Senate Passes Income Tax (Amendment) Act, 2015

The Senate, on Friday, July 3, passed the Income Tax (Amendment) Act, 2015, that will facilitate the provision of an additional $35,568 in tax-free income for workers, effective January 1, 2016.

The Bill, which was passed with four amendments, provides for an increase in the personal income tax threshold of $592,800 per annum, up from $557, 232.

Justice Minister, Senator the Hon. Mark Golding, who led the debate on the Bill in the Upper House, said the provision will make the first $592,800 of each Jamaican’s annual income, tax-free.

The latest proposed adjustment, on coming into effect, will translate into a cumulative increase of $85,488 in tax-free income facilitated over the past two years, with the personal income tax threshold having stood at $507,312, at the start of that period.

“These increases in the income tax threshold for individuals have been introduced in recognition of the social impact occasioned by the economic adjustments, as a result of the economic reform efforts. They will increase the disposable income of employees and compliant self-employed individuals and, thereby, also provide additional stimulus to the domestic economy,” Senator Golding said.

He pointed out that the Bill also seeks to formalize the introduction of the revised income tax threshold for the 2015 assessment year, which made the first $557,232 of annual income earned, as at January 1, tax-free.

Senator Golding also said the Bill will formalize the increased sum of loans that can be provided by financial institutions to their employees, from $1.5 million to $4.5 million, without this provision being subject to income tax assessment on the concessionary element of the below market interest rate charged.

The Minister further advised that the Bill will also formalize the 15 per cent withholding tax on insurance premiums paid by residents to non-residents, with exceptions for bona-fide insurance placements in the international market.

Senator Golding pointed out that most of these measures were previously introduced by provisional orders under the Provisional Collection of Tax Act, and are now being formalized in the Bill.