Are you ready for tax season?
YOU CAN’T ignore it any longer. Tax filing season is right around the corner.
You may have realised that all the resolutions you made last year about being more efficient and having tighter record-keeping methods went right through the window.
On the other hand, you may have it all together and just need some tips on the way forward. Here’s a checklist that could, if executed in a timely fashion, help to make this tax filing season less onerous.
As a business owner, it is important that you attain a certain level of appreciation for taxation, in order to keep yourself and your tax accountant accountable. There is a lot of information available to the public, as well as learning opportunities such as seminars.
You don’t need a degree in taxation, just a general understanding of certain requirements for taxes, such as tax filing deadlines, tax returns that must be filed based on your industry, and which returns are required to be filed online.
SEEK EXPERT ADVICE, IF NECESSARY
Who doesn’t love do-it-yourself or DIY projects? After all, it’s a great way to save money and learn new tricks. However, while some people are capable of doing their taxes themselves, others need the help of a tax professional to decode the tax legislation.
Generally, if there is any uncertainty, it is best to hire a tax accountant. Some situations in which you should consider engaging a tax accountant include:
Operating under an incentive scheme;
A complex corporate structure — e.g., parents-subsidiaries, operating in other countries);
Making contributions to charity;
Being self-employed or owning your own business;
Engaging in related party transactions;
Trading in investments frequently; and
Have limited or no training in tax preparation or filing.
Note, however, that the responsibility for accurate and timely filings remain with you, even if you hire an accountant.
GATHER ALL BUSINESS RECEIPTS
If you have not been practising proper record-keeping, you may need to embark on a scavenger hunt.
The car ashtray, the out-of-season handbag you retired and that ‘catch-all’ drawer are some of the places you may need to start your search to find those business receipts.
Now, this activity is very important, because your receipts are potential goldmines for tax deductions. If you are uncertain about an expense, consult with your tax accountant.
Our local legislation requires everyone to report income from all sources, for tax purposes. This includes interest, dividends, residential/commercial rental income and trade revenue.
Spend some time and ensure that all income sources are being accounted for.
You may be tempted to not declare some of your income because you cannot find or did not generate an invoice. However, that would be unwise.
Lest you forget, Tax Administration Jamaica (TAJ) now has access to third-party information, so while you may not have reported the income, your customer may have taken the deduction. As such, TAJ may already have an idea of what your revenue should be.
BEAT THE RUSH, FILE EARLY
I have heard so many business persons say, ‘my accountant has it covered’. It’s wonderful that you have faith in your accountant.
Nevertheless, I encourage you not to sit back and wait until 3 p.m. on March 15 to make contact with your tax accountant.
Ensure that your tax accountant is made aware of notices received from TAJ, however trivial you think they may be. Also, agree on how often you require progress updates and the action to be taken if it appears you are at risk of missing the filing deadline.
Plan ahead. Aim to have a completed tax computation and return at least one to two weeks prior to the filing deadline. This allows you to check and correct any mistakes and gather the funds required to settle your tax obligation.
Register for and utilise TAJ’s e-filing facilities, unless you are required to file a paper return. E-filing can be done at any time of day, saving you time and the cost of printing.
You must file a return in order to receive your deductions/ credits and avoid penalties and interest. Don’t try to get creative with your accounting — tax accountants are here to assist you in maximising your deductions and credits, legally.
It’s tempting to want to maximise your tax breaks and even tax refunds, but never make a claim that would affect your integrity. It’s just not worth it.