A new income tax threshold of $592,800 per annum comes into effect in the New Year on January 1, 2016, moving up from the current tax-free amount of $557,232.
The increase in the threshold means that the corresponding tax-free portion to be used by employers, as of January 2016, in making periodic payments is as follows:
$ 22,800.00 Fortnightly
$ 49,400.00 Monthly
Employers are advised to make the necessary adjustments to their payroll system to reflect the increase in the threshold, so that all employees may benefit from the increase.
In addition to employees, all individuals resident in Jamaica, whether self-employed or pensioners will also benefit from the increase in the income tax threshold.
With the increase in the threshold, the tax paid per annum by each individual will reduce by $8,892.00 (i.e. 592,800 – 557,232 = $35,568 x 25%), while the net effect for each individual per quarter will be a reduction in tax of $2,223.00 and $741.00 per month. The public is reminded that income in excess of the threshold will continue to be taxed at 25%.
Self-Employed individuals are advised that the new threshold of $592,800 is to be used to file their estimated income tax return for the 2016 year of assessment, due March 15 and to make payments for the same year in four equal instalments by March 15, June 15, September 15 and December 15 of each year. However, the threshold of $557,232 is to be used in filing the annual tax return for year of assessment 2015, which is also due on March 15, 2016. Pensioners and persons sixty-five and over are reminded that in addition to the threshold they are entitled to a pension exemption of $80,000 and an age exemption of $80,000 respectively.