S.A.Q #3 Taxation of Stipend

Short answer is that it is subject to income tax unless it is declared to be tax exempt by any legislation in Jamaica or if the Commissioner General of Tax Administration Jamaica (TAJ) authorizes that it may be paid tax-free.

Section 5 of the income tax act (ITA) indicates that all profits and gains arising or accruing from, among other things, employment or vocation of a person resident in Jamaica, is subject to income tax in Jamaica.  If the income is not seen as a gain from employment, it would at least be regarded as a gain from a vocation and therefore would be subject to income tax. 

Section 5 of the ITA defines emoluments subject to income tax as including, among other things, all provisions, or payments and facilities whatsoever.  This definition is very broad and would certainly cover the stipends described above, unless it is declared to be exempt by some other provision in law.

Section 2 of the ITA stipulates that emoluments include, among other things, all sums paid to any person by an employer in respect of expenses, whether such expenses are reimbursable or not.  This means that even if the amount is in place to reimburse an employee for out-of-pocket expenses it would still be subject to income tax.  An exception would be an allowance for meals because the meeting was outside of normal working hours.

Section 12 of the ITA indicates that income may be declared exempt of income tax based on an enactment in the island other than the income tax act.  Therefore, if there is a law which specifies that such a stipend is exempt of income tax, it should be treated as such, but otherwise it is taxable.

The ITA indicates that the Commissioner General of TAJ may authorize certain payments to be made free of tax.  Therefore, an application may be made to TAJ for such a determination on the merit of the nature of the payment, however, failing which, the stipend would be subject to income tax.

Despite the above, if expenses are wholly and exclusively incurred by the parliamentarian to earn the income, such expenses may be claimed by the parliamentarian upon filing his annual income tax return.