Inconsistencies that pervade the revenue collection system cause inordinate delays and are time consuming. One contradiction that should be speedily resolved is the requirement to report assessable income for Education Tax based ( line 41 of the Income Tax form (IT01)) <–See PDF Form Here
and the confusion at the Revenue Office when the taxpayer reduces his/her liability by the amount paid through the Pay As You Earn (PAYE) system.
Many times the taxpayer is asked to revise his return at the Tax Collection Centre and this is a travesty. This contempt is compounded when the taxpayer is asked to write a letter stating that an error was made. Nothing in the taxpayer’s initial presentation of the taxpayer’s liability on the Education Tax form (ET01) suggests that this course of action is warranted.
Mini Glossry: ETOI is the Education Tax Return, IT01 is the Income tax Final Return
The reasons are obvious: Please follow very closely
Currently, the assessable earnings for Education Tax is reported on the total line, (column 2, page 2) of the ET01 form and the computed tax at the total line ( column 3). Since a taxpayer should pay no more or no less that his/her fair share, then the amounts already paid should be reported at line (d) column 3. The difference between the computed figures at column 3, total line and column 3, line (d) placed in column 3, line (e).
According to the instructions on the ET01 form, all 4 figures should be reported at lines 8,9,10 and 11 on page one of the aforementioned form.
Line 41 of the IT01 form includes income from employment and if the taxpayer paid Education Tax through the PAYE system: We submit that this should be reported at Column 3, line (d) on page 2 of the ET01 form and taken to line 9 on page 1 of the form.
We note for the record that line 41 on the form includes pension at line 29 dividends and interest at line 30 yet an asterisk on page 2 of the form shows that these sources of income are not assessable for Education Tax. Moreover Education Tax from the PAYE system is currently reported on Form S02 and formerly Form ET 03.
A Recommended Solution
We submit that the tax forms needs revision if a clear understanding of their preparations can be forged among taxpayer, tax preparer and tax collectors. We further opine that a relevant worksheet for tax preparation ( like the IT 2012 issued by the Canadian Government ) should be available on the TAJ website.
This Federal Worksheet is ostensibly an explanation on how to prepare the tax form and is not required to be submitted when presenting the tax returns.
Understanding builds compliance.