IN KEEPING with the government's thrust to take additional tax measures for fiscal year 2002/2003, we understand that the penalties for certain breaches of the Income Tax Act are being revised. The new penalties will take effect upon the issue of the relevant Gazette.
The Minister of Finance & Planning has proposed that the following penalties be revised thus:
Failure to deliver declaration of estimated income tax by March 15, and failure to comply within 30 days after service of notice by Commissioner
Fine increased to
$10,000.00 and $1,000.00
for each day default
continues.
Failure to file returns
Fine increased to an amount
not exceeding $20,000.00.
Failure to file return of trades carried on by two or more persons jointly
Penalty increased to
$10,000.00
Penalty increases in relation to other breaches of the Income Tax Act have also been proposed in Ministry Paper No. 84/02.
Please note that these proposed penalties are subject to change.
The deadline for filing income tax returns for the year 2002 and the declaration of estimated income tax for the year 2003 is March 15, 2003.
OUTSTANDING INCOME TAX
Where tax is overdue in respect of the year of assessment 2001 and earlier years, the Collector of Taxes may issue assessments with a 50 per cent penalty. We understand that the Inland Revenue Department is now enforcing interest on overdue tax at a rate of 40 per cent per annum and that the Department has upgraded its computer system so that this interest is imposed automatically. Interest and penalties may also be charged on overdue payments of estimated tax. Interest and penalties are not allowed as expenses in arriving at taxable profit. Please be reminded that the 1st quarter instalment of estimated tax for the year of assessment 2003 is due by March 15, 2003.
PRESCRIBED RATE FOR
CONCESSIONARY LOANS
The prescribed rate for concessionary loans is reduced from 18 per cent to 14 per cent by The Income Tax (Concessionary Loans) (Prescribed Rate of Interest) Order, 2003. This order relates to section 5A(2) of the Income Tax Act and shall be deemed to have come into effect from October 1, 2002.
Mr. Raphael E. Gordon is the Managing Partner of KPMG Peat Marwick, Past President of the Institute of Chartered Accountants of Jamaica, a member of the Public Accountancy Board, and Jamaica's representative on the Association of Chartered Certified Accountants International Assembly. The views and opinions are those of the author and do not necessarily represent the views and opinions of KPMG Peat Marwick. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation.
