Inland Revenue Division

Trinidad House
St. Vincent Street
PORT OF SPAIN


TEXT PREPARED BY INLAND REVENUE
2012
Know Your
Income Tax
YOUR TAX DOLLAR$




TRINIDAD AND TOBAGO

(i)

MISSION
STATEMENT


To Promote and Foster Voluntary Compliance
with the Tax Laws and Regulations by:
Providing quality customer service and
education

Improving our employees welfare, knowledge,
skills and attitudes

Applying the Tax Laws effectively and
efficiently with fairness and integrity within an
atmosphere of mutual respect.





Inland Revenue Division
Changing the way we interact with people
visit us at our website
www.ird.gov.tt

Telephone: 623-2981 ext. 321, 431, 432
Fax: 624-3903





(ii)

Ministry of Finance
Inland Revenue Division


This booklet serves as a guide to the Employer and
in no way is intended to be a substitute for the Tax
Laws and PAYE Regulations of Trinidad & Tobago.

It briefly outlines the rights and responsibilities of
the employer.
























(iii)

CONTENTS

Page

Introduction 1
Definitions 1
Chargeable Income 1
Employee 1
Employer 1
Emoluments 1
Allowable Deductions 1
Office 1
Total Income 2
Board of Inland Revenue File Number 2
Non-Resident Individual 2
Responsibilities of the Employee 3
Submit TD 1 Form to Employer 3
Submit TD 1 Form for BIR Approval 3
Submit BIR File No. to Employer 3
Responsibilities of Employer 4
Deduct Taxes from Emoluments 4
Remit Taxes to B.I.R. 4
Issue Pay slips 4
Submit PAYE/Health Surcharge Monthly Return 4
Issue TD.4 Certificates 4
Keep Records 5
Responsibilities of BIR 5
Declaration of Emoluments, Deductions and Allowances 5
Tax Declaration Form (TD 1 Form) 5
Approval by the BIR 6
When is BIR Approval not required 6

(iv)

Tax Deductions and Allowances 7
Personal Allowance 7
Tertiary Education Expenses 7
Allowance for First-time Home Owners 7
Contributions to Approved Pension Fund/Scheme
Deferred Annuity Plans & NIS 7
Alimony/ Maintenance Payments 8
Deed of Covenant 8
Tax Credit 8
Guidelines for Approval of TD 1 Form 9
How to compute P.A.Y.E. 11
Retirement or Death 12
Use of Tax Deduction and Calculations 12
Benefits-In-Kind 13

TD4 Certificates 14
Completion of TD 4 Certificates 15
Specimen of TD 4 Certificate 16
Completion/Issuance of IT 76 Certificate and
Summary Forms 17
Health Surcharge 17
Garnishee Order 18
Monthly Return 19
Specimen of Return 20
Payment and Accounting for Tax 21
Acceptance of Payments by the Bank 21
Accounting for Tax deducted and Keeping
Records 22



(v)

Severance Pay and Computation 22
Redundancy 23
Retirement Severance Benefit 23
Severance Ill Health 23
Calculations 25
Ex Gratia payments 27
Retirement Benefit Payments Public Sector 27
Contract Gratuity 28
2006 2011 Tax Rates 29
Penalties under the Income Tax Act 30































1

INTRODUCTION

The Pay-As-You-Earn System (PAYE) was introduced in Trinidad and Tobago in 1958.
The legislation relating to its operation is contained in the Income Tax Act, Chap.
75:01, and the Income Tax (Employment Regulations 1957 (Act 77/57) as amended by
Income Tax Act 13/68; Government Notice 76/76 and the Income Tax (Employment)
(Amendment) Regulations, 1989, the system entrusted responsibility on the employee,
employer and the Board of Inland Revenue.

P.A.Y.E. is not a method of assessment of Income Tax. It is the system by which
tax is withheld from emolument Income (The PAYE System).
Therefore it is necessary for the employee to submit a TD 1 Form to the employer. (see
TD 1 Form on pg. 3).

Definitions
Allowable Deductions means any deduction allowed in accordance with the Income
Tax Act in determining a persons chargeable income.

Chargeable Income for the purpose of a person, whose sole source of income is
from an office or employment, means the total emoluments of the person for the year of
income less the appropriate deductions and exemptions granted under the Income Tax
Act.

Employee means any person, not being the holder of an office, in receipt of
emoluments.

Employer means any person paying emoluments whether on his own account or on
behalf of another person to an employee, and shall be deemed to include any person
paying emoluments whether on his own account or on behalf of another person, to the
holder of an office.

In relation to an employee or officer, employer means the person from whom the
employee or officer receives his remuneration.

Emoluments means all salary, wages, bonus, overtime, remuneration, perquisites,
includes value of board or lodging, stipend, commission or other amounts for services,
directors fees, retiring allowances or pensions, arising or accruing in or derived from or
received in Trinidad and Tobago and which are assessable to income tax, but shall not
include any salary or share of profits arising from a trade, profession or vocation carried
on by any person wither by himself or in partnership with any other person.

Office means a position not being an employment or place, entitling the holder
thereof to a fixed or ascertainable stipend or remuneration and includes the office of a
Minister of Government, the Office of a member of the Senate or the House of

2

Representatives of Trinidad and Tobago, a member of the municipal or Regional
Corporation and any other office, the holder of which is elected by a popular vote
or is elected or appointed in a representative capacity and also includes the position
of a company director.
N.B. Although the holder of an office is not an employee, the holder of an office is
subject to Tax under the PAYE System.

Total Income means the aggregate amount of income under Section 5 of the
Income Tax Act before allowing any deductions other than those under Section 10,
11, 16 and Income Tax Act (In Aid of Industry) Act.

Board of Inland Revenue File Number

Every employee or office holder is required to furnish his employer with his Board
of Inland Revenue File Number and the employer must record this number on the
certificate (TD. 4 Certificate) he issues to the employee by the last day of February
of the year following the year of income.

According to Section 119 of the Income Tax Act, any person who

(a) Being an employee or an officer and who, with the intent to deceive,
furnishes his employer under section 76B of the Income Tax Act Ch.
75:01 with a Board of Inland Revenue File Number which is not his
own.

(b) Being an employer, and who knowingly or recklessly records under
section 76B of the Income Tax Act Ch. 75:01, a Board of Inland
Revenue File Number of an employee or officer which is different from
the number furnished by that employee or officer.

is guilty of an offence, and in addition to any penalty provided is liable on summary
conviction to a fine of fifty thousand dollars ($50,000) and to imprisonment for three
years.

Non-Resident Individual

An individual under 60 years, who is non-resident in Trinidad & Tobago and is in
receipt of emolument income arising in Trinidad & Tobago, is subject to tax under
the PAYE System.

Such an individual is not eligible for any deductions/tax credit including the
Personal Allowance.


3

Therefore the total amount of income earned in Trinidad and Tobago is taxable
whether or not it is received here.

Where the non-resident individual is 60 years and over and receives income which
accrues or derived in Trinidad and Tobago, the person is entitled to a personal
allowance. The allowance was introduced in 2004 at $40,000 and increased to $60,000
in 2006.

Responsibilities of the Employee

1) Submit TD 1 Form to the Employer

To ensure the correct amount of PAYE is deducted from emolument income, each
employee must submit a TD 1 Form to his employer

The day on which he/she takes up employment

Within seven (7) days of a change in allowable deductions

When required to do so by the Board of Inland Revenue

2) Submit TD 1 Form for Board of I nland Revenue Approval

It is the responsibility of the employee to ensure that the Board of Inland Revenue
approves his/her TD 1 Form, where necessary.

3) Submit BI R File Number to Employer

Each employee must give his/her Board of Inland Revenue (BIR) file
number to the employer.
Where the employee does not have a file number, an application for one
must be completed using the application for BIR Number form together
with a copy of a valid ID and a job letter or TD 4 Certificate (or completed
return).
These are submitted for processing at the Registration Unit, Queen Street,
Port of Spain.
This can be done through the employer or individually.

N.B. Each employee should ensure that

(a) He obtains a TD 4 certificate (original and duplicate) from his employer on
or before the last day of February following the year of income.

(b) The correct amount of tax is deducted from his/her salary/wages.
4

Responsibilities of the Employer

1) Deduct taxes from emoluments
The employer has the responsibility to deduct taxes from the emoluments
(salary, wages, etc.) of his employees in accordance with the P.A.Y.E.
Regulations each time a payment is made weekly/fortnightly/monthly. The
employer should ensure that he receives a TD1 Form from the employee to
accurately determine the amount of tax to be deducted.

2) Remit taxes to Board of I nland Revenue
The total amount of taxes deducted from the emoluments of employees must be
remitted to the Board of Inland Revenue using the PAYE/Health Surcharge
Monthly Return on or before the 15
th
day of the month following the month in
which the deductions were made (eg. Deductions made in January must be
remitted by the 15
th
February).

An employer who fails to deduct and remit the amount deducted from his
employees, after the statutory date will be liable to

(i) *A penalty of 25% of the deduction or $40.00 whichever is greater and
interest on both the amount deducted and the penalty at the rate of
20% per annum from the due date to the date of payment.

(ii) A fine of thirty thousand dollars ($30,000.00) or imprisonment for two
(2) years or both, upon summary conviction.
* The 25% penalty came into effect from 1/1/2008 and is not to be treated
retroactively.

3) I ssue Payslip
The PAYE Regulations require the employer to give a statement of emoluments
paid and the taxes deducted for each pay period (payslips).

4) Submit a PAYE Monthly Return
The employer is required to submit the monthly return when remitting the taxes
deducted.

5) I ssue TD. 4 Certificates
At the end of the year during which tax was deducted (including Health
Surcharge), but no later than the last day of February of the following year, the
employer must:

(i) Issue the original and one (1) copy of the TD.4 Certificate to
each employee showing total emoluments paid during the year
and the total tax and other amounts deducted;


5

(ii) Forward to the Board of Inland Revenue one (1) copy (triplicate) of
the TD. 4 Certificate of each employee and TD. 4 Summary (original
& duplicate) showing the total emolument paid and the total tax
deducted during the year. The relevant forms may be obtained
from the Board of Inland Revenue (P.A.Y.E. Section).

(iii) Keep for his records a copy of the TD. 4 Certificate (quadruplicate) of
each employee and a copy of the TD. 4 Summary.

6) To keep records of employees earnings
The employer must keep records of employees earnings and tax deducted
therefrom, and makes them available for inspection by the Board, (Penalty
applicable for non-compliance $15,000 and/or 2 years imprisonment).

The Responsibilities of the BIR

(i) To provide Tax Deduction Tables and Instructions for ensuring correct
deduction of taxes.

(ii) To provide literature and guidelines to ensure the proper administering of
the system.

(iii) To offer assistance whenever necessary or requested.

Declaration of Emoluments Deductions and Allowances

Tax Declaration Form (TD 1 Form)
A TD 1 Form is a form that is designed solely for the purpose of making the appropriate
deduction of tax from emoluments. The Form requires the taxpayers Board of Inland
Revenue file number, Electoral Identification Card number and signature.

All source of income are declared and claims for tax deductions are made on this
form.

Since the information is necessary for the correct amount of tax to be deducted, each
employee, on taking up employment, MUST submit a Tax Declaration 1 Form to his
employer
(a) On the date of commencement of his employment;

(b) Within seven (7) days, if there is a change in his tax
deductions/allowances;

(c) When required to do so by the Board of Inland Revenue.

6

Where an employee has more than one employment or in receipt of both pension and
salary or wages, details of each source of emolument income must be stated
separately on the same form.
In such case, the Board of Inland Revenue must approve the TD. 1 Form.
(The Board would advise each employer separately to the tax to be deducted)

Approval by the Board of I nland Revenue

Where an employee has any or all of the following claims for deductions, he/she is
required to present a TD 1 Form for the Board approval:

(i) Tertiary Education Expenses (relates to institutions situated outside of
T&T except Public Regional Institution)

(ii) First Time Home Ownership (homes acquired with effect from January
01, 2011)

(iii) Contributions/Premiums paid towards
an Approved Pension Fund/Deferred Annuity Plan

(iv) Alimony/Maintenance payments

(v) Venture Capital Tax Credit

Where an employee fails to submit a Tax Declaration (TD 1 Form), the
employer may deduct taxes without allowing any deductions. The effect of this
is that the tax deducted will be in excess of the amount which would normally have
been deducted if a declaration form had been filed.

This method of deducting tax should also be used where

(i) Overtime is paid to an employee and his/her tax deduction was already
applied to determine tax on the salary.

(ii) A bonus is paid to an ex-employee.

(iii) Emoluments are paid to a non-resident individual who is 60 years and
under.

When I s The Board of I nland Revenue Not Required To Approve a TD 1 Form?

Where a person has the following deductions only, the Board does not require the
TD 1 Form to be approved Personal Allowance, NIS and Companys Approved
Pension Fund/Scheme.
7

Tax Deductions/Allowances

To determine the chargeable income that would be subject to tax, a resident individual
is entitled to the following allowances, deductions and tax credits:

1. Personal Allowance
A Personal Allowance of sixty thousand dollars ($60,000) with effect from
2006.

2. Tertiary Education Expenses
(a) Reasonable expenses incurred in respect of tertiary education by the
taxpayer for self, spouse or child/children of both spouses at an institution
situated outside of T&T except a public regional institution.

These expenses include Tuition, Exam Fees, Books, 1 return airfare,
Accommodation, etc.
This claim is limited $60,000 and may be claimed in such proportion as
may be determined by both spouses. ($18,000 up to 2007).

3. Allowance for First Time Home Owners
An individual who acquires a home for the first time with effect from January
1, 2011, by way of purchase or construction, is allowed a deduction of up to
$18,000, on the cost of this home, for the first five (5) years of acquisition.
Where ownership is shared, the aggregate amount allowed is $18,000.

4. Contributions
(a) Contributions to an Approved Pension Fund Plan/Scheme.
Contributions made under the Retiring Allowances(Legislative Services)
Act.
(b) Premiums paid under
An Approved Deferred Annuity Plan
TISP (Republic Bank)
Future Cash (RBTT Bank)
SAFE (Scotia Bank)
Retirement Provider (FCB)

(c) N.I.S.
70% of the annual contributions made in accordance with the National
Insurance Act.

Where a taxpayer contributes to the Widows and Orphan Fund (this is
usually the male appointed Public Servant) deduction allowed is 100%
of this contribution and 70% of the difference between this contribution
and the N.I.S. deduction.

8

Total deduction in respect of item 4(a)(b) & (c) is limited to $30,000 (with effect
from 2009).

5. Alimony/Maintenance Payments
This is a payment made to a spouse or former spouse under a Deed of
Separation or Court Order.

This deduction shall not be allowed unless the spouse or former spouse in
receipt for such alimony/maintenance is chargeable to tax under the Income
Tax Act Ch. 75:01.

6. Deed of Covenant. (With effect from January 01, 2011)
Payments made to a charity under a deed of covenant in favour of
- a sporting body of persons as defined in Section 6(2) of the
Corporation Tax Act and approved by the President in writing;
- an ecclesiastical, charitable or educational institution of public
character approved by the President in writing;
- the Childrens Life Fund established under the Childrens Life
Fund act 2010.

This claim is equal to the amount donated but limited to 15% of total annual
income.
(Not to be included on TD1 Form).

7. Tax Credits
Venture Capital
The Venture Capital Tax Credit is equivalent to 25% of the investment in
any Venture Capital Company. The tax credit is offset against the tax on
chargeable income thereby reducing the tax liability. Where this tax credit
exceeds the tax on chargeable, the excess tax credit may be carried forward
to the following year(s), until it is exhausted.

CNG Kit and Cylinder (with effect from 1/1/2011)
A tax credit equal to 25% of cost of CNG Kit and Cylinder purchased and
installed in his motor vehicle.
This credit is limited to $10,000.

Solar Water Heating System (with effect from 1/1/2011)
A credit equal to 25% of cost of solar water heating system equipment
purchased for household use.
This credit is limited to $10,000.
NB: All tax credits are offset against the tax on chargeable income.



9

Guidelines to be followed when
submitting a TD 1 Form for Approval

With effect from January 2009 when a TD1 Form is approved by the Board of Inland
Revenue, a Certificate of Approval for PAYE Tax Deductions is issued to the employer.

The certificate shows:

An approval letter will be issued to the employer identifying
- The Employers name, address and PAYE Account Number
- The Employees name and BIR#
- The Employees Total Allowances and Credits
- The Expiration date of the TD1 Form
- The Board of Inland Revenue Stamp
- Date and Signature of an IRD Officer

Complete one (1) TD1 Form and submit to the Inland Revenue Division for
approval together with the following documents for the relevant claims-

1. Tertiary Education Expenses
- Copy of letter of acceptance from the Educational Institution showing the
course and duration of studies,
- Proof of payment of expenses,
- Statement showing all expenses claimed.

2. First-Time Home Owner
- Letter from Financial Institution confirming first time acquisition, date of
acquisition and address of property.
- Completion certificate if property was constructed.
- Lands and Buildings Tax Receipt.
- Sworn affidavit, if property was built without mortgage.


3. Approved Pension Fund/Plan/Schemes
- Salary deductions slip for the most recent pay period, identifying pension
contribution.

4. (i) Approved Deferred Annuity
- Policy Statement showing that the policy is in force and paid up to date.
- Where the Board approved the policy, the following words must be
marked on the statement
THIS PLAN IS APPROVED BY THE BOARD OF INLAND
REVENUE





10

(ii) Tax I ncentive Savings Plan (T.I .S.P.) - Republic Bank
Royal Future Cash - RBTT
Scotia Assured Future Earnings (S.A.F.E.) - Scotia Bank
Retirement Provider - FCB
- Receipt showing payments made in previous year.
- Where the Board approved the policy, the following words must be
marked on the statement
THIS PLAN IS APPROVED BY THE BOARD OF INLAND
REVENUE

5. Alimony/Maintenance
- Original Copy of Court Order, Decree or Registered Deed of
Separation.
(The Income Tax File Number of the recipient is also required).

- Copy of receipt of payments made in previous year.

For Common-Law Relationships
- Copy of receipt of payments made in previous year.
- Sworn affidavit stating that the union, which produced the
child/children, was a common-law relationship established under the
Co-habitational Relationship Act.

6. Venture Capital Tax Credit
- Certificate from the Venture Capital Company showing investment
made.

7. I ncome from two or more sources

Where the taxpayer has income from two or more sources, he must submit
a TD 1 Form to the Board for approval together with pay slips of salaries
paid to date for the current year. A TD 1 A (directive) will be issued to the
respective employers, advising of the amount of tax to be deducted from
each source of income for the current year.

THE BOARD OF I NLAND REVENUE MAY REQUEST ADDI TI ONAL
I NFORMATI ON OR DOCUMENTS, I F CONSI DERED NECESSARY,
TO EFFECT THE APPROVAL OF THE TD 1 FORM.

Where there is doubt concerning any claim or the procedure to be followed, please
call the following Sections for clarification:

Taxpayer Services
Telephone Number 623-2981 Ext. 201/204/520
or
Taxpayer Relations Section
Telephone Number 623-2981 Ext. 321, 323-6
11

How to Compute P.A.Y.E

Under the Income Tax (Employment) Regulations every employer shall deduct tax from
the payment of emoluments to any employee or holder of an office. Taxable
emoluments are those arising or accruing in or derived from or received in Trinidad and
Tobago. In accordance with the PAYE Regulations, the employer is required to make
deductions from salary or wages.
Only the Board has the authority to reduce or amend the tax deductions of an
employee in the case of a dispute.

The Board will determine the amount to be deducted in the following cases:
(a) Where payment is made at other than regular weekly, fortnightly, monthly or
annual intervals, e.g. persons paid on a commission basis only;

(b) In the case of casual or seasonal workers, where tax was deducted using to the
Tax Deduction Tables for the six(6) months during which they were employed
and therefore the total tax would far exceed their liability calculated on an
annual basis;

(c) Where the Board decides that the class of employee or nature of the
emolument is such that it makes the application of the Tax Deduction Tables
impracticable;

(d) In the case of an employee with more than one employment.

Tax should not be deducted from emoluments in the following cases:
(a) Where persons who are exempt from tax receive the emolument income,

(b) Where the emoluments are pensions earned outside Trinidad and Tobago,

(c) Where a resident individual or non resident individual 60 years and over is
in receipt of total annual income of $60,000 annually and under, ie

Weekly - $1154.00
Fortnightly - $2308.00
Monthly - $5000.00

(d) Where the emoluments are paid outside of Trinidad and Tobago to an
employee outside of Trinidad and Tobago;

(e) Where the payment is made in respect of domestic services performed in a
residence where the employer sleeps or eats when in Trinidad and Tobago.



12

In all other cases the employer will use the information on the Tax Declaration
Form (TD. 1) submitted by the employee together with the Income Tax
Deduction Tables or the stipulation made by the Board of Inland Revenue to
determine the amount of tax to be deducted at each pay period.

Where a taxpayer works for short or irregular periods, the employer has to be
much more vigilant in ensuring that the correct PAYE deducted. In such
circumstances, to avoid under deductions of tax, the employer should consult
with the Board of Inland Revenue.

The Board of Inland Revenues approval is also necessary where an employee
takes up employment late in any income year and would not earn in excess of
$60,000, but the employer is uncertain as to whether there is other employment
income.

EMPLOYERS MUST NOT ACCEPT ANY I NSTRUCTI ONS FROM
EMPLOYEES TO REDUCE OR CEASE THE DEDUCTI ON OF TAX FROM
THEI R I NCOME.

Retirement or Death
When an employee retires and a pension is paid, tax must be deducted in accordance
with the PAYE Regulations. Retirees who receive other income, in addition to their
pension, must include such income on a TD 1 Form to be approved by the Board to
determine the correct amount of tax to be paid from each source of income.

When an employee dies, tax is to be deducted from the emoluments due to the
deceased person, as if he was alive.

When an employer dies or there is a change in employer, the person assuming
control of the business must continue to deduct taxes from the employees.

Use of tax deductions (on TD 1 Form) and calculation of Tax
To determine the tax deducted from an employees income, the employer must
consider the deductions on the TD 1 Form (approved where necessary) that the
employee would have submitted.

The formula is as follows
Total Annual Income Total Deductions = Chargeable Income
Chargeable Income x Tax Rate = Tax on Chargeable Income (tax liability)
Tax Liability
* Pay Periods = Tax per pay period
* Weekly paid employees Divide annual tax by 52
* F/nightly paid employees Divide annual tax by 26
* Monthly paid employees Divide annual tax by 12

13

Examples

(a) Weekly paid wages and benefits - = $ 1,500.00
Annual emolument $1,500 x 52 = $ 78,000.00

Deduct Total deductions (as shown on TD 1 Form) = $ 61,933.00
Chargeable Income $78,000 - $61,933 = $ 16,067.00

Tax liability = $16,067 x 25% = $ 4,016.75
Weekly tax = $4, 016.75
52 = $77.25

(b) Fortnightly paid wages and benefits = $ 4,000.00
Annual emoluments - $4,000 x 26 = $ 104,000.00

Deduct Total deductions (as shown on TD 1Approval) = $ 65,000.00
Chargeable Income - $104,000 - $65,000 = $ 39,000.00

Tax liability = $39,000 x 25% = $ 9750.00
Fortnightly tax = $9750
26 = $375.00

(c) Monthly paid salary and benefits = $ 11,500.00
Annual emoluments - $11,500 x 12 = $ 138,000.00

Deduct Total deductions (as shown on TD1Approval) = $ 90,000.00
Chargeable Income - $138,000 - $90,000 = $ 48,000.00

Tax liability = $48,000 x 25% = $ 12,000.00
Monthly tax = $12,000
12 = $1,000.00

Benefits-In-Kind

The provision of Sections 133-141of the Income Tax Act state that where a company
pays expenses on behalf of its directors/employees or grants allowances or benefits to
any such director/employee, the amount paid or granted shall be treated as a perquisite
(BIK) of the office/employment and included as income of the director/employee. (See
our Booklet Expenses, Allowances and BIK for more information).







14

TD 4 Certificates

Employers must note the following:

(1) Total taxes shown on the TD. 4 Certificate as deductions must agree with
the total P.A.Y.E. remitted to the Board of Inland Revenue for the Income
Year.

(2) Total emoluments shown on the TD. 4 Summary must agree with the pay
records of the business and with the total of the TD. 4 Certificates attached
to the Summary.

Under the following circumstances every employer is under an obligation to deduct
tax (where applicable) and issue a TD 4 Certificate:

(a) Change of Employment
If an employee changes his job, the former employer will cease to deduct
tax. The new employer would now deduct tax on the basis of a new
Certificate of approval for PAYE tax deductions submitted to him by the
employee or by instruction from the Board.

(b) Death of the Employee
Where an employee dies and emoluments are due to him after his death,
deductions are to continue as if he were alive.
(TD 4 Certificates must be sent to his Legal Personal Representative by
the 15
th
day of the month following the month in which he died).

(c) Death of Employer
If an employer dies (but his business continues) his Legal Personal
Representative must continue to make PAYE deductions.

(d) Change of Ownership-Business
If a business changes hands, the new employer is responsible for the PAYE
deductions.

(e) Cessation of Business
If an employer ceases to carry on business he must, within one month after
cessation, issue TD 4 Certificates to all employees from whose emoluments
any tax was deducted.

Where a business ceases operations, PAYE deductions, which had not
yet been remitted to the Board, must be paid to the Inland Revenue
Division within seven days after cessation of the business.


15

(f) Retirement of Employee
If an employee retires and is given a pension, such retirement shall not be
treated as a cessation of employment for the purposes of the PAYE Regulation
if the emoluments are paid by or on behalf of the same person both before
and after the retirement.

If the pension is paid by a person other than the former employer, (e.g.
Trustee) the pensioner must provide the other person with a certificate of
approval for PAYE tax deductions for the purpose of tax deductions and the
Trustee must give TD 4 Certificates to the retiree on the appointed date.

Where retroactive payments are made, these payments must be included on the
TD4 Certificate in Box 7.

Completion of the TD 4 Certificate

All TD 4 Certificates must bear the official name, address, stamp, BIR and P.A.Y.E.
File number of the Employer. They should also bear the N.I.S. Number and Board of
Inland Revenue File Number of the Employee and should be initialled by the officer
with such delegated responsibility.

Where applicable, the following information must be inserted in the appropriate
boxes on the TD 4 Certificate:

(1) Total deductions (as shown on the TD 1 Form).
(2) Weeks employed for the year.
(3) Remuneration before deductions.
(4) Commissions.
(5) Taxable Allowances (Form IT 76. See page 18)
(6) Other Taxable Allowances. (e.g. Travelling allowance for which no
dispensation is granted).
(7) Income relating to previous year(s) paid in current year.
(8) Savings Plan withdrawals of Contributions made by Company.
(9) Gross Earnings. (Total of boxes 3-8)
(10) Non-Taxed Allowances and Benefits. viz.:-
(i) Employers Contribution to Approved Fund/Contract (This refers to
payments made by the employer in accordance with Section 134(6) of
the Income Tax Act ONLY).
NB: Employees do not contribute to this plan.
(ii) ONLY Travelling allowances for which the Board has approved a
dispensation.
(11) Approved Pension Fund Plan/Approved Deferred Annuity Plan (Employees
contributions).
(12) National Insurance deducted.
(13) Income Tax deducted. (PAYE)
(14) Health Surcharge deducted.
(see Specimen of TD 4 Certificate on next page)
16


TD4 - 2011
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17

Completion/Issuance of I .T. 76 Certificates and Summary

The Income Tax Act Ch. 75:01 and the Income Tax (Employment) Regulations
require an employer who pays allowances or expenses on behalf of an employee or
provide an employee with benefits in kind, to furnish such an employee with
particulars in respect of these payments/benefits. The particulars must be included
on the Form IT 76 prescribed by the Board of Inland Revenue for this purpose.

This form is to be prepared in triplicate. One copy (original) is to be given to the
employee; one copy (duplicate) is to be submitted to the B.I.R. together with the
original IT 76 Summary; and one copy (triplicate) is to be retained by the employer
for his records.

The IT 76 Summary must state the names of all the employees in respect of whom
IT 76 Certificates were completed.

NB. These forms, the IT 76 Certificates and Summary are to be submitted
together with the TD 4 Certificate and Summary to both the employee and
the Board of Inland Revenue on the appointed day (last day of February of
the year following the income year).

A person who fails to make the return within the time specified is guilty of an
offence and may be prosecuted.

Health Surcharge
Health Surcharge is a tax, which is charged on income.

Finance Act 14/87 transferred the responsibility for the due administration,
computation, collection and recovery of health surcharge from the National
Insurance Board to the Board of Inland Revenue.

Health Surcharge is charged and payable: -

(a) By every employed person who pays or is liable to pay contribution
under the National insurance Act; and
(b) By individuals other than employed persons who are liable to furnish
a return of income (self-employed)

Individuals who are exempt from the payment of health surcharge are those:

Under the age of sixteen (16) years
Sixty (60) years and over
Whose only source of income is pension


18

Rates of Payment

Health Surcharge is payable at two (2) rates as follows:-

- Where the monthly/weekly income is more than $469.99/$109.00
respectively the rate is $8.25 per week.

- Where the monthly/weekly income is less than $469.99/$109.00
respectively the rate is $4.80 per week.

Method of Payment of Health Surcharge

The employer must make this payment after deducting the correct amount
from the emoluments of his employees at each pay period.
This amount is payable to the Board on or before the 15
th
day of the month
following the month in which the deduction was made.

Health Surcharge is payable in cash or by certified cheque and must be
accompanied with the PAYE/Health Surcharge Monthly Return.

Penalties for late/non-payment of health surcharge

Employed Persons
An employer who fails or neglects to deduct health surcharge and or remit
to the Board is guilty of an offence; and in addition to the amount not
deducted and or remitted is liable to a penalty of 25% of such amount and
interest at the rate of 20% on both the outstanding amount and penalty from
due date of payment.

NB Health Surcharge deductions must be included on the TD 4 Certificate.
(Box 14).

Garnishee Order

Where a taxpayer (including an employee) has outstanding taxes and
refuses or neglects to make payments to liquidate this arrears, the Board of
Inland Revenue can enforce collection using various methods empowered
by the Income Tax Act.

One of these methods is the issuing of a Garnishee Order.
A copy of the Garnishee Order is also sent to the taxpayer.

Section 112 of the Income Tax Act enables the Board to instruct the
employer via a Garnishee Order to deduct arrears of taxes from emolument
of the delinquent employee for a specific period.

19

This arrears is deducted in addition to any tax which is due under the PAYE System.
A deduction under a Garnishee Order must be remitted to the Board of Inland Revenue
at the end of the month in which the deduction was made.

This payment must not be included in the monthly PAYE deductions. A separate
PAYE Remittance Form must be used.

Information in respect of the Garnishee Order must include:
~ Garnishee Order No.
~ Name of Employee
~ BIR No. of Employee
~ Current Remittance
~ Amount Remitted to Date

N.B. Deductions made via a Garnishee Order MUST NOT be included on the TD 4
Certificate for the respective year of income.


Monthly Return - PAYE/Health Surcharge

Every registered employer would receive a monthly PAYE/Health Surcharge Return in
the mail.

The employer is required to submit this return along with PAYE/Health Surcharge
deducted from emolument at any of our payment centres on or before the 15
th
day of
month following the month of deductions.

If an employer does not receive a Return in the mail he can request one, in writing, from
any of our Regional offices.

An employer shall submit only one(1) Return for a filing period (month). Therefore, if
more than one payment is made for a period; all the payments must be totaled and
entered on the Return.

Failure to submit a Return for any month means that the respective payment would be
suspended.








20













































21

Payment and Accounting For Tax

All taxes deducted must be paid by the employer to the Board on or before the stipulated
date, i.e. 15
th
day of the month following the month in which the deductions were made.

Where a person ceases business, the tax must be paid within seven (7) days after the
cessation of the business.

All queries and payments can be made to:

Head
Office (POS):

Inland Revenue Division
Office Collections
Victoria Courts
Cor. Queen & Edward St.
Port of Spain

Telephone:625-0895
Fax:623-0426
Arima Regional
Office:

Inland Revenue Division
Prince Street
Arima



Telephone: 667-7639
Fax: 667-5589
San Fernando Regional
Office:

Inland Revenue Division
Taxpayer Services
52, Cipero Street
San Fernando


Telephone :657-5000 Ext 106
Fax: 657-6057
Tobago Regional
Office:

Inland Revenue Division
Sangsters Hill
Scarborough
Tobago


Telephone: 635-1420
Fax: 639-2538

Payments can also be made at the following District Offices:

Chaguanas - #20 Ramsaran Street, Chaguanas
Couva railway Road, Couva
Pt.Fortin Teshier Road, Point Fortin
Siparia High Street, Siparia
Sangre Grande Damarie Hill, Guaico
Princes Town Naparima Mayaro Road, Princes town
Rio Claro Naparima Mayaro Road, Rio Claro

Acceptance of Payment by the Bank

The Royal Bank of Trinidad and Tobago, through all its branches, has entered into an
agreement with the Government to accept, from the employer, payment of monthly
PAYE and Health Surcharge remittances deducted from employees.

The Bank will accept payment made
(a) On pre-validated computerized forms received in the mail. Where no pre-
validate form is available the employer must make payments directly to the
Board;



22
PYE-00004231
31-OCT-2011
JOHN DOE
3 BENCH PARK
WOODFORD SQUARE
PORT OF SPAIN


PYE-00004231
31-OCT-2011
JOHN DOE
3 BENCH PARK
WOODFORD SQUARE
PORT OF SPAIN



(b) By certified cheque, except where the employer is an account holder of the
Branch;

(c) Over the counter during normal hours and by way off the Banks Fast
Service 24;

(d) Where the amount received agrees with the amount shown on the
PAYE/Health Surcharge Monthly Return;

(e) And issue as a receipt the smaller segment of the official form with its
(Banks) official stamp affixed. The larger segment will be sent to the
Board;

(f) Not later than the due date. i.e. The Bank will not accept late payment nor
collect penalty and interest.

This system has been devised in an effort to assist the taxpayer to expedite payments.
It is advisable to take advantage of this convenient method of effecting payments.

Accounting for Tax Deducted and Keeping Records

When an employer makes any payment of emoluments to an employee or holder of
an office from which tax is deducted as required by the Regulations, he shall furnish
the employee or office older with particulars of the payment including particulars
of the gross emoluments for the pay period and the amount of tax deducted there
from in such form as may be approved by the Board (Payslip).

The Board may, in its discretion, exempt in writing any or all employers from
complying with the provisions of this regulation in respect of such classes of
employees or office holders as the Board shall think fit, and such exemption may at
any time be revoked by the Board.

Every person who makes any payment of emoluments to an employee or holder of an
office (from whose emoluments tax is deducted) must keep, to the satisfaction of the
Board, a record of emoluments paid to each employee and tax deducted from each
payment. Upon request, all records relating to the payment of emoluments and taxes
must be made available for inspection by the Board at the premises of the employer.

Severance Pay and Computation

Severance Pay refers to a lump sum payment made to an employee, under a contract
of emolument, in respect of past services where the

(i) Employees position is made redundant, or

(iv) Employees services were terminated due to ill health.
23

Payments made to an employee by reason of voluntary resignation would not qualify
as severance pay.

Requirements for processing of Severance Approvals for Employees

Prior to the payment, the following information must be supplied to the Taxpayer
Services II (P.A.Y.E. Section) in writing, on a Companys letterhead:-

a) Redundancy-
1) Employees name
Date of Birth
Address
Contact Number
BIR Number
Post of Employee
2) Date of start of employment
3) Copy of Employment Contract (with details of permanent employment)
4) Date of Severance
5) Amount of Severance
6) Reason for Severance
7) Computation of how severance amount was calculated
8) PAYE number of company
9) Individual Termination letters

In addition to the general requirement at (1) (9) the following information is
needed in respect of the specific severance areas listed below:

b) Severance payment to be classified as Retirement Severance Benefit
(i) Employee must be 60 years of age (copy of Birth Certificate and
Affidavit)

(ii) Letter from National Insurance Board stating the employee has retired
from insurable employment.

(iii) Letter from the company stating whether the employee is part of the
companys pension plan.

c) Severance payment due to Ill Health
(i) Original Letter from Medical Doctor stating the nature of the illness
and whether or not the employee is able to continue to work.




24

(ii) Photocopy of the relevant section from the Companys Terms and
Condition of employment or the Trade Union Agreement covering
severance payment.

(v) Details of computation.

With respect to payments connected with termination of employment or office
which would not otherwise be chargeable to tax:-

(a) Where payments are to be made to a spouse, relative or dependant the
names of the spouse/relative/dependant and the circumstances under
which the payment is to be made to him/her and

(b) Where payment is in the form of a valuable consideration other than
money details of the consideration, the dates it is to be given and
evidence of its value at that date.

It should be noted that where a payment is made to a spouse or any relative
or dependant of a person who holds or has held an office of employment, the
payment shall be treated as if it were made to that person (the employee).

It is important that this information be forwarded to the Board for
determining the nature of the payment and the rate at which tax is to be
deducted.

N.B Tax deducted from a Severance payment is not PAYE. A separate
TD4 Certificate with the details of the Severance Pay only, must be
prepared and issued to the Board of Inland Revenue and the employee.
The words SEVERANCE PAYMENT should be clearly marked on
this TD 4 Certificate.

The first $300,000.00 received by an employee as Severance Pay upon
termination of employment where the position has become redundant or on
grounds of ill health is exempt from tax under the Income Tax Act.

The amount in excess of that which was exempted is to be taxed at the
average rate of tax paid by the employee for the year immediately
preceding the year in which the employment is terminated.

NB: The average rate of tax is computed by the Board of Inland Revenue as
follows:

Tax Payable x 100

Chargeable Income
25

Example: No. 1

2011: Total Severance Pay received $449,000.00
Less Statutory Limit (Exempt) $300,000.00
Chargeable at Average Rate $149,000.00

Taxpayers Chargeable Income for 2010 was $63,500.00
Tax payable on $63,500.00
= $63,500 @ 25% = $15,875.00
= $15,875.00

Average rate = 2010 Tax Payable x 100
2010 Chargeable Income

= $15,875 x 100 = 25%
$63,500

Tax on Severance Pay excess = $149,000 at 25%
Tax Payable = $37,250.00

Example: No. 2

(Employment was terminated in 2009. Severance was received in 2011).

2011 Total Severance Pay received $530,000.00
Less Statutory Limit (Exempt) $300,000.00
Chargeable at Average Rate $230,000.00

Taxpayers Ch. Inc. for 2008 (year preceding termination) was
$175,000.00.

Tax payable on $175,000.00:
$175,000.00 @ 25% - $43,750.00
Tax Payable - $43,750.00


26

Average Rate of Tax = $ 43,750.00 x 100 = 25%
$175,000.00
Tax on Severance Pay excess = $230,000.00 x 25%
Tax Payable = $57,500.00
Retirement Severance Benefit and Computation
This is an amount paid to an individual who:
(a) Is not entitled to a pension other than under the National Insurance
Act or the Old Age Pension Act;

(b) Is not a member of an approved Pension Fund Plan, or a Fund or
Scheme that is a Provident Fund and

(c) Who produces evidence to the satisfaction of the Board of Inland
Revenue that he has;

(i) Retired from insurable Employment within the meaning of
the National Insurance Act; and

(ii) Reached the age of 60 years.

Subject to the above conditions, an amount of $300,000.00 of the
retirement severance benefit is exempt from Income Tax. Any amount
remaining in excess of the exemption of $300,000.00 is to be included
in the individuals chargeable income and charged to tax using the rate
of tax for the current year.

Example
2011: Total Retirement Severance Benefit $441,000.00
Less Statutory Limit (Exempt) $300,000.00
Income Chargeable at Scale Rate $141,000.00
Taxpayer Income for 2011 as at 31/3/11 $ 53,500.00



27

Tax Computation
*Taxpayers Income as at 31/3/11 $ 53,500.00
Plus excess over $300,000.00 $141,000.00
Total Income $194,500.00
Less Personal Allowance $ 60,000.00
Total Net Income $134,500.00
Less Approved Deductions (TD 1 Approval) $ 14,000.00
Chargeable Income $120,500.00
Tax on $120,500.00 @ 25%
Total Tax Liability for 2011 = $ 30,125.00
NB: Tax Deduction on Retirement Income =
(Total Tax Liability P.A.Y.E. deduction to date from *income)

Before payment of a Retirement Severance Benefit is made, the employer must
write the Board of Inland Revenue (P.A.Y.E. Section) for approval.

Ex-Gratia Payments
This payment is not normally classified as one of the types of Severance Payments.

Upon approval by the PAYE Section of the Inland Revenue Division, the first
$300,000.00 of ex-gratia payment is exempt from tax and the balance shall be charged
to tax using the average rate of tax.

Retirement Benefit Payments Public Sector

In the Public Sector, Retirement Benefit Payments may take the form of:

- Contract Gratuity
- Retirement at 60 compulsory retirement
- Permission to retire at 50/55
- Retirement on medical grounds due to ill health

In all cases of Public Sector Retirement Benefits, a Statement of Indebtedness must be
obtained from the Board of Inland Revenue before payment is made.

Contract Gratuity payment arises where a person (both within the public and private
sectors) was employed on contract for a specific period, and in accordance with the
terms and conditions of the contract, the employment is terminated. This payment must
be provided for in the contract of employment.
28

Contract Gratuity - Statement of I ndebtedness

Prior to the payment being made, the employer must request a Statement of
Indebtedness from the Board of Inland Revenue.

The request should include:

The employees name
Tax deducted to date
The contract gratuity payable
A completed TD 1 Form
The total income for the year (this includes income paid to date and payable
for the remainder of the year, and any other source of income. eg. Pension)

If the contract is to be renewed this should be also stated together with the
projected earnings for the remainder of the year.

The approval from the Board can only be granted where all outstanding taxes are
cleared.

Where these taxes cannot be paid, a Garnishee Order would be issued to deduct
the arrears from any payment to the individual.

Taxation of Contract Gratuity and the Approval

Provided all liabilities are cleared, the Board of Inland Revenue will issue a
Statement of Indebtedness authorizing payment and indicating how much tax is
to be withheld, in accordance with the P.A.Y.E. Regulations.

The tax is computed after taking into consideration all income to be paid to the
individual for the entire year and the necessary deductions. (Thus the need for a
TD 1 and a statement showing tax and earning to date, along with projected
income to be earned.

Statement of I ndebtedness re: Payment of Retirement Benefits

A similar procedure is followed where Public Servants are due to retire.

This allows the Board of Inland Revenue to recover all outstanding debt owed by
the taxpayer, prior to him receiving his lump sum payment (gratuity) from the
state.

On receipt of the request for the Statement of Indebtedness, the Board of Inland
Revenue must ensure that all outstanding liabilities are cleared.


29

Failure to make these payments would result in a Garnishee Order being served.
All liabilities to the Board of Inland Revenue are first settled by this means, and the
taxpayer then receives what remains of his gratuity.


Not included as Severance Payments are lump-sum payments made:

(a) Under an approved pension scheme;

(b) Under an approved pension fund plan or approved deferred annuity
plan;

(c) Under a contract approved by the Board under section 134(6) of the
Income Tax Act, Chapter 75:01.

(d) In connection with the termination of the holding of an office or
employment by death of the holder or made on account of the injury
to or disability of the holder of the office or employment.

(e) On the death of an employee under his employers pension plan.


TAX RATES 2006 2011
25% of the Chargeable Income
























30

PENALTIES UNDER THE INCOME TAX ACT

Specific Offences for PAYE.

Sec. 98(2) Failure to file a tax declaration.

Any person who fails to file a declaration is liable on summary
conviction to a fine of $3,000.00.

Sec. 98(4) Failure to deduct and/or remit PAYE.

A person who fails to deduct PAYE or to remit, to the Board of Inland
Revenue, the PAYE deducted is guilty of an offence and liable on
summary conviction to a fine of fifteen thousand dollars ($15,000.00)
or to imprisonment for two (2) years or both.

Sec. 99(4) Penalty for late remittance.

Failure to remit the PAYE deducted will result in a penalty of 25% or
$40.00 whichever is greater and interest at the rate of 20% per annum
on the outstanding amount plus penalty from the due date to the day
of payment.

Sec. 99(7) Failure to deliver account or certificate of tax deducted or withheld

Any person who fails to deliver an account or certificate to any person
from whose emoluments the tax was deducted or withheld or to the
Board for the purpose of accountability, is guilty of an offence and is
liable on summary conviction to a fine of seventy five dollars ($75.00)
for every day during which such failure continues.

Sec. 125(3) Any person who contravenes or fails to comply with the regulations
made under Section 125 (1) (i.e. the PAYE Regulations) may be subject
on summary conviction to a fine of five thousand dollars ($5,000.00) or
three (3) months imprisonment.

NOTE:

THIS SUMMARY OF THE PAYE SYSTEM IS NOT A SUBSTITUTE
FOR THE INCOME TAX LAWS & REGULATIONS.

In the case of any inadvertent conflict, the Laws and Regulations
prevail.


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NOTES