Social security and contributions to pension schemes approved under the Income Tax Act are deductible in determining taxable income, as is interest paid on capital employed in acquiring income.
Approved charitable contributions, restricted to 5% of taxable income, are also deductible.
There are no standard deductions in Jamaica.
There are no personal allowances in Jamaica. However, the first JMD 1,500,096 of a Jamaican tax resident individual’s statutory income is tax free.
There are also exemptions from income tax on the first JMD 80,000 for an individual who is aged 65 and over. A person who is 55 years and over who is in receipt of income from an approved superannuation fund or an approved retirement scheme also enjoys an exemption of JMD 80,000 of income from that source and any other source. If the individual is younger than 55 years of age, the exemption is limited to income from the approved scheme not exceeding JMD 80,000.
To the extent not reimbursed, individuals (resident or non-resident) can deduct all expenses that are incurred wholly and exclusively by them in earning their income (e.g. business-related travel, automobile, and entertainment expenses), provided these expenses are not of a capital nature or specifically mentioned in the tax legislation as non-deductible. Expenses for travel to and from work are not deductible.
Fines and penalties
Fines, penalties, and interest arising from tax arrears are not deductible.
Net operating losses
Any claim for deduction of tax losses incurred in a prior year will be capped at 50% of the taxpayer’s chargeable income (before deduction of tax losses carried forward) of the year in which the claim is being made.
This cap will not apply:
- for the five years of assessment following the first year of operation of a new trade, profession, or business, or
- where the taxpayer’s gross revenue from all sources for the relevant year of assessment is less than JMD 3 million per annum.