TAXPAYERS who are dissatisfied with the decisions of Revenue Commissioners in relation to assessments made under the Income Tax, General Consumption Tax, Transfer Tax, Customs, Stamp Duty, Bauxite Production Levy or Contractors Levy Acts, may now appeal to the Commissioner of Taxpayer Appeals (CTA) for a review of the decision, instead of going to the Revenue Court in the first instance.
The above mentioned Acts were amended by the Revenue Administration (Alternation of Laws) Order 2001, to establish the CTA as the initial appellate body for the settlement of disputes between the taxpayer and the relevant Revenue Commissioners. Where the taxpayer is dissatisfied with the decision of the CTA, he may still appeal to the Revenue Court for a decision. The taxpayer's appeal to the CTA should be made within 30 days of the date of receiving the disputed decision of the relevant Revenue Commissioner.
The creation of the new appellate body has been met with great approval particularly for the following reasons:
It should provided a low cost alternative to Court for settlement of tax disputes. We understand that no fees will be charged for the Appeal to the Commissioner.
The proceedings will be informal, removing the need for attorneys and the attendant legal costs.
Disputes should be settled in a relatively shorter time than that usually spent under the appellate system of the Courts.
The Commissioner is now independent from the Taxpayer Audit and Assessment Department (TAAD) and the other Revenue Departments.
The decisions of the Revenue Commissioners which would be the subject of the appeal can only be confirmed, vacated or reduced. The amendments make no provision for any increases in the assessments.
The hearings will be heard at locations island-wide for the convenience of all parties.
You are encouraged to make use of this facility to save time and considerable costs in settling tax disputes with the Revenue Commissioners.
RENTAL ALLOWANCES
The TAAD is conducting in depth examinations of business payrolls with special emphasis on rental agreements. Where, based on its audit, the Department is not satisfied that the relevant employer ensured that the landlords under the agreement were bona fide, then the rent payment is being treated as a cash benefit (emoluments) and subjected to income tax as if the 15 per cent limit did not apply. Any objection to its assessment must be substantiated by evidence that he landlords are bona fide. The TAAD is of the view that since the rental agreement is between the landlord and the employer, the onus is on the employer to ensure that the landlord and the agreement are bona fide.
GCT CREDIT ON MOTOR VEHICLES
It is our understanding that the TAAD has taken the view that claiming an input tax credit, relating to the purchase of a motor vehicle, over a 24-month period is not supported by the GCT Regulations.
The reason for this is that Regulation (14(10), which requires a taxpayer who acquires machinery or equipment, for use in his taxable activity, to claim the input tax credit over a 24-month period, does not apply to motor vehicles. The credit allowed on motor vehicles is governed by paragraph 14(5)(b) which allows a tax credit and not an input tax credit to be claimed in respect of them.
Consequently, the tax credits allowed on motor vehicles (i.e. 6.5 per cent of the cost inclusive of tax, etc.) can be claimed in full in the period in which the transaction occurred.
The only exception to this provision is where the registered taxpayer provides U-drive services as his taxable activity and
is licensed under the Tourist Board Act to operate a tourism enterprise; and
the motor vehicles provided by him are subject to rental for not more than 45 days for each rental, or longer period as allowed by the Commissioner.
In this circumstance, the taxpayer is required to claim the total input tax incurred in equal instalments over a 24-month period.
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.
