Income Tax - Individuals - M. Hamel-Smith & Co.
16307
page-template-default,page,page-id-16307,ajax_fade,page_not_loaded,,hide_top_bar_on_mobile_header,qode-theme-ver-9.0,wpb-js-composer js-comp-ver-5.4.2,vc_responsive
 

Income Tax – Individuals

Filing of Tax Returns

An income tax return is required to be filed on or before 30th April in each year.  The returns must be filed with the Board of Inland Revenue at any one of its offices. Employees with income arising only from employment are not required to file a return.

Payment of Taxes

In respect of the self-employed, these are payable quarterly on 31st March, 30th June, 30th September, 31st December and the remainder of the tax, if any, on or before 30th April the following year. In other cases, the tax is payable 30 days after receipt of the notice of assessment. The tax is estimated on the previous year’s profits. In respect of employees, the tax is deducted monthly from the employment income under the PAYE regulations.

Sources for Computing Taxes

Income from sources derived in or accruing in Trinidad & Tobago or elsewhere and whether received in Trinidad & Tobago or not in respect of gains and profits from: farming, fishing, operation of mines or exploitation of other natural resources, trade or business, professions, vocations or managerial charges, employment, rents, royalties, interests, discounts, annual payments, fees, commissions, distributions, short-term capital gains.

Deductible Expenses

All expenses wholly and exclusively incurred in the production of income are allowed. Where the source of the income is employment income the only expenses allowed are travelling necessarily incurred in the performance of the duties and trade union dues. Major expenses not deductible are expenses from employment except for travelling capital expenses domestic and private expenses certain payments to non-residents unless withholding taxes have been accounted for and paid over to the Board of Inland Revenue. The following are some of the exemptions allowed.

The following are some of the Exemptions allowed:

  • Income from scholarship or bursary
  • Dividends from resident companies (except preference dividends)
  • Income of a resident where the total income does not exceed $72,000.00 for a year of income
  • Government gratuities to former monthly paid employee
  • Pensions under the National Insurance Act
  • Interest from savings accounts accruing to resident individuals on savings accounts or on bonds or others similar investment instruments
  • Certain annuities purchased by persons who have reached age 60.
  • Severance payments due to redundancy, retirement severance benefits and certain other payments on termination of office or employment are exempt to a maximum of$300,000.00.

Applicable Rates

25% on the chargeable income and a personal allowance of $72,000 for every resident.

Territorial Rules

An individual is taxable in respect of income accruing in or derived from Trinidad and Tobago.  The resident individual is subject to tax on his world income.

In the case of income arising outside of Trinidad and Tobago to persons who are not ordinarily resident or not domiciled in Trinidad and Tobago, tax is payable on the amount received in Trinidad & Tobago; but where the employment or office of such person is exercised in Trinidad and Tobago, gains or profits from such employment are taxed in Trinidad and Tobago whether received in Trinidad and Tobago or not.

Taxation of Employment Income

Salary and emoluments are subject to a withholding called ‘Pay As You Earn’ (P.A.Y.E.) which is deducted by the employer at time of payment of salary or other emoluments.  Salary of non-residents arising here also attracts P.A.Y.E.  The section assumes that the employer is a resident or has a tax presence here which makes him subject to the jurisdiction of the Act.  The normal withholding tax provisions referred to above (page 6) do not apply to salary and emoluments.

Other matters impacting on Emplyment income

Pension fund plans, individual retirement plans, savings plans, profit sharing plans which are not approved by the Board of Inland Revenue do not secure tax benefits under the law for the employee.

Effective 2009, an individual may claim up to $30,000 in the aggregate as deductions in respect of pensions and/or deferred annuities and National Insurance contributions. Interest on loans taken out to purchase investments is, subject to exceptions, a deductible expense in ascertaining the taxable income of individuals.  Interest is not an allowable deduction where the interest is incurred on a loan to acquire shares in companies quoted on the Stock Exchange.

A person who became a first-time homeowner between the period January 1, 2003, and December 31, 2005, was entitled to an allowance of $10,000.00 per year for the first five years commencing from the year in which the house was acquired.  A person who became a first time homeowner on or after 1st January 2011 will be entitled to an allowance of $18,000.00 per year for five years commencing from the year in which the house is acquired.