FREQUENTLY ASKED QUESTIONS
Below is a listing of our tax-related frequently asked questions. Just click on the FAQ topic title to reveal or hide the FAQs dealing with that particular topic.
GENERAL TAX QUESTIONS
Who must file Income Tax Returns?
If an individual has failed to submit Income Tax Returns for several years, what is his or her obligation in respect of those missing years?
Any person liable to furnish a return of income, in respect of any year of income, who fails, neglects or Inland Revenue Department requires that returns be submitted for the last six years.
Should an income tax return still be submitted if, in any year of income, a small business or a company suffers a loss?
Yes. An income tax return should be filed by a small business or a company whether or not the net result is a loss. A financial statement including Income Tax Computation showing details of the loss must be attached to the return and the actual loss shown on the return in brackets. A loss arises when the allowable business expenses exceed the income earned.
What are the requirements for registration?
A completed and signed registration form should be submitted along with any of the following forms of identification:
Passport, Drivers Licence, National ID, NIC card.
In addition to the completed registration form and a valid ID as indicated above, a self-employed individual is required to submit a certification of registration for their business.
The registration for the partnership signed a partner must be submitted along with:
The completed registration form signed by a director or the company secretary must accompany:
Where should I register?
Taxpayers may register at any of our locations
What is a Tax Account Number (TAN)?
A Tax Account number is a unique eight-digit identification number assigned to an individual taxpayer, a business enterprise, a company (partnership) by way of an automated system. A Taxpayer will require this number when transacting business with either of the revenue collecting departments.
Why the TAN?
The Inland Revenue uses a fully computerised tax system called the Standardised Integrated Government Tax Administration System (SIGTAS). SIGTAS is a fully-networked system running on a modern database. The computerization of operations with the department helped improve the tax administration and ultimately provide better services to the public.
Under the TAN system, all taxpayers have a unique identification number which must be used when transacting business with the Inland Revenue Department, as well as the Customs Department.
The TAN will:
Who needs a TAN?
ALL TAXPAYERSdoing business with the Revenue Departments need a Tax Account Number (TAN).
Taxpayers (Individuals, Partnerships and Companies) are required to register and receive a TAN by completing the relevant registration forms.
A taxpayer discovers that he has been given two Tax Account Numbers (TAN). What must he do?
The taxpayer should come in to the Tax Intelligence of the Inland Revenue Department with his St. Lucian identification card or NIC card and notify an officer of the Section. He will then be told which is his correct number and this number should be the one used at all times.
When a taxpayer changes his or her name and/or address, how is Inland Revenue notified?
The taxpayer should write or call the Tax Intelligence of Inland Revenue Department to notify the Section of the change.
What are some factors which delay the normal processing of a return?
The most frequent ones are Income Tax Returns without:
I am self-employed and was not aware that I had to submit yearly returns. On applying for a letter of exemption Re: 10% Contract Tax, I was told that I had to file my income tax returns for the last six (6) years. Is this correct?
It certainly is. Every self-employed person, whether or not he or she has made a profit, must file an income tax return every year. It should be noted that self-employed persons must pay their taxes yearly, in advance on a quarterly basis and the balance of tax estimated by him should be paid by March 31 of the following year. The dates of payment are March 25, June 25 and September 25.
My business operations ceased during the year. Am I still obligated to file an Income Tax Return Form?
Yes. Section 73 (b) of the Income Tax Act of 1989 requires that a person who ceases to carry a business during any year should file an Income Tax Return Form for the period of time in which the business was in operation prior to its closure.
I am leaving St. Lucia in September to pursue studies; should an Income Tax Return Form be filed for the period that I was employed?
Yes. An Income Tax Return Form should be submitted to the Department. However, if income is being received while you are away at school, returns should be filed by March 31, of the following year.
I understand that there is a 5% late filing penalty but I am unable to meet the filing deadline. What can I do to avoid this penalty?
You may apply to the Comptroller in writing, requesting an extension of time stating the reasons and the required extended date. It must be noted however, that an extension of time must be requested prior to the due date. The Department would appreciate that requests for extensions be filed at least one month in advance of the due date.
PAY AS YOU EARN (PAYE) QUESTIONS
How is tax deducted from an employee's earnings?
An Employee Declaration Form (TD Form) AU-1 must be filed with Inland Revenue Department within fourteen days (14) after the commencement of employment. The employer will use the tax deduction tables prepared by the Department, to determine how much tax should be deducted at each pay period based on the employee's Tax Code.
An employee feels that too much PAYE is being deducted from his salary, can he arrange with his employer to payless?
No. If the employee has a Code Number and the amount to be deducted is in accordance with the Tax Tables, the employer has no authority to enter into any arrangement with the employee for a lower deduction.
If any employer deducts more tax than should be paid by the employee at any pay period, can be regularise this by deducting less from the employee at the next pay period?
No. The employer has no authority to deduct less PAYE from the emolument of an employee, even if asked to do so by the employee. The employer must deduct the amount arrived at by using the information on the Code Form and the Tax Deduction Tables. Should the employer deduct less tax he shall be liable to a penalty which will be inclusive of interest.
An overpayment of PAYE by an employee would be refunded when the Income Tax Return for that income year is filed and processed.
PERSONAL ALLOWANCES QUESTIONS
My husband is unemployed. Can I claim an allowance for him?
As of 1988, working wives can claim the allowance for their non-working husbands. The allowance which can be claimed is a maximum of $1,500 per annum.
I had a baby in December. Can I still claim for the child?
The law provides that an allowance of $1,000 can be claimed for any child born during the income year.
I maintain my niece who is eighteen (18) years of age and who is unemployed. Can I claim for her as my dependent relative?
No. The requirements for this allowance are that the dependent relative be incapacitated by old age or infirmity and unemployable by reason of old age and must be the child, brother or sister or whether incapacitated or not is your parent, aunt, uncle who is unmarried, divorced, widowed or separated.
My daughter Kim is 10 years old and attends the La Croix Combined School. Do I still claim the $1,000?
No. An allowance of $2,000 can be claimed for any child who has attained the age of 10 years and was a student whether in St. Lucia or elsewhere during the income year.
My relative attends St. Mary's University in Canada. What can I claim for him?
A deduction of $5,000 is allowable provided that the individual, irrespective of age, was receiving full time tuition at a University whether in St. Lucia or elsewhere during the income year. This also includes an institution which provides technical or professional education equivalent to a University standard, for example, A Polytechnic or the University Division of the Sir Arthur Lewis Community College. It must be noted that proof that your relative has attended the University and was supported by you is required by the Department.
NB: Students who are pursuing Advanced Level or Technical Studies at the Sir Arthur Lewis Community College are not entitled to the deduction of $5,000.
Some Associate Degree Programmes do qualify for Higher Education Allowance of $5,000. They are as follows:
Can my brother who is employed be classified as a Dependent Relative?
No. The Tax Law recognised a Dependent Relative as "individual who whether incapacitated or not, is the parent, aunt or uncle who is either unmarried, divorced, widowed or separated or is incapacitated by old age or infirmity or is employable by reason of old age and is the brother, sister, child of the taxpayer of his or her spouse.
I have been living with my girlfriend, for over five years, I consider her to be my common law wife. Can I claim for her as a Spouse or Housekeeper?
No. You are not entitled to either of these deductions. Spouse Allowance in only available where parties are legally married, and not in respect of a common law relationship. Housekeeper Allowance can be claimed only in cases where the taxpayer is a widow or widower or is unmarried, divorced or separated and maintains a relative who resides with the taxpayer for the purpose of having the charge and care of the child of children.
Last year I had an operation which cost over $5,000. Is the entire amount claimable as a medical expense or do I limit the amount to $400?
The entire amount is allowable if no part of it was reimbursed. However, if the Insurance Company reimbursed part of the total, then the reimbursed amount will be deducted from the total amount of the bills and the balance will be allowed as a deduction.
Only medical claims from registered practitioners will be acknowledged
ALLOWANCES & DEDUCTIONS QUESTIONS
I have three insurance policies for my children and myself, which amount to $4,000 yearly. Do I claim the entire amount paid as a deduction?
The Tax Act grants a relief for premiums for insurance on your life or that of your spouse or child or other dependents. It must be noted however, that the amount of insurance allowable shall not exceed the lower of (a) one tenth of your assessable income less NIS contributions or (b) $8,000.
I have an insurance policy which I took in 1976 with an overseas based Insurance Company. Can I claim as a deduction the premiums that I paid to the company?
Yes. Premiums paid to a company in respect of a policy in effect after 1972, with a company not doing business in St. Lucia are allowable as a deduction. The amount allowable however is 50% of the premium paid to the company. The deduction is limited to the higher of:
I pay the mortgage interest, house insurance premiums, house tax and maintenance expenses on my parent's house. Am I entitled to claim for these as deductions?
The Tax Law grants relief to a taxpayer who has taken a loan to acquire a dwelling house which is occupied by himself either alone, or together with his family, or occupied rent free by members of his family. This relief is also in respect of any rates, taxes, insurance premiums and expenses reasonably incurred in the upkeep and maintenance of the house.
In circumstances where for economic or the reasons you have taken over the mortgage on your parent's house the Department will allow you to claim the expenses on sufficient proof that your parent's house is your principal place of residence.
Interest on a loan for the acquisition or construction of or improvements to an owner occupied dwelling house is allowable up to a maximum of $15,000. The interest claimed must be substantiated by a statement from the lending institution indicating the purpose of the loan and interest paid during the income year.
I pay subscriptions for shares with the St. Lucia Civil Service Credit Union. Can I claim for this?
Yes. Relief is granted up to a maximum of $3,600 to an individual who makes payments by way of subscriptions to a society registered under the Co-operatives Societies Act. Therefore share taken with registered Credit Unions are allowable and a statement indicating the shares contributed must be attached. However there are specific provisions in the Income Tax Act which apply with respect to the disposal of these shares.
In an effort to secure funds to build my home, a Savings Plan was started with Bank of Saint Lucia. Can I claim this amount as a deduction?
Yes. You are entitled to a deduction not exceeding six thousand dollars $6,000 for payments made under a Registered Home Ownership Savings Plan.
This deduction can only be claimed by a resident individual who has not previously owned a home in St. Lucia.
In 1999, I took a loan to pursue a degree programme at the University of the West Indies. Is this an allowable deduction?
Yes. A resident individual is entitled to deduction of a maximum of three thousand dollars ($3,000) in respect of any amount paid during the year of income by way of interest on money borrowed to finance his/her tertiary education.
In the event that the loan has been repaid by a relative, the interest can ONLY be claimed as a deduction by the STUDENT. However, the relative may claim the HIGHER EDUCATION ALLOWANCE of $5,000 in respect of that child.
I invested in the purchase of a solar water heater during 2001. Can I claim the expenses which I incurred?
Yes. An individual may claim expenses amounting to six thousand, five hundred dollars ($6,500) for the purchase and installation of a new solar water heater system.
This deduction would only be allowed for income years 2001 to 2005, and 2007.
I took advantage of the offer made by the Bank of St. Lucia and purchased shares. Can I claim for this?
Yes. A deduction shall be allowed to a resident individual who purchases newly issued shares in a resident public company. This deduction is limited to five thousand dollars ($5,000).
I have a medical policy I paid premiums totalling $900 for the year. Can I claim the total premiums as a deduction for medical expense of is it limited to the maximum allowed without bills, which is $400?
Yes. The total premiums paid for the year under a Medical Insurance is allowed as a deduction.
I paid premiums for the year of $750 towards a Medical policy, however, during the year I paid medical bills of $1,500 and was only reimbursed $500. Am I still entitled to a deduction and if so how much?
Yes. You are entitled to the difference of the total medical bills paid and the reimbursed amount. This difference will then be added to your total premium paid for the year.
In the example given, the calculation will be as follows:
I make contributions annually to the World Wide Church of God can I claim for this as a donation?
No. This claim will only be allowed if the contribution is made under a deed of covenant for a period not less than three years.
It must be noted that the amount allowable is restricted to twenty-five percent (25%) of your assessable income for the year in question.
What are some of the business expenses which can be claimed by the self-employed?
Claims can be made against the total income for expenses which were wholly and exclusively incurred in the production of such income. Some of these claims are follows:
Is there a specified period of time in which the books and records of a business must be maintained?
The Income Tax Act of 1989 requires that all books of account and other records of a business be preserved for a period of six years after the end of the year of income to which these books of records relate. In certain circumstances the Comptroller may approve the disposal of such books/records prior to the six year period.
Is Agricultural income exempt?
Yes. Income earned by an individual from fishing or agriculture is exempt. This includes horticulture, the use of land for husbandry including the keeping of livestock or poultry or the growing of crops, fruits or vegetables.
It must be noted that losses from exempt income cannot be set off against any other source of income or activity.
How is Wear & Tear (Capital Cost Allowance) granted on fixtures and equipment used in business?
There are set rates specified by the Income Tax Act. By these claims for Wear & Tear the cost of the asset for use in the business is written off (using the reducing balance method) over a period of time. The basic rates are as follows:
Office Equipment 15%
Suppose a motor vehicle was purchased for $10,000. The calculation of allowances in the year of acquisition is as follows:
Cost of Vehicle
Initial Allowance - 20%
Annual Allowance - 25%
Written Down Value
You are entitled to claim an initial allowance in the year of acquisition.
A list of all assets and applicables can be obtained from the Inland Revenue Department upon request.
I am provided with a vehicle by my company for my exclusive use on the job. Is this considered as a benefit? If so, how is this calculated?
Yes. This is considered to be a taxable benefit and the amount must be included as part of your employment income. The benefit is calculated as follows:
» In the case where the vehicle is purchased locally:
15% of the listed selling price of the vehicle Imported into the country directly or indirectly by your employer.
» 15% of the landed cost of motor vehicle plus all local charges i.e. 15% (landed costs + local charges)
Should the vehicle be leased, the benefit is calculated as:
» 40% of the leased cost to the employer.
What are concessional deductions?
What are the Income Tax Rates?
On the Chargeable Income of every individual, unincorporated body of persons or trustee:
What are the penalties for infringement of the Tax Laws?
Failure to file an Income Tax Return:
EMPLOYERS & EMPLOYEES QUESTIONS
Who must pay tax?
Every person paying emoluments, whether on his own account or on behalf of any other person herein referred to as an employer, must take deductions from such payments.
What is subject to tax deduction?
Pay is the employee’s earnings for the pay period, including the value of free board and lodging or any other perquisite including house allowance and entertainment, bonus, commission, overtime, director’s fee or any other benefits including any taxes paid by the employer on the employee’s behalf or allowances LESS any sum deducted by the employer in respect of contributions paid by the employee to an approved pension fund or scheme.
Doubtful cases should be referred to the Inland Revenue Department.
The following should be treated as pay for taxation purposes:
What payments are credited to an employee's account?
Crediting pay to an employee’s bank account constitutes “Payment” in the same way as payment in cash and tax should be deducted accordingly. The same positions applies if the amount is credited to an account with the employer on which the employee is free to draw or is applied in reduction of a debt due to him to the employer, unless the debt arises from a payment in advance or on account of remuneration from which tax was deducted.
In certain circumstances, pay may be credited to an employee in some special way which makes it doubtful whether the “Pay” has actually been “Paid”. When there is any such doubt the matter should be referred to the Inland Revenue Department
Who is required to file a declaration?
Every Employee is required to file a declaration on TD Form A4-1 certifying the amount of allowances claimed. In the event an employee has not obtained a code number from the Inland Revenue Department use the personal allowances plus medical of 400.
E.g. Income year 2012 personal allowance – 17,000. Tax code = (17,000 + 400) = 17,400
Use 174M for Monthly, 174F for Fortnightly or 174W for Weekly.
What amount should be deducted and when should the deduction be made?
Note: NIC should not be deducted from the current salary when entering it in the program. E.g. if employee salary is 2500 then enter the full amount and the system will calculate the NIC deduction.
What about accounting for amounts deducted?
Tax deductions withheld from employees are trust funds in the hands of the employer until remitted to the Comptroller, the amount deducted in one month must be forwarded to the Comptroller of Inland Revenue on or before the fifteenth of the following month. The appropriate remittance form must be used for this purpose.
An employer failing to remit by the due date is liable for the amount deducted plus a penalty of 10% of the amount deducted and interest of 1% per month above the prevailing market rate of interest.
On making any payment of emoluments to an employee whose emoluments tax is deducted, the employer, unless exempted by the Comptroller, must furnish each employee with the particulars of the payment including particulars of the gross emoluments for the pay period and the amount of tax deducted thereof. Any exemption granted by the Comptroller may at any time be revoked. Every employer must keep, to the satisfaction of the comptroller, a record of the emoluments paid to and the tax deducted from each employee.
What happens is the employee has left?
If you permanently cease to employ an employee or on the death of an employee, you should complete the form P45 in triplicate. Give the original copy to the employee (or if deceased, to his personal representative or next of kin) or post it to him or them not later than the day when the last payment of emoluments was made and send two carbon copies to the Comptroller. When making payment to any next of kin or personal representative tax should be deducted as if such employee had been alive at the time of payment.
What about annual return of emoluments paid?
Form copy numbers 1 and 2 of the TD5 (white and blue copies), which are rouletted, should be given to each individual employee not later than 31st January of each year. No.3 is to be sent to the Comptroller no later than 31st January of each year; and No.4 is for the employer. Where P45 has been used for cessation (See note 8) do not include on TD5 the employees who have left.
What if the employee has died?
If an employer dies anything which he would have been liable to do under the Income Tax Act shall be done by his personal representative or, in the case of an employer who paid emoluments on behalf of another person, by the person succeeding him, or, if no person succeeds him the person on whose behalf he paid the emoluments.
What if there is a succession?
The change is not treated as a cessation of an employment but the new employers are liable to do everything that the previous employers would have been liable to do. The employers after the change will not be liable for payment of any tax which was deductible from emoluments paid to the employee before the change took place.
What if there is a cessation?
When an employer ceases to carry on business he must pay over to the Comptroller all tax that was deducted and has not been paid over, within fifteen days of the day on which the last payment of emoluments was made, and complete Form TD5. He shall give Part1 and 2 to the employee or post it to him not later than the last day when the last emoluments were paid and sent within fifteen days, Part 3 to the comptroller.
When should tax not be deducted?
How should I take deal with casual or seasonal employment?
Specific arrangements for tax deductions may be necessary with employers in respect of certain types of employments including casual and seasonal employments, where it is found that tax deductions may be impracticable or would cause undue hardship. A specific notice in writing will be given by the Comptroller.
What do I need to do for employment on the gang or squad system?
Where wage earners are employed on the gang or squad system the responsibility for the correct deduction of tax rests with the employer, i.e. the employer of the gang leader. The employer should ascertain from the gang leader what wages are due to each employee so that:
Where there is any doubt the matter should be referred to the Inland Revenue Department.
If the gang leader is not an employee, then the gang leader is the employer, and he is responsible for: the correct deduction of tax; the accounting each month to the revenue; and, for supplying the required certificates. It would assist the Inland Revenue Department if the names of such gang leaders were reported so that they may receive the appropriate forms.
What I do if errors are discovered during the year?
Errors discovered during the year in respect of an earlier week or month should be reported at once to the Inland Revenue Department which will give any instructions necessary.
What is the penalty for failing to comply?
Any employer who wilfully fails to deduct in accordance with the Income Tax Act or any direction given hereunder by the Comptroller shall be liable on conviction to a fine of one thousand dollars or to imprisonment
PROPERTY TAX QUESTIONS
How long is the compliance certificate valid for?
Your property tax compliance certificate is valid for six (6) months however, if you have made a payment arrangement with a Collections officer, the officer usually makes it valid for three (3) months.
Can I download the form for compliance from the website?
Yes, you can now download the form and notes on supporting documents. Please note that for some transactions a property tax officer will also need to interview you in order to process your certificate accurately.
If I own no property do I need a compliance certificate?
Answer: Yes, your financial institution/lawyer will make you apply for compliance certificate for property tax whether or not you own property.
How long does the objection response take?
Within 20 working days
How long does the Exemption take?
Within 20 working days
What time during the year do Assessments go out?
We try to send them out as close to your anniversary date as possible; (i.e. the date you received your first assessment); however, you may get it a little earlier or later due to circumstances beyond our control.
How long does the offsetting process take?
The time frame of the refunds offsetting process is mainly due to the availability of funds, once funds are available the offsetting process normally takes three (3) weeks.
What happens if I fail to furnish Inland Revenue with a declaration form?
If we did not capture information on your property during our island wide visit a few years ago, we will schedule a site visit with you and will value your property and thereafter generate assessments for three years.
I am over sixty and renting an apartment downstairs my residence, will I qualify for a property tax pension exemption?
No, your residence has to be occupied by you or family members rent free in order to qualify for a property tax pension exemption.
I am a business owner, how do I begin to pay property tax?
There are commercial valuation forms available at our Department along with a list of recognized valuers, you are required to allow one of these valuers on our list to conduct a valuation and as the property owner you must sign this valuation and return the completed form to our department, thirty days after you have become the owner of such property.
Where do I pay my Property Tax?
At the Inland Revenue Department or the district councils offices in which the land/house liable are/is situated.
Who do I make a cheque, money order or bank draft payable to?
All cheques or money order should be made payable to the Accountant General.
Do I receive a receipt after making my property tax payment?
Yes an electronic or manual receipt should be given to you by the cashier or revenue clerk
What is the collection fee?
A penalty for not paying your property taxes on time
How is market value determined?
When determining the market value for a particular property, assessors consider each property’s unique characteristics. These are the same characteristics that a home buyer would consider, including size, layout, shape, age, finish, quality, number of carports, garages, sundecks, and condition of buildings. Services in the area, location, views and neighbourhood may influence a property’s market value.
Assessors may enter a home to conduct property inspections, ensuring that the description and condition of a property is accurately reflected on the property tax assessment notice. Assessors analyze all property tax sales in St. Lucia and develop common units of comparison and corresponding values. The review similarities and differences between properties to arrive at a uniform assessed value for a particular property.
Why are assessments based on market value?
Market value assessment is widely considered to be the fairest system for distributing the property tax burden.
In any tax area, properties of equal value contribute the same tax, while higher-value properties contribute more than those with lower values. Both assessors and taxpayers can readily check assessments by comparing recent sales and assessment of similar properties in the neighbourhood.