How to: Filing income tax returns for partnerships
With less than a month to the March 15 deadline to file income tax returns, Jamaican business persons will be busy getting their house in order to ensure they comply with the income tax laws.
Persons who operate a business in partnership with others, sharing the profit or loss, may be unaware of how the income tax law applies to their partnerships. Here is how persons in partnerships should file their income tax:
1. Partnerships should be registered and have a Taxpayer Registration Number (TRN). All registered partnerships are required to submit returns under the Income Tax Act. The Income Tax Return Form must be used to file the partnership return, showing the total income and expenses of the business and how the profit is shared.
2. The individual and their partner will need to file separate tax returns, using an Income Tax Return Form, showing the share of profit each person receives, plus any taxable income from other sources.
3. Similar to other types of businesses, a final partnership return and each partner's final income tax return is due by March 15 each year. Estimated annual returns are also due by March 15 for the partnership and individual partners.
4. Partnerships need to submit a combined income statement, or profit and loss statemen, of the 'complete' business operations for the year along with the Partnership Return Form. The return should include name and address of the partners and the share of net profit or loss of each partner.
5. For an individual that earns income from any source other than their partnership, such as salary, fees, rent, interest, profit or income received locally or from overseas, it should be disclosed in the individual income tax returns.
6. If a partnership arrangement exists between someone who resides in Jamaica and someone who resides abroad, the 'precedent partner', the partner who is resident in the island, is responsible to prepare, and submit a partnership return for the year of assessment.
7. In the case where neither partner is a resident of Jamaica, the return should be prepared and submitted by an attorney, agent, manager or factor of the firm who is resident in the island.