By Prunella Vassell, Contributor 
The following is Part II of a public education series on the Taxation Assessment and Objection Process by the Institute of Chartered Accountants of Jamaica (ICAJ). In last week's article, we looked at the different types of assessments with regards to Income Tax, noting that persons can either be subject to Assessment of Tax at source, by self-assessment or by estimated or additional assessments raised by the revenue. This week we examine the procedure that should be followed in circumstances where assessments are raised by the revenue and the penalties and appeals available.
THE OBJECTION PROCESS
WHERE ANY taxpayer has been issued with any additional assessment, raised under section 72 or any estimated assessment, raised under section 70, he may within 30 days of the serving of such notice make an objection to that assessment. The objection should be made in writing, requesting a review of the assessment and must state the precise grounds on which the objection is being made.
The Commissioner may extend the period within which the objection is being lodged on being satisfied that the Taxpayer had reasonable grounds for making the request.
On receipt of the notice of objection the Commissioner may require the person making the objection to deliver a return of income for each of the years affected by the objection notice, if no return had previously been filed. In addition, and more often than not, an audit or some examination may be carried out to enable the Commissioner to make a determination. To this end, he is empowered to require that he be furnished with all the books, documents, etc., relating to such returns and can summon any relevant persons to answer questions in that regard. A period of thirty (30) days or such longer period as the Commissioner may allow, is normally available from the lodging of the objection within which to furnish the required returns.
If the person making the objection fails to submit the required returns or to furnish any documents or records requested within the stipulated period, the notice of objection served would cease to have effect and the assessment made would be deemed final and conclusive. Where returns and documents are provided these are reviewed by the Taxpayer Audit and Assessment Department and any necessary adjustment made thereto. If in agreement with any adjustments the assessments are amended accordingly and the matter treated as settled. Thereafter, Discharge Orders are issued by the Department showing the amount of tax discharged and the amount of any tax payable.
In the event that no agreement is reached or where no agreement can be reached the Commissioner issues a notice in writing of his decision regarding the objection.
Any person who is dissatisfied with the decision of the Commissioner may appeal against that decision to the Commissioner of Taxpayer Appeals within thirty (30) days of receipt of the decision.
If no valid objection or appeal has been made within the stipulated time or where amounts have been agreed or determined, the assessment as made, agreed or determined on appeal shall be final and conclusive for all purposes of the Act.
It should, however, be noted that notwithstanding the foregoing the Commissioner of Inland Revenue may raise an assessment or additional assessment for any year of assessment which does not involve reopening any matter which has been determined on appeal.
P.A.Y.E.
As previously mentioned, emoluments are taxed under the "Pay as you Earn" or P.A.Y.E. system, which is essentially a system whereby income is taxed at the point at which it originates.
Section 78 of the Income Tax Act deals with the collection of income tax on emoluments to which P.A.Y.E. applies. The provisions relating to this section are as under:
Amounts deducted by an employer must be paid over to a Collector of Taxes, without further demand, on or before the last day of the period within which the amount is payable. That is, it must be paid over within 14 days of the end of the month in which the emoluments were paid.
This date is the "collection date" and interest is payable from that date on any overdue amount at the rate of 40% per annum calculated on a daily basis.
In addition Section 41 applies and the tax due from the employer is treated as if the tax were increased at the rate of 50% per annum in respect of each day after the date on which payment was due.
In summary, where P.A.Y.E. deductions are not paid over to the Inland Revenue Department or local Collector of Taxes, such payments attract interest and penalty of a combined percentage of as much as ninety percent (90%) per annum.
Where a PAYE audit is conducted, additional assessments may be raised and in this case on the employer, to enable the revenue to collect any income tax which it considers, ought to have been deducted from any employee but which the employer failed to deduct. An objection thereto may be lodged in the same manner as an objection to any assessment directly raised on any person and as outlined above.
FRAUDULENT STATEMENTS OR CONVERSION
As previously outlined, where the taxpayer has not made a return or makes a return, which the Commissioner does not accept, and the Commissioner is of the opinion that he is liable to pay tax, he may make an assessment on the taxpayer of the amount at which he considers he ought to be charged (Section 72). These estimated and/or additional assessments may be made within the year of assessment or six years after. Where a person who ought to be charged with tax is not duly assessed and charged by reason of that person:
a) wilful neglect or by fraud,
b) fraudulently converting his property, or delivered a fraudulent statement; such an individual can be assessed and charged up to three times the amount of tax for which he would normally be liable. Where fraud is proved there is no limit to how far back the revenue can go to raise estimated and/or additional assessments.
Miss Prunella Vassell is the Treasurer of the ICAJ and Chairman of the PR/Publications Committee. She is an Associate at Paul Goldson and Company.
