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Termination and Redundancy Payments and lump sum payment

Termination and Redundancy Payments and lump sum payment

 

When an individual’s employment is terminated, the terms of payments as they relate to entitlement to tax free payment, are governed by the Employment (Termination and Redundancy Payment) Act.

This guide does not seek to explain how the entitlement works; it will only explain how to calculate the amount that should not be taxed.

The Income Tax (Termination of Employments) Order 1971, determines what should not be taxed when a payment is made.

Payment in lieu of notice, sick pay and vacation pay should not be calculated as a part of the Redundancy amount, but will be part of the Redundancy package. Statutory deductions should be applied to these payments in the normal way, as well as the portion of the redundancy payment that is not exempt.

The formula to be used to calculate the tax-free portion is for example:

 

2 ¼ x Average Salary for the last 3 Years x number of Years of Service

33 1/3 Years

Salary in Year 10 (June 2006 – May 2007)      $1,200,000

Salary in Year   9 (June 2005 – May 2006)      $1,000,000

Salary in Year   8 (June 2004 – May 2005)      $   980,000

 

Total                                                               $3,180,000

Average Salary for last 3 Years   –                  $3,180,000 = $1,060,000

                      3

Use the formula for the tax-free portion, the amount is:

2 ¼ x $1,060,000 x 10 Years’ Service      =      $715,500

33 1/3

Total Redundancy payment                            $1,000,000

Less tax free portion                                       $    715,500

Taxable amount                                              $    284,500

Tax payable 284,500 x 25%                            $      71,125

Payment to be made to Employee    $1,000,000-$71,125   =   $928,875

 Information  gathered from Tax administration of Jamaica

For more information contact Bogle and Company at bogleandcompany.com

Benefits of being a dream employer


Benefits of being a dream employer

As companies move to increase their presence in the world and earn their piece of the market share. Many companies tend to neglect the best form of advertising, and that is employee satisfaction.

While clients/customers will always be the main focus of any company. The employees cannot be forgotten for the role which they play to the company's growth and wealth.

Countries with the Highest Working Hours

Balance between work and leisure

In the world today, we are constantly searching for the the correct balance between work time and time with to rest, have fun, and spend with family. Many believe that as you climb the ladder to prosperity it is only natural that more hours will be added to your day, however this is not the rule. Many workers putting in those crucial hours are sometimes at the bottom of the todem pole.

COJ Offers amnesty


On May 4 2015, the companies office is waiving costs and penalties owed by businesses who have not filed their annual returns and renewed their business name. This will last for a period of three (3) months.

The amnesty will allow:

  • companies limited by shares to file each outstanding annual return at a cost of $3,000 or 60% of the regular cost.
  • companies limited by guarantee to file annual returns at a cost of $1,000 or 50% of regular cost.

The associated penalties ($100 per day) will be waived.

The amnesty will also allow company to request removal without having to file all outstanding documents or to provide an audit certificate. The removal request process will be done by submitting a letter signed by a majority of the directors and submit a statutory declaration that the company has no assets or liabilities. This process will cost $10,000.

In regards to renewals/removals of business names, the companies office will offer an amnesty which will allow business persons to have their names removed for a flat fee of $2,000 and no late or renewal fees will be charged.

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