allowance on such assets.

Also effective 2006, Wear & Tear Allowance is allowed at the rate of 10 %

on the reducing balance of the capital expenditure incurred in the construction

of or improvement to a building/structure completed on or after 1/1/95 and

used in a trade, business, profession or vocation for the production of the

income

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INCOME

Types of Income

There are two types of income-

Emolument – See “Definitions” on page 2.

Non – Emolument Income – This is derived from trade or business. It

includes profits from trade/business, professional practice; royalties, rents

dividends, short-term capital gains etc. (Section 5 of the Income Tax Act

refers)

Rents Unless an exemption from income tax has been granted for rental income by

the Minister responsible for Housing, the income from rents, premiums and

other profits from the letting of property is taxable income.

Where approval of the Minister responsible for housing has been granted, the

exemption as to rents shall apply only where the monthly rental income in

respect of-

(a) an unfurnished letting is $750 or less;

(b) an unfurnished letting, in connection with

which services are provided, is $825 or less;

(c) a furnished letting is $900 or less;

(d) a furnished letting, in connection with

which services are provided, is $975 or less.

The exemption with respect to the above-mentioned rents is void where the

monthly rental exceeds the above-mentioned levels in any month of the year

whether payable to the owner or to any other person.

“Furnished Letting,” means a house rented with furniture consisting of a

stove, a refrigerator, and bed and living and dining room furniture.

“Service” includes any utility for which the landlord pays the supplier of that

utility.

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Where the income from the property is exempt under the Housing Act, a

Certificate of Exemption must be submitted with each Income Tax Return

filed.

The Ministry of Housing determines the validity of applications for

exemption and issues the Certificate of Exemption.

Where such a certificate has been issued, the taxpayer is still entitled to

deduct the related expenses even though the rent received for the property

will not be brought into charge for income tax purposes.

Dividends

From 1995 dividends other than preference dividends paid by a resident

company (listed and unlisted) to a resident individual are exempt from tax.

Preference dividends, however, continue to be subject to the 15% tax at

source. The remainder is deemed not to be income to the individual for tax

purposes.

With effect from January 1, 2004 interest payable on dividend to

a resident individual is exempt from tax.

Capital Gains

Any gain, which accrues on the disposal of certain assets within 12 months of

acquisition, is taxable and should be declared in the Income Tax Return using

the relevant schedule.

Adequate records on the date of acquisition and purchase price, together with

the date of disposal and selling price, should be kept.

Assets, which are chargeable to Short Term Capital Gains Tax, are all forms

of property whether situated in Trinidad and Tobago or not.

These include:

(a) Options, debts and incorporeal generally;

(b) Any form of property created by the person who is disposing

of it, such as goodwill, patents and copyrights;

(c) Any currency other than the currency of Trinidad and

Tobago.

-8-

Assets that are exempt include:

1. Currency other than Trinidad and Tobago currency where acquired for

personal expenditure abroad by the taxpayer or his family or dependants

(including expenditure on the provisions or maintenance of any residence

outside Trinidad and Tobago).

2. Sums obtained by way of compensation or damages for any wrong or

injury suffered by an individual in his profession or vocation.

3. Winnings from betting lawfully carried on under or by virtue of the

provisions of the Gambling and Betting Act, 1973 including pool betting

and lotteries or games with prizes.

4. Gains accruing on the disposal of an asset by an individual or a company,

which, under the provisions of the Income Tax Act or of the Corporation

Tax Act, is exempt from tax.

5. Gains accruing on the disposal of any security in Trinidad and Tobago.

6. Gains accruing on the disposal of –

(a) Private motor cars;

(b) Household goods;

(c) Owner-occupied houses disposed of for $5,000 or under.

In computing the Capital Gains, which can arise on the disposal of an asset,

allowable deductions include:

(i) Cost price (money or money‟s worth) of the asset,

together with other expenses incidental to the acquisition,

including legal fees, stamp duty, advertising or the

amount incurred in providing the assets;

(ii) Any expenditure wholly and exclusively incurred in

enhancing the value of the assets, provided that such

improvements are evident and effective at the time of

disposal (maintenance expenses are not allowable

deductions);

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(iii) Any expense incurred in establishing, preserving or

defending his title to, or to a right over, the asset;

(iv) Costs wholly and exclusively incurred on the disposal of

an asset, e.g. legal fees and agent‟s fees. Losses under

this head should also be declared by completion of the

relevant schedule of the Income Tax Return. Such losses

may be set off against capital gains in the same year of

income. Any excess of losses over gains is not

deductible from other sources, but may be carried

forward to be set off against capital gains in subsequent

years.

TYPES OF INCOME The Small Businessperson is generally charged tax each year on his non-

emolument income subject to the provisions of the Income Tax Act.

The person who receives both Non- Emolument and Emolument Income may

be required to pay tax on both types of income.

Where the Non – Emolument income exceeds 25% of the total income, the

person is required to pay quarterly instalments on such income.

The Small Business Person must include the income received from all

sources on his annual income tax return.

BUSINESS EXPENSES

A Small Business Person is allowed business expenses as a deduction in order

to calculate his chargeable profit/income. Business expenses are the expenses

incurred in the production of the income of the business, therefore the

personal and private expenses of the Small Business Person are not allowed

in determining the chargeable profit/income of the business.

-10-

Business Expenses may include, but are not limited to, the under

mentioned:

Accounting Charges Licencses

Advertising Management Charges

Travelling Expenses Bad Debts

Rents Paid Interest, Bank Charges

Electricity Stationery/Postage

Entertainment Wages & Salaries

WASA Rates Wear & Tear

Insurance Premiums *Motor Vehicle operating Expenses

Telephone * (75% of these expenses are allowed)

Rental/Interest on Mortgage Loan

Where a person carries on a business at his place of residence and incurs an

expense for rent or interest on a mortgage loan for acquiring the property, he

is entitled to claim a business expense for rent or interest on Mortgage in the

ratio of the use of the property comparing business to residential use.

* Expenditure on repairs is only allowed where the repairs undertaken

pertains to the area used for business purposes.

Lands and Buildings Taxes

Claims for Mortgage Interest paid will not be allowed without proof of

payment of Lands and Buildings Taxes for that year.

Wear & Tear

Wear & Tear is allowed as a Business Expense. It allows the individual to

write off the cost of the asset over it life cycle. The rates accepted are

outlined.

NB. The wear and tear allowance will not be granted unless the Board is

satisfied that Land and Building taxes have been paid for that year.

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The Seventh Schedule is reproduced for your guidance.

(Sec. 11A of the I.T.A.)

SEVENTH SCHEDULE

CLASS A (WEAR AND TEAR RATE) 10%

Adding Machines and Calculators – Manual 10

Billiard Tables 10

Boats – Barges 10

Boats – Lighters 10

Boats – Motor 10

Boats – Pontoons 10

Boats – Punts 10

Boats – Rowing and Sailing 10

Brick-making Plant – Walls and Windbreak 10

Buildings (Housing machinery) – Industrial 10

Buildings (Housing machinery) – Other 10

Building, structures and improvements thereon completed on or after

1st January, 1995 10

Industrial building structures under the Income Tax (In Aid of Industry)

Act acquired prior to 1st January, 2006. 10

Calculating Machines – Hand-operated 10

Cameras 10

Cash registers – Manual 10

Cigarette – Manufacturing Machinery 10

Cigarette – Tools and Equipment 10

Cigarette Papers – Cutting and Folding Plant 10

Coffee Manufacturing 10

Cylinders – Gas 10

Dentists – Fittings 10

Dentists – Instruments 10

Dictaphones 10

Doctors – Instruments 10

Filing Cabinets 10

Fire Extinguishers 10

Fixtures and Fittings 10

Furniture – Household 10

Hydraulic Jacks 10

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Ice Company Plant – Refrigerator 10

Irrigation – Water Supply 10

Lighters 10

Medical Practitioners – Instruments 10

Medical Practitioners – Radium Plaques and Needles 10

Motor Boats 10

Newspaper Equipment – Linotype metal 10

Newspaper Equipment – Stereos and Blocks 10

Newspaper Equipment – Type 10

Office Machines and Equipment – Addressograph 10

Office Machines and Equipment – Cash Registers 10

Office Machines and Equipment – Dictaphones 10

Office Machines and Equipment – Proof Machines – Banks 10

Office Machines and Equipment – Telephones 10

PBX Systems 10

Photography Equipment 10

Poultry Farmers – Eggboxes and Fillers 10

Poultry Farmers – Egg Grader 10

Radio Transceiver Sets 10

Road-making Plant – Utensils for drawing 10

Safes 10

Scales – Weighbridge 10

CLASS B (WEAR AND TEAR RATE) 25%

Accounting Machines 25

Adding Machines and Calculators – Electrical 25

Adding Machines and Calculators – Manual 25

Aerated Water Plant – Bottling Plant 25

Air-conditioning Equipment – Large General Unit 25

Air-conditioning Equipment – Single Units 25

Aircraft – Commercial – New 25

Arc and Gas Welding Plant 25

Automotive Equipment 25

Bakers‟ Plant 25

Beverage Coolers 25

Bicycles – Motor 25

Bicycles – Ordinary – Commercial 25

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Billiard Tables 25

Biscuit-making Plant 25

Boats – Barges 25

Boats – Launches 25

Boats – Lighters 25

Boats – Motor 25

Boats – Pontoons 25

Boats – Punts 25

Boats – Rowing and Sailing 25

Boats – Sloops and Streamers Ocean-going 25

Boats – Tugs 25

Boilers – Engines, Shafting 25

Boilers – General Binding Machinery and Plant 25

Boilers 25

Bookbinding Plant and Machinery – Boilers 25

Boot and Shoe-making – Boilers 25

Boot and Shoe-making – Box (Cardboard) Manufacturers‟ Machinery 25

Boot and Shoe-making – General Plant and Machinery 25

Boot and Shoe-making – Motor Vans and Lorries 25

Brewery Plant 25

Brick-making Plant – Grog Crusher 25

Brick-making Plant – Railway Siding 25

Brick-making Plant – Traxcavator 25

Brick-making Plant – Tunnel Kilns and Dryers 25

Brick-making Plant – Walls and Windbreak 25

Bucket Elevator – Quarrying 25

Buildings (Housing machinery) – Industrial 25

Buildings (Housing machinery) – Other 25

Calculating Machines – Electrical 25

Calculating Machines – Hand-operated 25

Cameras 25

Caravans – Mobile Site Office 25

Carpets (Cost over $500.) 25

Cash registers – Manual 25

Cement and Concrete Tile – Manufacturing Plant 25

Cigarette – Manufacturing Machinery 25

Cigarette – Tools and Equipment 25

Cigarette Papers – Cutting and Folding Plant 25

Clothing and Millinery – Manufacturing Plant 25

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Clothing and Millinery – Other Plant 25

Clothing and Millinery – Sewing Machines 25

Coconut Oil Manufacturing Plant 25

Coffee Manufacturing 25

Cold Stores and Ice Manufacturing – Ice Cans 25

Cold Stores and Ice Manufacturing – Machinery and Plant 25

Compressors – Air and Oxygen Types 25

Compressors – Ammonia – Horizontal 25

Compressors – Ammonia – Vertical 25

Concrete Mixers 25

Confectioners‟ Machinery 25

Containers-makers‟ Plant 25

Copra 25

Cotton Knitting and Spinning Plant 25

Cylinders – Gas 25

Dentists – Carpets 25

Dentists – Electric Motors 25

Dentists – Fittings 25

Dentists – Furniture 25

Dentists – Instruments 25

Dentists – Plant 25

Dictaphones 25

Dies 25

Diesel Engines and Motors 25

Distillery Plant 25

Doctors – Instruments 25

Dredges 25

Drying Kilns 25

Dumpers – Quarrying 25

Electrical Fittings 25

Elevators and Lifts 25

Engineering Works 25

Filing Cabinets 25

Fire Extinguishers 25

Fixtures and Fittings 25

Furniture – Household 25

Furniture – Office 25

Ice Company Plant – Coils 25

Generators 25

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Hollman Compressors 25

Hydraulic Jacks 25

Ice Company Plant – Cold Storage Plant 25

Ice Company Plant – Fabric Inserted Matting 25

Ice Company Plant – Factory Plant and Machinery 25

Ice Company Plant – Ice Breaker 25

Ice Company Plant – Ice Crusher 25

Ice Company Plant – Refrigerator 25

Ice Company Plant – Water Filter 25

Irrigation – Water Supply 25

Laundry Plant – General Plant 25

Laundry Plant – Washing Machines 25

Lifts and Elevators 25

Lighters 25

Live Network 25

Lorries (Motor) 25

Loudspeakers and Phones 25

Match Factory Plant 25

Medical Practitioners – Diathermy Plant 25

Medical Practitioners – Electro-Cardiograph 25

Medical Practitioners – High-Frequency Current Machines 25

Medical Practitioners – Instruments 25

Medical Practitioners – Ophthalmic Surgeon‟s Plant 25

Medical Practitioners – Other Plant 25

Medical Practitioners – Radium Plaques and Needles 25

Medical Practitioners – X-Ray Plant 25

Milk Treatment Plant 25

Millinery Manufacturing Plant – Other Plant 25

Millinery Manufacturing Plant – Sewing Machines 25

Mobile Site Office – Caravan 25

Molasses Industry – Concrete Sump and Gear 25

Molasses Industry – Mill Storage 25

Molasses Industry – Pipe Lines 25

Molasses Industry – Pumps 25

Molasses Industry – Punts 25

Molasses Industry – Storage Tanks 25

Motor Boats 25

Motor Cars and Vehicles 25

Neon Signs 25

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Newspaper Equipment – Boilers 25

Newspaper Equipment – Engines and Shafting 25

Newspaper Equipment – Linotype metal 25

Newspaper Equipment – Printing Machines 25

Newspaper Equipment – Stereos and Blocks 25

Newspaper Equipment – Type 25

Office Machines and Equipment – Accounting Machines 25

Office Machines and Equipment – Adding Machines 25

Office Machines and Equipment – Addressograph 25

Office Machines and Equipment – Calculating Machines 25

Office Machines and Equipment – Cash Registers 25

Office Machines and Equipment – Dictaphones 25

Office Machines and Equipment – Duplicating Machines 25

Office Machines and Equipment – Proof Machines – Banks 25

Office Machines and Equipment – Telephones 25

Office Machines and Equipment – Typewriters 25

Oxygen Acetylene Plant 25

Oxygen Manufacturing Plant 25

PBX Systems 25

Photography Equipment 25

Plastic Extrusion Machine 25

Poultry Farmers – Egg Grader 25

Poultry Farmers – Eggboxes and Fillers 25

Poultry Farmers – Incubators 25

Printing Press 25

Pumps 25

Quarrying Plant and Machinery 25

Radio Equipment 25

Radio Transceiver Sets 25

Radios, Radiograms and Phonographs 25

Railway Sidings 25

Refrigerating Plant and Machinery 25

RHF Welding Machine 25

Road-making Plant – Asphalt Plant 25

Road-making Plant – Barbergreen Finisher 25

Road-making Plant – Crawler Loader 25

Road-making Plant – Loader 25

Road-making Plant – Motor Dumper 25

Road-making Plant – Office Machinery 25

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Road-making Plant – Rollers and Steam 25

Road-making Plant – Service Cars 25

Road-making Plant – Special Tools 25

Road-making Plant – Utensils for drawing 25

Rum Refinery Plant 25

Safes 25

Scales – Weighbridge 25

Sea-craft 25

Sewing Machines 25

Ship-building Plant 25

Shop Fittings 25

Steel Barrels 25

Stone Crushing Plant 25

Sugar Industry – Boilers, Auxiliaries, Steam Piping 25

Sugar Industry – Distilling Plant 25

Sugar Industry – Drainage and Irrigation Plant 25

Sugar Industry – Factory 25

Television Sets 25

Transformers 25

Typewriters 25

Vacuum Cleaners 25

Vulcanizing Machine 25

Water Coolers 25

Water Tanks and Pumps 25

Weighbridges 25

Welding Units 25

Wireless Sets 25

CLASS C (WEAR AND TEAR RATE) 33.3%

Rate

%

Aerated Water Plant – Bottles and Cases 33.3

Agricultural Machinery – Tractors, Ploughs, Harvesters, etc. 33.3

Audition Unit – Station and Testing Equipment 33.3

Bulldozers 33.3

Cranes – Electrical or otherwise 33.3

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Cranes – Gantries 33.3

Cutlassing Machine 33.3

Farming Equipment 33.3

Forklift Trucks 33.3

Rigs (Oil) 33.3

Road-making Plant – Jitney 33.3

Road-making Plant – Spray Trucks 33.3

Computers 33.3

CLASS D (WEAR AND TEAR RATE) 40%

Aircraft – Engine Props – Rotable Spares 40

Aircraft – Second-hand 40

BALANCING CHARGE/ALLOWANCE

Calculations

Whenever an asset on which “Wear and Tear” has been allowed during the

course of its usage, is sold or disposed of at a price above or below the

written-down value, a balancing charge or allowance, as the case may be,

arises.

Effective 1/1/98 Balancing Allowances shall not be made until there are no

assets left in the pool. Balancing Charges shall not be made until the value in

the pool results in a credit balance.

Acquisitions

In computing Wear and Tear Allowances, the value of acquisition of plant or

machinery in a year of income shall be added to the written down value of

the plant and machinery in the pool.

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Disposal

Where disposals are made during a year of income, the value of the plant and

machinery disposed of shall be deducted from the written down value of the

plant and machinery however:

(i) in the event of a sale, the amount deducted shall be the

proceeds of the sale of the plant and machinery or

(ii) in event of loss or destruction of plant or machinery, the

amount deducted shall be the money received by way of

insurance or compensation.

Private Use of Asset

Where the asset is used for both business and private purposes, the pool must

be debited with the cost of the asset equivalent to its business use. Where an

asset is disposed of, the pool shall be credited with the same percentage being

applied to the proceeds of disposal up to the original cost of the asset.

Where assets are brought to the business from private use, the value to be

applied will be the market value.

If an asset from the business is appropriated for private use, the amount

(credited) deducted from the pool will be the market value.

In the case of any other event resulting in the cessation of interest in any

plant/machinery, the amount to be deducted from the pool shall be the market

value of the said item.

In no circumstances shall the amount credited to the pool exceed the original

cost of the said Plant and Machinery.

Assets acquired prior to 1995 and not incorporated into a pool will be subject

to balancing allowances/charges on an individual basis (up to 2006).

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OTHER DEDUCTIONS/ALLOWANCES A person may, where applicable, also qualify for the following deductions and

allowances as outlined in the Income Tax Legislation.

Human Resource Development (up to 2006)

A deduction for Human Resource Development became effective from

January 1, 1999. A deduction shall be allowed in ascertaining the

chargeable income of a person who has income from trade or business

where expenses are reasonably incurred in the training and retraining of

his employees up to 150% of the expenditure.

Promotional Expenses

Effective 1/1/94 individuals involved in Trade/Business who have

incurred promotional expenses which were wholly and exclusively

expended in order to promote the expansion of existing foreign markets

for the export of goods produced in Trinidad and Tobago and shipped in

commercial quantities, are entitled to a deduction equivalent to 150% of

the promotional expenses actually expended. This also applies to

Agricultural Produce manufactured/produce in T&T.

A person entitled to this deduction is not allowed another

deduction under Section 10 (Profit and Loss Account) in respect

of the same promotional expenses.

Promotional Expenses allowable are those incurred in respect of

goods produced in Trinidad and Tobago. They are in respect of: -

advertising in foreign markets;

providing promotional literature for overseas distribution;

the participation in trade fairs, trade missions and similar

promotional activities;

overseas travel for the purposes of conducting promotional

activities;

providing free samples and technical information on products;

inviting buyers to Trinidad and Tobago;

the recruitment of specialist sales personnel, operating in foreign

market for a maximum of two years.

conducting foreign market surveys.

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This deduction does not apply to –

expenses incurred in petroleum operations;

expenses incurred in the export or the expanding of the export of

goods/services or agricultural produce manufactured or produce

to the following countries –

Antigua, Barbados, Belize, Dominica,

Grenada, Guyana, Jamaica, Montserrat,

St. Kitts-Nevis, St. Lucia St. Vincent.

DEDUCTION AS A RESIDENT INDIVIDUAL

In addition to the business expenses, the Small Business Person is entitled to

all other allowable deductions of the resident individual. These include

deductions for:

Personal Allowance

Pension Contribution/Annuity Premium

Alimony/Maintenance Payment

First Time Home Owner Deduction (acquisition with effect from

January 1, 2011)

Tertiary Education Expenses (for external students only wef 2006)

Deeds of Covenant

There are also some Tax Credits

~ Venture capital

~ Installation of CNG Kit

~ Purchase of Solar Water Heating Equipment for household use

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COMPUTATION OF CHARGEABLE PROFITS

In calculating the chargeable profits, a small businessperson is entitled to

deduct all expenses wholly and exclusively incurred in the production of that

income, from his total income/sales.

All expenses claimed must be supported by proof of the expenditure eg.

bills/receipt. Expenses that relate to the proprietor‟s private use must not be

charged against the profits of the business.

Example – Calculation of Chargeable Profit

Total Income/ Sales $375,000

Less: Business Expenses $195,000

Net Profit $180,000

Less: Personal Allowance $ 60,000

Tertiary Education $ 50 000

Approved Annuity $ 12,000

Chargeable Income/Profits $ 58,000

TAXES

The Small Businessperson is required to pay his taxes to the Board of Inland

Revenue in quarterly instalments each year. The types of taxes paid by the

small businesspersons are-

Income Tax

Business Levy

Health Surcharge

Green Fund Levy (Partnerships)

Late payment of all taxes will attract interest at the rate of 20% per annum

from the due date to the date of payment.

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INCOME TAX

This tax is charged on the chargeable profits of the business. It is calculated

after allowing for Tax Deductions and Credit (if applicable) for the relevant

income year.

The basis of calculating the estimated amount payable in the current year is

applying the tax rate to the chargeable income/profits of the previous year

then divides it into four quarters.

These payments are to be made on or before –

March 31 September 30

June 30 December 31

in each year of income.

Where, by the end of the fourth quarter, instalments paid are less than the tax

liability disclosed in the tax return, (of the previous years) interest shall be

charged on the difference between:

(a) The tax liability on the chargeable income of the previous

year of income plus 80% of the increase in the tax liability of

the current year on the previous year of income; and

(b) The total amount paid by the end of the fourth quarter.

Where the estimated chargeable income for a year of income exceeds or is

likely to exceed the chargeable income of the preceding year of income, a

person shall make quarterly payments on the basis of the income in the

current year.

Example:

Calculation of quarterly instalment (2012)

Chargeable Profit (2011) $150,000

Less: Personal Allowance 60,000

Estimated Chargeable Income $ 90,000

Tax on Chargeable Income of $90,000

$90,000 x 25% $ 22,500

Estimated Tax Payable

Quarterly tax payable $22,500 $ 5,625

4

The amount of $5625 is payable on or before March 31, June 30, September

30 and December 31, 2012.

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Where a taxpayer is of the opinion that his business will produce an estimated

chargeable income less than the chargeable income of the previous year, he

may apply to the Board of Inland Revenue for a revision of his estimated

chargeable income and the amount of tax he is required to pay by quarterly

instalments.

NOTE: Where he is of the opinion that the estimated chargeable income

is likely to exceed or exceeds the chargeable income of the preceding

year, the quarterly instalments must be paid on the estimated chargeable

income of the current year of income.

TAX PAYMENT ON BOTH NON-EMOLUMENT AND EMOLUMENT

INCOME

An individual, who is in receipt of both non-emolument income, (such as

gains or profits from the operation of a trade or business, including income

from partnerships or from the practice of a profession,) and emolument

income (i.e. salary, wages, etc.), is required to pay tax by quarterly

instalments, where the non-emolument income is more than 25 per cent

of the total income.

Example 2012

Emolument Income 7000 x 12 $ 84,000

Estimated non-emolument income (Profits) $ 50,000

Estimated Total Income $134,000

Less - Personal Allowance $60,000

- Pension&NIS Contr. $ 7,500 (67,500)

Chargeable Income $ 66,500

Tax on Chargeable Income

$66,500 x 25%

Total Tax Liability $ 16,625

NB: Non-emolument income is more than 25% of total income.

If we assume that the taxpayer is currently charged to tax on his emolument

income, the quarterly installment to be paid

= Profit from non-emolument income x 25%

= $50,000 @ 25% - $12,500

Amount payable by quarterly instalments $12,500 = $3,125

4

NOTE: The difference in the tax liability and the quarterly instalment would

have been deducted by the employer via the PAYE System.

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BUSINESS LEVY

Business Levy is a tax on the gross sales/receipt of a person, other than

emolument income, in excess of $200,000.

Gross Sales/Receipt incorporates all income received in the ordinary course

of business activities before allowing any deductions for business expenses.

The rate of Business Levy is 0.2% of the gross sales/receipts for each

quarter of the current year of income.

The Business Levy is due and payable on a quarterly basis on or before:

March 31 September 30

June 30 December 31

in each year of income.

Interest on short payment of Business Levy

Where there is a short fall in payments of Business Levy, interest shall be

charged on the difference between 90% of the Business Levy liability and the

amount actually paid for each quarter.

For late payment of Business Levy, interest will be calculated at 20% per

annum from the date following the end of the quarter when the Levy liability

became due, to the date of payment.

Exemptions from Business Levy - Individuals.

The Gross Sales or Receipts of a person which are exempt

from income tax under any Act.

The income of a person whose emolument income exceeds

75% of his total income.

The Gross Sales or Receipts of a person, whose Gross

Sales or Receipts in the proceeding year of income

do not exceed $200,000, unless there are reasonable grounds to

believe that the gross sales or receipts in that particular

year will exceed that sum.

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The gross sales or receipts of the business of a person

who had not been in that business for three (3) years from

the date his business commenced.

COMPUTATION OF BUSINESS LEVY

All persons liable to make Business Levy payments are required to

compute both their Income Tax and Business Levy Liabilities.

A person is entitled to a Tax Credit against his Business Levy Liability for

a year of income, of any payment made in respect of Income Tax Liability

for that year of income up to a maximum of his Business Levy Liability.

To calculate the Business Levy, the Gross Sales or Receipts figures to be used

are the current ones; estimation is to be used only for the last few days, (1 – 3

days) of the quarter. When an estimation is made for any period in a quarter

and it is subsequently determined that the actual sales or receipts are more

than the previously estimated figures, the difference of the Business Levy

liability must be paid no later than the last day of the quarter following the

quarter in which the estimation was made.

Partnerships With respect to a partnership, the Individual Partner‟s Share of the Gross

Sales/Receipts must exceed $200,000 per annum to be liable for Business

Levy payments.

NB: The partners are liable to this tax, not the partnership.

GREEN FUND LEVY

Green Fund Levy is also a tax to be paid on the gross sales/receipts of any

company/partnership carrying on business in Trinidad and Tobago whether or not

such business is exempt from Business Levy.

This rate of the Green Fund Levy tax is 0.1% of gross receipt/sales.

The Sole Trader does not pay Green Fund Levy, however the

organization of the Partnership is liable to this Levy. Green Fund Levy is

paid using the Partnership BIR File number.

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It is due and payable to the Board of Inland Revenue on a quarterly basis on

or before:

March 31 June 30,

September 30 December 31

in each year of income.

In ascertaining the gross sales or receipts of a quarter an estimate of the sales

for the last 1-3 days of the quarter may be required.

Where estimation is made and the actual sales of that quarter exceed the

estimated figure, the short payment must be paid by the end of the quarter

immediately following that quarter in which the sales or receipts were

estimated.

Interest on short payments or late payments.

Where a company, which is liable to the quarterly payment of the Green Fund

Levy, pays less than 90% of its liability at the end of the quarter; interest is

charged at the rate of 20% per annum on the difference between the 90% of

the liability and the amount paid.

This interest shall accrue from the end of the quarter in which the liability

occurred to the date of payment.

N.B: In ascertaining the Chargeable Profits of a company, no

deduction is allowed for any payments made to this Fund.

Overpayment of the Green Fund Levy

Where the Board of Inland Revenue is satisfied that a company has overpaid

the levy in any quarter, the company is entitled to a refund of the excess tax

paid.

However, instead of making a refund, the Board may otherwise choose to

apply the excess tax against any future liability and notify the company

accordingly.

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NOTE: (i) The Green Fund Levy shall be under the care and

management of the Board of Inland Revenue.

(ii) “Company” means an incorporated body, unincorporated

association and includes a partnership.

The partnership must therefore pay this levy using the

partnership BIR Number.

HEALTH SURCHARGE

Health Surcharge shall be charged and is payable –

a. by every employed person who pays or is liable to pay contributions

under the National Insurance Act; and,

b. by individuals other than employed persons who are liable to

furnish a return of income.

The following are exempt from the Health Surcharge provision –

(i) individuals under the age of 16 years;

(ii) persons who have attained the age of 60 years;

(iii) persons whose only source of income is from pension.

The rates at which the Surcharge payable are –

(i) Employed persons whose monthly emoluments

are more than $469.99 per month or weekly

emoluments more than $109.00 - $8.25 per week.

All other employed persons - $4.80 per week.

(ii) Individuals, other than employed persons, whose

total income for the year averages more than

$469.99 per month - $8.25 per week. All other

individuals - $4.80 per week.

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An individual, other than an employed person, shall pay Health Surcharge to

the Inland Revenue Division, on or before –

March 31 September 30

June 30 December 31

Unpaid amounts at the due dates shall attract interest at the rate of 20% per

annum.

OTHER TAXES

WITHHOLDING TAX

This tax is deductible at source and is imposed on non-resident individuals

and companies in respect of:

a distributions, e.g. dividends from a Company;

b any payment arising in Trinidad and Tobago where

the recipient is not engaged in Trade or Business

in Trinidad and Tobago, e.g. Interest, Royalties.

The law requires any person or company making any payment or distribution

to a non-resident person or company to deduct and pay Withholding Tax to

the Board of Inland Revenue within 30 days, in respect of the sum paid.

„Payment‟ means a payment without any deductions whatsoever, other than a

distribution with respect to –

(a) interest, discounts, annuities or other annual or

periodic sums

(b) rentals

(c) royalties

(d) management charges or charges for the provision

of personal services and technical and managerial skills

(e) premiums (other than premiums paid to

insurance companies and contributions to pension

funds and schemes), commissions, fees and licences.

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Rates of Withholding Tax w.e.f. 01.01.08 The rates of Withholding Tax shall be –

(i) on any distribution made – 10 per cent; but where such

distribution is made to a parent Company, the rate shall be

5 per cent;

(ii) on any payment made to a person other than a company –

15 per cent;

(iii) on any payment made to a company – 20 per cent;

but where there is a Double Taxation Agreement in force or where an Order

is made under section 96 of the Income Tax Act, (under which the President

may vary the rate of Withholding Tax), the Withholding Tax shall be such

lesser rate as may be therein provided.

Relief in Cases of Double Taxation

When Trinidad and Tobago concludes a double taxation treaty with the

Government of any country, the President makes an Order and the

arrangements specified in the Order shall, notwithstanding anything in any

written law, have effect in relation to income tax.

Trinidad and Tobago has negotiated the following Double Taxation Treaties:

Country Order [Government Notice

(G.N.) Legal Notice (L.N.)]

Canada G.N. No. 164 of 1966

Denmark G.N. No. 148 of 1969

Norway G.N. No. 175 of 1969

United States of America G.N. No. 1 of 1971

Italy G.N. No. 278 of 1971

Switzerland G.N. No. 94 of 1973

*Associated States (Caricom) G.N. No. 16 of 1974

Federal Republic of Germany G.N. No. 194 of 1976

United Kingdom L.N. No. 162 of 1984

Sweden L.N. No. 172 of 1984

France L.N. No. 239 of 1987

India L.N. No. - of 1999

Venezuela L.N. No. 348 of 1997

Luxembourg L.N. No. 206 of 2001

China L.N. No. 134 of 2004

Spain L.N. No. 169 of 2009

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NOTE:

A distribution is:

(a) any dividend paid by a Company including a Capital

Dividend. It extends to a dividend paid by a Company out of

a realised capital surplus;

(b) any other distribution of the assets of a company (whether in

cash or otherwise) in respect of shares of the Company,

except so much as represents the repayment of share capital,

or is equal in amount or value to any new consideration given

on the distribution.

Withholding Tax must be deducted (without deductions for expenses)

from the gross income received in respect of Rentals, Royalties,

Management Charges for the provision of personal services and

technical and managerial skills, premiums (other than premiums paid

to Insurance Companies and Contributions to pension funds and

schemes), other annual or periodic payments, interest on any debt,

mortgage or other security and such other payments as may from time

to time be prescribed.

* Details re: Belize, Jamaica and St. Lucia may be obtained from the

Withholding Tax Section of the Board of Inland Revenue.

HOTEL ACCOMMODATION TAX

Definitions

“Hotel” means a building or group of buildings occupied together,

comprising not less than six bedrooms for the purpose of providing hotel

accommodation for reward.

“Hotel Accommodation” means sleeping accommodation ad services and

facilities ancillary thereto provided in a hotel for its guests, not being persons

resident in the hotel under a contract of service.

“Hotel Operator” means a person who, either by himself or through an

agent or servant carries on the trade or business of operating a hotel.

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Tax Authority

The Tax Authority shall be the Board of Inland Revenue which, in respect of

the collection and recovery of the tax, shall have all the powers as it has in

relation to Income Tax under the Income Tax Act, Act No.5 of 1995.

A tax called an Hotel Accommodation Tax shall be charged on the proceeds

of the letting of hotel accommodation by an hotel operator at the rate of ten

per cent (10%) of the proceeds of such letting, and collected by an hotel

operator.

Hotel Accommodation Tax is payable notwithstanding that the hotel is an

approved hotel for the purposes of the Hotel Development Act, or is

otherwise exempt from any other taxes, charges, impositions or levies by

virtue of any other written law.

The room tax shall be charged on the full amount of the proceeds of the

letting without any other deduction or allowance than is authorized or

allowed.

The hotel operator is accountable to the Tax Authority for the tax and shall

pay the tax on or before the last day of the month following that in which

the tax is collected.

Where the hotel operator fails to remit the tax, the hotel operator is liable for

the payment of the amount of the tax due, in addition to interest on such

amount at the rate of fifteen per cent per annum from the due date.

Monthly Hotel Accommodation Tax Returns are mailed to the Hotel

Operators. This is to be completed and submitted by the 15th day of the next

month. The top portion is retained by the BIR and the bottom portion is

stamped and returned to the taxpayer.

MINISTRY OF FINANCE Inland Revenue Division

Hotel Accommodation Tax Return

Hotel Accommodation Tax Returns are due on or before the 15th of the month following the month of deduction.

Please allow 4 days for postal delivery.

Amended Personal Information Change BIR No. Hotel Tax Id:

Period Ending: Name of Hotel Address Telephone # Hotel Operator Name: Hotel Operator Address: Hotel Operator BIR#: Hotel Operator Telephone #:

General Declaration

I hereby certify that the information given in this return is true and correct. __________________ _________________ _________________ SIGNATURE JOB TITLE DATE

MINISTRY OF FINANCE Inland Revenue Division

Hotel Accommodation Tax Return Acknowledgement

BIR No.

Pay As You Earn

Period Ending:

Taxable Proceeds: 10% Tax: 15% Annual Interest:

Amount Payable:

$ $ $

$

Taxable Proceeds: 10% Tax: 15% Annual Interest:

Amount Payable:

$ $ $

$

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SPECIMEN OF MONTHLY RETURN

Name of Hotel Address

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FINAL STATEMENTS USED ON FILING INCOME TAX RETURN

At the end of the trading year, final statements of accounts must be prepared

in order to determine the profits or losses from the business.

The information from these final statements must be submitted to the Board

of Inland Revenue when the Income Tax Return is filed.

Taxpayers who derive income from trade, business or profession must

complete the schedules on the Tax Return Form.

Trading, Profit & Loss Statement: This is the result of the trading, business

or professional activity during the year.

Balance Sheet: This is the financial position of the business at the end of the

financial year or accounting terminal date approved by the Board of Inland

Revenue.

LOSS RELIEF

Where the amount of a loss incurred in a year of income from any trade,

business, profession or vocation carried on by any person either solely or in

partnership is such that it cannot be wholly set-off against his income from

other sources for the same year, it shall, to the extent to which it is not

allowed against his income from other sources for the same year, be carried

forward and set-off against what would otherwise have been his chargeable

income for succeeding years.

However, no loss incurred by a person in any year of income from any of the

following:

(i) Farming, agriculture, forestry, fishing or other primary activity.

(ii) The operation of mines or the exploitation of natural or mineral

resources.

(iii) Any other trade or business.

shall be set off in that year or any succeeding year against:

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(a) Gains or profits from the practice of any profession or vocation

or management charges for the provision of personal services and

technical and managerial skills;

(b) Gains or profits from any employment or office

including pension, emoluments and any contribution of

the employee paid by the employer on behalf of the

employee, to an approved fund or scheme.

WHO SHOULD FILE

In accordance with the Income Tax Act, Chapter 75:01 the following persons

are required to furnish an Income Tax Return:

(a) every person liable to pay tax under this Act;

(b) every partnership;

(c) every person who in that or any previous year of income has

made a loss which he may be entitled to claims as a deduction in

the current year of income or any subsequent year of income;

(d) every person who derives any income from any source irrespective

of the amount of such income; and

(e) every person who derives any income which would be

charged to tax under this Act but for the provisions of any

other written law exempts such income from the

charge to tax.

NOTE: The Small Business Person MUST file an Income Tax Return.

Partnerships

Where a business is jointly owned, the precedent partner will be held

responsible for filing the income tax returns of the partnership.

-36-

The precedent partner is the one who, of the partners resident in Trinidad and

Tobago –

(i) is the first named in the partnership agreement; or

(ii) where there is no agreement, is named singly or first in the

usual name of the firm;

(iii) is the first named active partner where the partner whose

name appears first is not an active partner.

Each partner must report in his personal Income Tax Return, his share of the

income received from the partnership, and attach a copy of the statement of

accounts of the partnership.

PAYE SYSTEM

The PAYE System is the method used to deduct taxes from employees‟

salaries/wages. The Income Tax Act and the PAYE Regulations govern the

PAYE System.

REQUIREMENTS

Where the Small Businessperson employs workers in the business, he has the

responsibility of administering the PAYE System of tax deductions in respect

of these employees.

Each employer must register his business with the Registration Unit of the

Inland Revenue Division for the purposes of being assigned a PAYE File

Number as is required by the PAYE Regulations (see page1). This number is

to be used when remitting Income Tax and Health Surcharge withheld from

employees‟ salaries to the Board.

SEE PAYE BOOKLET FOR FURTHER INSTRUCTIONS

THE INCOME TAX AUDIT

The Income Tax Audit is conducted by the Board to verify the information

submitted in an Income Tax Return.

Selection of an Income Tax Return for an Audit does not necessarily mean

that the information is viewed as false or that claims will be disallowed. The

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Board, however, is charged with the responsibility for collecting the correct

tax payable by each taxpayer and must maintain a system to monitor taxpayer

information relating to income and expenses.

If, during the course of audit, the auditor realizes that a taxpayer has

neglected to include valid claims, this will be drawn to the taxpayer‟s

attention and the necessary adjustment will be made to the taxpayer‟s benefit.

When his return is selected for audit, the taxpayer is informed of the date and

time of the audit. Where the date and time appointed by the Board is

inconvenient, the taxpayer may request a change.

An Audit may be conducted at the offices of the Inland Revenue Division or

at the Taxpayer‟s place of business. The Board will determine the type of

audit to be conducted and inform the taxpayer of the information which must

be made available to the auditor.

OBJECTION OF ASSESSMENT

The Income Tax Act requires the Board of Inland Revenue to make an

assessment on every person who is liable to tax after such a person delivers a

tax return to the Board.

If a person disputes the assessment made, he may apply to the Board by a

notice of objection, in writing, to review/revise the assessment, stating the

grounds for such request.

The request for the objection must be done within 15 days from the date of

service of the assessment.

The Board may accept a notice of objection outside of the time limit if it is

satisfied that there is a reasonable excuse for making the application late.

In reconsidering the assessment, the Board has the right to request additional

information from the person disputing the assessment and to inform the

person in writing of the results of its reconsideration.

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If a person refuses to supply the Board with the additional information it

request, the Board may deem the original assessment to be final and

conclusive.

Where the Board fails to determine an objection made within 24 months after

the service of the notice of objection, the objection shall be deemed to have

been determined in the favour of the person who disputed the assessment.

PENALTIES UNDER THE INCOME TAX ACT Ch. 75:01

There are three categories under the Income Tax Act, Ch. 75:01:

(i) Administrative Penalties

(ii) Specific Offences

(iii) General Penalty

1. Administrative … non compliance with requirements

of the Act or Regulations

2. Specific Offences… on summary conviction in respect of

particulars offences committed under the

Act.

3. General Penalty…. Imposed on summary conviction –

failure to fulfil requirements of the Act.

Administrative

Sec. 76 S.S. (6) Failure to furnish a return of income for the year

of income 1987 and subsequent years. Any person

who fails, neglects or refuses to furnish a return of

income for the year of income 1987 and subsequent

years after six (6) months from the time required to

file the return, shall thereafter in addition to any

other penalty provided under this Act, be liable to a

penalty of $100. for every six (6) months or part

thereof during which such failure, neglect, or refusal

continues.

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Sec. 76 S.S.(7) Failure to furnish a return for any year of income

preceding the year of income 1987. Any person

who has not furnished a return of income for any

year of income preceding the year of income 1987

and fails, neglects or refuses to furnish any such

return on or before October 31, 1988 shall in addition

to any other penalty provided in this Act, be liable to

a penalty of $100. in respect of any such return for

every six (6) months or part thereof during which

such failure, neglect or refusal continues.

Sec. 83(4) Filing an incorrect Income Tax Return.

Additional tax not exceeding the amount assessed by

the Board provided that the taxpayer proves that the

omission or incorrectness of the return was not due to

fraud, covin, act or contrivance, or gross or wilful

neglect.

Sec 83(5) Neglect or refusal to file a return. Additional tax

equal to three (3) times the normal tax (unless the

taxpayer can prove that neglect or refusal was not

without a reasonable cause).

Sec. 99(4) Failure to remit the P.A.Y.E. deducted will result in a

penalty of 25% or $40.00 whichever is greater.

Specific Offences

Sec. 98(2) Failure to file a tax declaration.

Any person who fails to file a declaration is liable on

summary conviction to a fine of $3000.

Sec. 99(7) Failure to deliver account of certificate of tax

deducted or withheld.

Any person, who fails to deliver an account or

certificate to any person from whose emoluments the

tax was deducted or withheld or to the Board for the

purpose of accountability, is guilty of an offence and

is liable on summary conviction to a fine of $75. for

every day during which such failure continues.

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Sec. 118(6) Any person (officer who divulges confidential

information with regard to any manufacturing

process or trade secret obtained during the

compliance of the provisions of Section 118 re

“Powers of Entry for certain purposes” is liable to a

fine of $15,000 or to imprisonment for twelve (12)

months.

Sec. 118 (7) Interference with anyone doing anything he is

authorised to do under the Income Tax Act.

Any person who hinders, molests or interferes with

anyone doing anything he is authorised to do under

the Income Tax Act, is guilty of an offence and liable

on summary conviction to a fine of $15,000 and to

imprisonment for two (2) years.

Sec 119 Offence in respect of fraud.

Any person who knowingly or recklessly makes false

or deceptive statements or representations in a return,

is guilty of an offence, and in addition to any penalty

otherwise provided is liable on summary conviction

to a fine of fifty thousand dollars $50,000 and to

imprisonment for three (3) years.

General Penalty Sec. 121 Any person guilty of an offence under this Act is

liable on summary conviction to a fine of thirty

thousand dollars $30,000. or to imprisonment for two

years or both

Sec. 76(5) A person is guilty of an offence in each of the under-

mentioned sections:

(i) Any person who fails, refuses or

neglects to file a return.

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Sec. 77(2) (ii) Any person who, after being

required by the Board to make a

return, fails or neglects to do so

within the specific time, whether or

not he is liable to tax;

Sec. 97(2) (iii) Any person who fails to furnish the

Board with a schedule of income

within a specified time;

Sec. 97(4) (iv) Any person who, without lawful

excuse, refuses or neglects to attend

or give evidence or to produce books

or other documents or who wilfully

gives false evidence; and

Sec.117(5) (v) Any person who –

(a) Fails to give to the Board any

information as required by this

section; or

(b) Fails to produce for the

inspection of the Board any

records which he may be

required by the Board to

produce.

Other Measures

In addition to the general penalty and administrative penalty on the failure to

remit P.A.Y.E. deducted, interest is charged at the rate of twenty per cent

(20%) per annum on the amount outstanding plus the penalty from the day on

or before which he was required to make the payment to the day payment.

Sec.103(1) Late payment of Income Tax outstanding at April 30.

Interest is charged on Income Tax outstanding at April 30,

from May 1 to the day of payment at the rate of twenty per

cent (20%) per annum.

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Sec.103(2) Late payment of Tax by Quarterly Instalment. In addition

to the interest payable under subsection (1) where any person

being required by this Act to pay a part of instalment of tax

has failed to pay all or any part thereof as required, he shall

on payment of the amount he failed to pay, pay interest of

twenty per cent (20%) a year from the day on or before

which he was required to make the payment or the

beginning of the period in respect of which he becomes liable

to pay interest thereon under subsection (1) whichever is

earlier.

Section 79 Section 79 of the Act is amended by deleting subsection (3B)

and substituting the following subsection:

3B. Where a person to whom subsection 3A applies

had paid quarterly instalments which amount to less

than the tax liability disclosed in the return of the

year of income, such person shall, with effect from

1st January, 1992, pay interest under section 103 on

the difference between –

(a) the tax liability on the chargeable

income of the previous year of

income plus 80% of the increase in the

tax liability of the current year on the

previous year of income; and

(b) the total amount paid by the end of the

fourth quarter.

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NOTES

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NOTES