TAJ Provides Clarity on New Income Tax Regime
Jamaica Information Service (JIS)
Tax Administration Jamaica (TAJ) has been assisting individual income earners and businesses to better understand the Government’s new $1.5-million income tax threshold.
Senior Technical Specialist at TAJ, Monica Walker, said that the agency has been conducting public-education seminars island-wide.
She noted that several entities and persons have reported challenges, particularly regarding the correlation between the initial threshold of $592,800, which came into effect on January 1, and the new tax regime.
“They were not implementing it (the initial threshold) via the cumulative approach, so it caused some amount of challenge for them to adjust their records when we increased the threshold mid-year,” she outlined.
Mrs. Walker said the agency has also been visiting entities that have requested its intervention. “We, pretty much, have gotten most stakeholders on board thus far, in terms of their understanding; and based on the feedback, I think we are doing well,” she informed.
She was speaking with JIS News following a seminar at the Management Institute for National Development (MIND) in St. Andrew on Wednesday (August 17), under the theme ‘The Income Tax Break Implementation and its Impact on Public Servants’.
The new $1.5-million threshold is being implemented in two segments. The first phase, which took effect on July 1, saw the figure increase from $592,800 to $1,000,272.
However, with the TAJ’s tax assessment period spanning the calendar year, the figure for July to December 2016 will be $500,136.
Additionally, with the initial 2016 threshold of $592,800 only covering the first six months, from January to June, the assessment figure was revised to $296,400. As such, the overall threshold for the year has been revised to $796,536.
Under the new regime, persons earning up to $19,236 weekly or $83,356 monthly, will pay no income tax. This will provide them with an additional $8,489 on their salaries.
Phase two of the new threshold comes into effect on April 1, 2017, and will see the figure moving to $1,500,096.
This will result in persons earning up to $125,008 being exempt from paying income tax and being provided with an additional $10,413 on their salaries.
The TAJ said that persons earning in excess of $592,800 but less than $796,536 from which income tax was withdrawn may, before, December 31, 2016, have that deduction refunded by their employers.
Meanwhile, the tax rate on income exceeding $6 million between July and December 2016 will be increased from 25 to 30 per cent.
However, income between $796,536 and $6 million will continue to be taxed at 25 per cent.
Wednesday’s income tax seminar was organised by Women Initiating Financial Interest (WIFI).
The organisation comprises administrative professionals from various Government Ministries, Departments and Agencies who are pursuing a Diploma in Administrative Management programme at MIND.
The seminar was one of the course requirements for students.