Last week we started looking at a topic that makes most consumers rather uncomfortable – taxes. We either think we’re paying too much or we’re trying to figure out ways to pay less.

However, just like a persistent itch that won’t go away until you scratch, our obligations to the ‘tax man’ won’t disappear. It just makes good financial sense to learn more about our rights and responsibilities under the tax laws.

Recently the Jamaica Trade and Invest (Jampro) Corporate Finance Broker Unit hosted a seminar that highlighted some of the key tax matters relating to self employed persons and small business owners.

Presented by renowned tax expert, Ethlyn Norton Coke, the event featured discussions on the Jamaican tax system, tax deductions, GCT issues and compliance requirements.

Norton Coke, in her inimitable style, shared her vast knowledge of things we need to know when it comes to paying taxes. As she answered a variety of questions from the participants, it became increasingly clear to me that when it comes to your taxes, what you don’t know could cost you where it really hurts – in your pocket.

Here a few of the things I learnt:

1.   If you’re participating in an alternative investment scheme like Olint or Cash Plus, you’re required to pay income tax on your gains. The law doesn’t care whether these schemes are licensed by the Financial Services Commission or not – you have to include them in your annual returns, or you could be charged interest and penalties.

2.   Any profits made by persons resident in Jamaica are liable to tax whether the source of the income is in the island or overseas. Persons not living in Jamaica are also liable to tax on income arising in Jamaica.

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3.   If you are in business, you should retain all receipts and documentation for 20 years. Normally if you’re audited the tax authorities can only go back six years, but if they suspect fraud, they can search over 20 years.

4.   If you had a business registered to collect GCT and you cease operations, you need to de-register and hand back the GCT certificate or you could still be liable to pay the tax.

5.   Tax authorities can assess you for taxes based on your lifestyle and activity on your TRN. So if you aren’t paying taxes yet you own a 2008 BMW and several upscale townhouses, watch out!

6.   If you run into trouble under the tax laws, you are basically guilty until you prove your innocence. Make sure you have the evidence to support your counter claims.

As Norton Coke revealed more, I had visions of Gestapo-like tax men in my future, searching my records while I cowered fearfully in my retirement rocking chair. I decided that it was definitely a good idea to consult with a tax professional, because I would never know all there was to know.

However it’s important to note that you should pay your taxes not just out of fear, but in recognition of the social benefits as well. As Norton Coke encouraged taxpayers to “lift our moral standards to improve the voluntary compliance in paying taxes,” she reminded us that many persons who complained about the poor state of social services in Jamaica, were some of the very people who evaded taxes.

I also spoke to Robert Parkes, partner in the accounting firm Henry Parkes & Partners, who recommended adopting a positive attitude about paying taxes. He noted that being tax compliant would make it easier for business owners to access loans and apply for government contracts in a timely manner. He revealed that persons who fail to keep on top of their tax situation sometimes lose out on opportunities to advance their businesses.

Parkes noted that taxes also benefit business owners by financing social requirements like education and health. “If your environment is healthier with better educated people and good infrastructure, then your business will prosper more,” he confirmed. However, he pointed out that some people disliked paying taxes because of their concerns about Government wastage. While he agreed that may be a problem, he argued that the solution was to put structures in place to ensure that our tax dollars are properly used.

Whether you choose to be compliant out of fear or social responsibility, here are a few things you can do:

1.   Find out what your rights and responsibilities are. The Tax Administration provides free tax advisory services that can help you to understand the tax laws; and if you’re in business, consult with an accountant who can guide you on ways to legally minimize your tax obligations.

2.   If you have access to the internet, check out the Tax Administration’s website www.jamaicatax.gov.jm – it provides simple, yet comprehensive tax information.

3.   Look out for seminars and articles that can keep you abreast of new developments in the tax laws.

4.   If you are self employed, or earn an extra income, keep all records of your income and business-related expenses. Even if you’re not sure if they are important, pass them on to your accountant who will know what to do.

5.   If you know that you have been guilty of ignoring your tax responsibilities, don’t stick your head in the sand like an ostrich and hope that your troubles will disappear. Hire a tax professional to advise you.