There have been many misconceptions and uncertainties within the realm of ‘Tax Filing’ that has caused many business operators to bear the wrong end of the stick when it comes to dealing with the Tax Administration of Jamaica. As such, the backlog and burden of having to pay high scores of penalties is sometimes the cost that most business operators and companies ultimately have to bear.
Who Files Taxes?
Tax Filing is done by self-employed persons who fall within the category of operating a business, being employed informally, or are employed under special contracts. Business operators may be those who operate as a Sole Trader, Partnership, or Company Limited under the full registration and act stipulated by the Companies Act of Jamaica. By law, it is stipulated by the government that all persons who fall under the aforementioned categories should declare their income or salary of any kind to be taxed (or pay over contributions) in the notion or in perspective of the percentages implemented to do so.
As such, understanding the term ‘Self-employed’ is therefore very important. Being ‘Self-employed’ speaks to any person that offers their trade, skill, or profession formally or informally and receives payment(s) in kind of cash for these services before or after they are rendered. If you read the last sentence keenly, you will realize that two important terms were used; ‘formally and informally’, this encompasses the parameters of one’s employment or job titles that make them ‘Self-employed’.
For example, ‘self-employed” persons in our Jamaican context are usually vendors of food, clothes, or other items, bar owners, small shops or stalls, gardeners/groundskeepers, licensed barbers, nail technicians, hairdressers, farmers, mechanics, or electricians. These persons while they do fall within the bracket of self-employed are still considered ‘informal’. However, in the event that any such person is able to establish themselves in their profession or service industry in a manner that allows them to earn a steady inflow of cash, it would be incumbent upon them to maximize this business potential. They may do so by taking steps to register a business name in order to operate under the regulations of the Companies Act and Tax Administration of Jamaica. After which they are considered “Formally Self Employed” individuals. This status allows the government and its relevant agencies to acknowledge them as a part of the countries inland revenue as well as affords them the benefit of accessing perks such as available grants, credit facilities, and exemptions through public and private institutions.
What do YOU need to file your TAXES?
In order to file your taxes within any of the categories previously discussed above, a comprehensive listing of your revenue and expenses must be prepared. As such, you might need to ensure that all recordings were done throughout the assessed year, this is especially emphasized If your line of business falls within a robust skill area such as a mechanic or electrician that involves constant purchases of materials and tools.
With the provision of this information along with the aid of an accountant, compliance officer at the tax office, or even by yourself, you will now be able to compile an Income Statement in order to determine whether or not a ‘Net Income’ was made throughout the year. Note well, that Net Income speaks to the money that was made after your expenses were subtracted from your sales/revenue. It is this figure that determines whether your taxes or contributions that are deemed payable are calculated. Also, in the instances of persons who are unable to supply this necessary information and still want to make their contributions at a net income or salary suitable based on sales, revenues, or cash collected throughout the assessed year, you can still do so via the same submission of an SO4/SO4A Return. Vehicles or assets used within your trade, profession, or business in whichever category or business type can be declared in order to receive what is known as ‘Capital Allowances’; this may result in a legal reduction in taxes or contributions to be paid.
What FORMS are used to file your Taxes and when?
After a clear pictorial view is noted and known of your net profit or loss. The next step to know and establish is which Tax Return or Form to submit. This is done based on the category or business types as shown below:
1. SO4/SO4A Forms: Sole Traders, Self-employed Individuals, Partners, Directors
2. ITO2/ITO7 Forms: Businesses registered as Company Limited.
3. ITO3 Form: Businesses registered as Partnerships.
Figures are then populated on the respective forms to declare taxes or contributions to be paid and should be submitted on or before the stipulated deadline of March 15th, 2021. Again, not being able to meet this deadline will attach a penalty of $5000.00 for each month that you are deemed late. Sole Traders and Partnerships are stipulated to commence Filing right after registration in the forthcoming year proceeding registration, while Company Limiteds are stipulated to file after a tax break period of eighteen months have elapsed.
However, it is important to note that there are several conditions that must be applied in order for this to be accepted. As such, we encourage everyone that falls within this business type or category to contact your nearest Tax Office for more information.
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: Anothonio James [ CEO | I Am Skilled ]