INCOME TAX & CONTRACTS
IN JAMAICA
Persons may enter into contracts of varying kinds in order
to render services.
These include:
v
Contract of Service
v
Contract for Service
v
Contract for Personal Service
1. CONTRACT OF
SERVICE:
Once a Contract of Service is identified, then this means
that the contract is one of employment. The amounts paid under this contract
are emoluments and therefore all statutory deductions are to be made e.g.Income
Tax ; Education Tax; and employees’ contributions, NHT, and NIS.
Employers must pay employers’ contributions for NHT and NIS
and also Education Tax on these emoluments.
Under this contract arrangement a person (employee) is under
an obligation to render personal services to another person (employer) and the:
-
ü
Individual (employee) is subject to the supervision,
direction and control of another person.
ü
Individual (employee) holds an integral position
within the organization e.g. Accountant /Managing Director.
ü
Individual (employee) holds an integral position
within the organization e.g. Accountant Managing Director.
ü
Individual (employee) does not conduct business
on his account.
ü
Contract is a legally binding exclusive service
agreement between the performer and payer.
ü
Tools, materials and work place are provided by
payer.
ü
Individual receives a payment of a fixed salary
and reimbursement of the performer’s expenses by the payer.
ü
Performer receives vacation leave and any other
staff related benefit.
ü
Performer is required to file regular, oral or
written status reports with the payer.
This contract represents an independent (business) and the
individual is therefore responsible for his/her returns and payments under the
self-assessment system: This applies to:
- An individual who is not subject to the super- vision, direction and control of another person.
- An individual who does not hold an integral position within the organization e.g. Accountant Managing Director
- Individual who conducts business on his own account.
- The performer’s right to provide services to more than one person at a time with a separate contract between the performer and each payer.
- Performer provides his own equipment
- Payment of a fixed amount or commission for the complete job rather than periodic payments.
- Performer assumes his/her own financial risk and has responsibilities for his/her investment and management.
3. PERSONAL SERVICES:
The definition of “Personal
Services”includes services of a professional,clerical, technical administrative
or managerial nature”.
(a) where personal services
are provided by a person (the employee) to another person (the employer) on
behalf of a company and the employee is subject to the right of supervision,
direction or control by the
employer as to the manner in which he renders
those services, and
(b) the renumeration for
the services would not, apart from this paragraph Section 5(1) (ix)
of The Income Tax Act be treated as emoluments,
then the relevant services shall be treated as duties of an office or employment of profit.
Contact UHY Dawgen
Chartered Accountants for further info ON Taxation in Jamaica:
Email:info@uhy-ja.com
Unit 34,Winchester
Business Centre
15 Hope Road, Kingston
10
Tel:1876-9084007/7542074
Fax:1876-7540380
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