by Serika Sterling
Filing an income tax return is a must for many Jamaican residents. Jamaica taxes its residents on their worldwide income from all sources and uses a self-assessment tax system, where you must calculate your own tax liability.
Income tax returns are due by March 15th each year, for the immediately preceding year. That means the income tax return for 2018 is due by March 15, 2019.
If you are unsure whether you should be filing an income tax return this year, read on to learn more.
Multiple Simultaneous Employment
Once you are on the payroll of more than one employer, you are required to file an income tax return. Though your employers may have already deducted taxes and contributions from your income, you are still required to file an individual income tax return, declaring all your income and taxes thereon. This will determine if you are entitled to a refund or have additional taxes to pay.
It’s important to note that filing this income tax return is not the responsibility of your employer.
Self-employed/Additional Income Earners
If you are self-employed or earn additional income outside of your employment, you are required to file an income tax return. This is applicable whether or not you have a registered business or a formal business structure. Note that this category includes partners in a partnership.
Therefore, whether you are earning income from selling shoes out of your trunk, renting out your car part-time or as a virtual assistant to a boss in the US, you are required to declare the income and pay any relevant taxes.
Dormant/Non-operational Entities
You may have registered an entity but never started operations, or discontinued operations without removing the entity from the Companies Register or closing your tax accounts with Tax Administration Jamaica (TAJ). In both cases, you are still required to continue filing annual income tax returns until you have removed the business name or company from the Companies Office Register and closed all its tax and statutory accounts with TAJ.
It’s important to note that you are required to make all relevant tax filings and clear all taxes owed before you can close the tax accounts.
Non-Profit/Charitable Organizations
Although non-profit organizations and approved charitable organizations may be exempt from a number of taxes, including income tax, they are still required to file an annual income tax return. The type of tax return form used is dependent on your charitable status. Your tax accountant or TAJ’s Taxpayer Education Unit can provide guidance.
Companies/Businesses Registered During 2018
It is a common misconception that your financial year, for tax purposes, follows the date of your business/company registration or the date you began formal operations. This is not the case.
Based on local law, your financial year for tax purposes follows a calendar year, regardless of which month the entity was registered or when operations began. For example, if you registered your business or company in July 2018, your financial year for tax purposes remains January to December, and you would still be required to file an income tax return come March 15, 2019, for the year 2018.
To change to an alternate financial year for tax purposes, you must seek approval from TAJ’s Commissioner General, in writing.
Foreign Branches & Non-resident Entities
Foreign branches and certain non-resident corporations carrying on trade/business activities in Jamaica are required to file an annual income tax return locally.
The basis on which an income tax return filing is required by a non-resident or foreign branch is intricate. As such, I recommend that you engage a tax accountant for guidance.
Still in Doubt?
If you are still not certain whether you are required to file an income tax return, I recommend that you contact Tax Administration Jamaica or consult with an independent tax professional.
Serika Sterling is a Certified Public Accountant (CPA) and Owner/Manager at Senior Accounting Services. You may contact her at ststerling@sasjm.com