One year wait for ease

chrissincklerandhisestimatesAs Minister of Finance Chris Sinckler prepares to deliver his Budget tomorrow, Government is only now moving to formalise a number of tax breaks pledged in the last such presentation more than a year ago.

Parliament will be asked to approve a series of amendments to the Income Tax Act for measures, including an annual medical expense deduction for Bajans 40 years and over, and a suite of tax eases related to renewable energy.

According to the 20-page Income Tax (Amendment) Act. 2013, effective income year 2012 individuals and businesses can access specific income tax holidays, and tax benefits related to staff training, interest paid on loans, marketing of products and services, product development and research, and shareholder dividends, all of which must have direct relation to renewable energy.

In the case of medical expenses, once changes to the act are passed, Barbadians of a specified age will get a maximum $750 tax deduction.

“In calculating the taxable income for an income year of an individual who has attained 40 years of age and over, there shall be deducted from the assessable income of that individual, amounts expended, not exceeding $750 for … annual comprehensive medical examination rendered in Barbados by a medical practitioner registered under the Medical Registration Act,” the amendment stated.

The same will be available for “associated diagnostic services provided in Barbados by a registered laboratory, public hospital, private hospital or private clinic as recommended by the medical practitioner”.

Other tax eases that will be available under the proposed amendments included: • With effect from income year 2012, a developer, manufacturer or installer of renewable energy systems and energy efficient products shall be granted an income tax holiday for a period of 10 years. • With effect from income year 2012, in calculating the taxable income for an income year of a person carrying on an eligible business, there shall be deducted from that person 150 per cent of the amount of interest paid on a loan in respect of … the construction of a new facility or the upgrading of an existing property to enable the generation, supply and sale of electricity from a renewable energy source; the construction of a new facility for the installation or supply of renewable energy systems or energy efficient products. • With effect from income year 2012, and for a period of 10 years, in calculating the taxable income for an income year of a person carrying on an eligible business, there shall be deducted from the

assessable income of that person 150 per cent of the amount actually expended on the training of staff in the generation and sale of electricity from a renewable energy source or in the installation and servicing of renewable energy electricity systems or energy efficient products.” • With effect from income year 2012, in calculating the taxable income for an income year of a person carrying on an eligible business, there shall be deducted from the assessable income of that persons 150 per cent of the amount actually expended in the marketing of products that are for the generation and sale of electricity from a renewable energy source or the marketing of products that are related to the installation and servicing of renewable energy electricity systems or energy efficient products.

• With effect from income year 2012, in calculating the taxable income for an income year of a person carrying on an eligible business, there shall be deducted from the assessable income of that person, 150 per cent of the amount expended in respect of product development and the conduct of research related directly to the generation and sale of electricity from a renewable energy source or the installation and servicing of renewable energy electricity systems or energy efficient products.”

• With effect from income year 2012, where venture capital funds are invested in the renewable energy sector and energy efficient sector, the funds shall be exempt from the payment of corporation tax for a period of 10 years. • With effect from income year 2012, in calculating the taxable income of a person, there shall be deducted from the assessable income of that person, contributions to venture capital funds where investments are made in the renewable energy sector and energy efficient sector for a period of 10 years.”

• With effect from income year 2012, dividers earned by shareholders of companies solely engaged in the installation nor supply of renewable energy electricity systems or energy efficient products are exempt from withholding tax for a period of 10 years.

• With effect from income year 2012, interest earned by financial intermediaries for financing the development, manufacturing and installation of renewable energy systems and energy efficient products shall be exempt from the payment of tax for a period of 10 years.

In June last year when he announced some of these measures in the 2012 Financial Statement and Budgetary Proposals, Sinckler said Government also intended to “undertake a complete review of the entire tax system next year and it is our firm expectation that coming out of that exercise a further lowering of the income tax thresholds and rate of tax will come down”. (SC)

Leave a Reply

Your email address will not be published. Required fields are marked *