TAJ provides clarity on new income tax regime
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 islandwide. She noted that several entities and persons had 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 midyear," she said. Walker said the agency had also been visiting entities that had requested its intervention.
"We, pretty much, have got most stakeholders on board thus far, in terms of their understanding, and based on the feedback, I think we are doing well." Walker was speaking with JIS News following a seminar at the Management Institute for National Development 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, 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 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.
TAJ said that persons earning in excess of $592,800 but less than $796,536 from which income tax was withdrawn may, before, December 31, 2016, have that deduction refunded by their employers.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.