If you should ask all business owners about the primary purpose of why they came into the business, I can assure you that at least 80% of them would reply that their main aim was to earn high profits and revenues. Not many were much aware of the importance of implementing proper recording systems until it was time to go to the bank for a loan or on March 15th when their taxes became due. Hence, it is right there at that moment that many become susceptible to the harsh reality of bearing the consequences of making some mistakes that were unaligned with the practicality and accounting principles of operating a business properly. Some of which are sometimes totally illegal, and some were just not even knowledgeable of the magnitude of unethical business practices. As such, these are the same practices and ultimately mistakes that could prompt and lead your business to be listed for audit by the Tax Administration of Jamaica. Let’s explain a number of these below:
1. Filing a ‘NIL Final Return’ even though your business was in FULL operation. Many business operators fall victim to this as they sometimes submit a ‘Nil Final Return’ mistakenly thinking that because no profit was made then it is somewhat safe to declare a ‘Nil Return’. It is important to note that a ‘Nil Return’ is completely different from a ‘Return with no Profits’. Thus, once this is done and the Tax Administration becomes aware, you might become prompted for audit to declare and prove whatever that was transpired throughout the year of assessment.
2. Filing a ‘NIL Final Return’ even though you have submitted a ‘populated’ GCT Return monthly. This is a huge red flag as it is important to note that anything submitted monthly on your GCT Returns should be transposed and declared at the end of the financial year to make Income tax payments if necessary.
3. Filing ‘Nil GCT Returns’ even though you have a ‘populated’ Final Return. Yes, this is the reverse of what’s explained above. As such, the reverse again is another huge reg flag. Bear in mind that the government will always want to ensure that its GCT is being treated not only fairly but legally, thus not reporting your monthly GCT activities will only highlight that something is not being done properly.
4. Not matching your ‘Final Sales figure’ with your ‘Total GCT Sales figure’ for the year. Once you submit a GCT Return monthly, it is important to note and understand that what is or was declared as sales or revenue throughout the months of the assessed financial year should always match or be the same as the ‘total’ sales or revenue figure that’s placed on your final return that is submitted or before March 15th. Not matching these returns will prompt the variant or error of not reporting your GCT sales figure or Final figure properly, as such it may feed a notion that money is owed for either GCT or Income tax based on what transpired throughout the year.
5. Not Submitting a GCT Return as a Motor Vehicle Sales and Import Company. Without a doubt in mind, it is absolutely in your best interest you see within this nature or business to open a GCT account once you have started trading. The fact is, being that the GCT Threshold is $10M and you are within the field of selling products within such a high sale range, this will ultimately raise a red flag to the Tax Administration.
Other Red FLAGS for Motor Vehicle Sales and Import Companies include:
• Not reporting all vehicles that were brought through customs.
• Reporting vehicles that were ‘imported’ on behalf of a particular customer as ‘sales’.
• Reporting ‘Old Vehicles’ bought for resale through a ‘Special MV license’ operator on your GCT Return as purchases or sales.
6. Filing a NIL SO2 Return even though your monthly SO1 Returns were populated. Yes, this has more to deal with the employment or payroll side of the business. As such, all final figures submitted and shown on your final SO2 Return should match whatever that took place throughout the year. Failure to do so will or may prompt an audit from the National Housing Trust (NHT) mainly of your payroll department or files.
7. Soliciting Government Contracts and not reporting it on your final return. Whether the contract was taken within your personal or company name, it is important to note that once you have paid over the contract levy amount, all proceeds of the contract should be reported at the end of the financial year. Also, it is important to note that our sub-contractual amounts are given out, the subject party should also report these proceeds at the end of the year as well.
8. A major increase in revenue or sales. Yes, again this might sound cliche, but the reality must be accepted. Where there is a major spike in sales as compared throughout particular years of operating, this may or can also hint or prompt an audit from the TAJ.
9. Trying to access Income Tax Refunds. This might prompt a check by the Tax Administration to assess all records before you claimed Tax Refund is given.
10. Closure of GCT Returns within a particular Financial year. Sometimes, before the closure of the mentioned account, the TAJ might conduct a closure audit to ensure that all records and operations of the business or company seeking closure have matched up legally with what transpired at the date of seizure of GCT-related activities.
‘The value of Recording your Business Transactions’
Again and again, the notion of properly recording your business activities has altered its way to the forefront of your minds and you have somehow still ignored its calling to be implemented properly within your business. Please, the mere fact that you can be fined a total of approximately $2M for not reporting your business transactions or activities properly should give you some alarm about its importance. The matter of being ‘audited’ is only feared when there are not many documents available to be assessed. As such, once you can prove every or most things that have transpired throughout the year, it should be only a matter of ‘check’ for you from the Tax Office’. Thus, exercising this important procedure can only do or mean you much good.
If you need help or further information, please feel free to contact us at 1 (876) 902-7259 | 545-6928 or email us at BIZcareConsultationAcct@Gmail.com to arrange your consultation session. Do remember at BIZcare “Your Business is our Priority”. We offer the services of:
- Business Registration
- Tax Filing
- GCT Filing
- Payroll Services
- Consultation Services
- TCC Services
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Written by: Kmar Henry [ CEO |BIZcare Consultation & Accounting Firm Limited ]
Edited by: Sheryl Bailey [ Director | BIZcare Consultation & Accounting Firm Limited ]