Jersey income tax
A tax is a financial charge imposed on an individual or legal entity. Taxes consist of direct and indirect tax. To be specific, tax means a pecuniary burden lay upon individuals or property to support the government. Usually tax is collected by a legislative authority. Tax is not a voluntary contribution; it is made compulsory for every qualified individual, who earns money more than the stipulated level. The tax earned so far, is used for the benefit and welfare of the people, like laying roads till protecting the country from enemies.
Funds collected by means of revenue have been used by the respective states to carry out certain functions like
1. expenditure on war
2. Enforcement of law and public order.
3. Protection of property, economic infrastructures.
4. public works and social engineering,
5. Welfare and public services, like education, health care, pension, unemployment benefits, transportation and common public utilities.
Every country has formed its own legislative councils to collect the tax. In new jersey, the government has formed its own income tax department.
Every individual who receive wages from their employees are subject to the New Jersey income tax. In this context wage includes income received for services rendered as an employee. It may be in any form like salaries, tips, fees, commission, bonuses and last but not the least any other compensation received from the employer, cash and benefits .
If we carefully examine the term income, we could get few differences, when we compare it with the federal government.
1. The first and striking difference is that New Jersey does not allow any individual to exclude any amount from wages, which has been contributed to deferred compensation and retirement plans.
2. In the same way, the New Jersey government doesnt permit any individual to deduct moving expenses or employee business expenses from wages, although they can exclude reimbursement for certain expenses. The federal designation of statutory employee has no meaning for New Jersey income tax purposes.
The Income Tax Office also performs a vital function for the community in Jersey - the tax they assess and collect forms some 85% of total States revenue, helping fund vital public services such as education and health.
Here are some glimpse of the rules and general guidelines to be followed by individuals who pay their income tax in New Jersey. There is no minimum age before an individual becomes liable to income tax. It all depends on the level of income. There are thresholds known as small income exemption limits. For the year of assessment 2006 these are £11,020 for a single person and £17,680 for a married man. These limits may be increased depending upon personal circumstances e.g. if you have children, if you are a single parent, if your wife is working or if you are over 63 years of age.
Certain deductions and allowances are available for the tax payers relief. Some are summed up as follows.
Deductions:
1. Employment expenses - personal pension premiums. Interest paid to a bank on certain qualifying loans; for example a loan to purchase the property where the assessees reside.
2. Maintenance payments like life assurance premiums, medical insurance premiums.
Allowances.
1. Single persons allowance £2600.
2. Married persons allowance £5,200.
3. Earned income allowance up to £3,400.
4. Wifes earned income allowance up to £4,500.
5. Child allowance £2,500 or £5,000 if in further education.
6. Additional personal allowance £4,500.
7. Child care relief up to £6,150.
Every qualified income tax payer, at the time of marriage need to declare their respective incomes. and in case of females, her income will be entered in husband tax return. After marriage she will be taxed as a single person and he as a married person. Each will receive their own Notice of Assessment. In subsequent years only one Tax Return and one Assessment is issued to the husband. He is legally responsible for completing this Tax Return and paying the tax due on the combined income.
Yearly cycle:
The standard rate of tax is set each year by Law, a piece of legislation that is enacted annually at the time the Budget is presented to the States (usually in early December). The standard rate has continued to be set at 20p in the £ for more than 50 years. At this time, they will announce regarding the amendments to the income tax law.
Consequences of non declaration of income
If it is found out in an investigation that some part of full of income has been omitted from any tax returns submitted, or if someone has failed to pay the correct amount of tax, fines will be levied and the tax due will also be collected.
The maximum penalty for negligently making a return is £2,000 for each offence plus 200% of the tax lost. Let us take an example, if negligence has been made by an individual in making returns for three-years, it will lead to further tax of £2,000 and a maximum fine of£10,000. This fine is in addition to paying the tax of £2,000.
It is the Comptrollers general practice to accept a money settlement consisting of the tax plus a fine rather than institute proceedings before the Royal Court. Although he can give no undertaking as to whether or not he will accept a money settlement in a particular case, he is influenced by the fact that a person makes a full confession of any offence to which he has been a party and has given full facilities for investigation. It is therefore very important to ensure that all your taxable income is declared on your Tax Return. The simple way to lead a smooth and safe life is disclose the right amount of income and paying the right amount of tax on time.
However if any employee is not satisfied with the notice of assessment sent to them, or if they think that the figures are incorrect, they can make a notive of appeal within forty days from the date of issue of assessment.
Consequences of delayed payment
Every late payment has a surcharge. If any individual doesnt pay the tax before the stipulated time, usually 10 percent will be added to the sum which remains unpaid. In addition, legal proceedings are also taken against those defaulters. The legal cost will be borne by the latter.
The following are the rates of tax for the year 2006.
Summary of allowances for 2006
Earlier years and provisional allowances for 2007 ;can be found under Fast Find below
Personal allowances
Standard rate 20% Single £2,600 Married £5,200 Earned income fraction Earned income maximum ¼ £3,400
Thresholds (Exemption limits)
Marginal rate 27% Single £11,020 Married £17,680 Single (Aged 63 or over for the whole of the year) £12,300 Married (Aged 63 or over for the whole of the year) £20,250.
Other allowances
Additional Personal £4,500 Wifes earned income £4,500 Child Reduction £2,500 £1 for £1 Child in further education Reduction (calculated by reference to the excess of child\\\'s income over £2,500) £5,000 £3 for £2
Retirement Annuity Relief
15% of Relevant Earnings (including other pension contributions) to a maximum £15,000 Aged 40 - 49 25% of Relevant Earnings (including other pension contributions) to a maximum £25,000 Aged 50 or over 35% of Relevant Earnings (including other pension contributions) to a maximum £35,000
Motor expenses
Flat rate per mile: Car Flat rate per mile: Motor cycle 55p 27.5p
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