Income Tax (Amendment No. 40) (Jersey) Law 2012

Income Tax (Amendment No. 40) (Jersey) Law 2012 Arrangement Article part 1 3 introductory 3 1 Interpretation . 3 part 2 3 international business companies 3 2 Article 3 amended . 3 3 Article 76A amended . 4 4 Article 76B amended . 4 5 Article 76C amended . 4 6 Article 123B repealed . 4 7 Article 123F amended . 4 8 Years of assessment for which this Part has effect 4 part 3 4 child care relief 4 9 Article 92B amended . 4 10 Years of assessment for which this Part has effect 5 part 4 6 termination payments 6 11 Article 41B amended . 6 12 Article 62D inserted . 6 13 Article 115A inserted . 6 14 Years of assessment for which this Part has effect 7 part 5 7 pensions 7 15 Article 3 amended . 7 16 Article 131 amended . 8 17 Article 131B amended . 9 18 Article 131CA amended . 10 19 Years of assessment for which this Part has effect 11 part 6 11 miscellaneous 11 20 Article 41HA inserted . 11 21 Article 55 amended . 11 22 Years of assessment for which this Part shall have effect 11 Part 7 12 deemed dividend – computation and tax allowance 12 23 Article 81B amended . 12 24 Schedule 5 amended . 12 part 8 13 closing 13 25 Citation . 13 Income Tax (Amendment No. 40) (Jersey) Law 2012 A LAW to amend further the Income Tax (Jersey) Law 1961. Adopted by the States 8th November 2011 Sanctioned by Order of Her Majesty in Council 30th May 2012 Registered by the Royal Court 15th June 2012 THE STATES , subject to the sanction of Her Most Excellent Majesty in Council, have adopted the following Law – part 1 introductory 1 Interpretation In this Law, “ principal Law ” means the Income Tax (Jersey) Law 1961 [1] . part 2 international business companies 2 Article 3 amended In Article 3(1) of the principal Law in the appropriate alphabetical order there shall be inserted the following definition – “ ‘international activities’ means business activities carried on outside Jersey;”. 3 Article 76A amended In Article 76A of the principal Law – (a) in paragraph (4) the words “or is a company which, pursuant to Article 123B of this Law, has made application and been charged to tax as an international business company” shall be deleted; (b) in paragraph (6) the definition “international activities” shall be deleted. 4 Article 76B amended In Article 76B of the principal Law – (a) in paragraph (6) the words “or is a company which, pursuant to Article 123B of this Law, has made application and been charged to tax as an international business company” shall be deleted; (b) in paragraph (8) the definition “international activities” shall be deleted. 5 Article 76C amended In Article 76C of the principal Law – (a) in paragraph (6) the words “or is a company which, pursuant to Article 123B of this Law, has made application and been charged to tax as an international business company” shall be deleted; (b) in paragraph (8) the definition “international activities” shall be deleted. 6 Article 123B repealed Article 123B of the principal Law shall be repealed. 7 Article 123F amended In Article 123F(10) of the principal Law, for the definition “qualifying company” there shall be substituted the following definition – “ ‘qualifying company’ means a company to which Article 123D applies.”. 8 Years of assessment for which this Part has effect This Part shall have effect for the year of assessment 2012 and ensuing years. part 3 child care relief 9 Article 92B amended In Article 92B of the principal Law – (a) for paragraph (1) there shall be substituted the following paragraph – “(1) The threshold applicable in the case of an eligible claimant shall be increased by – (a) the amount paid by the claimant – (i) to a registered day carer or nanny accredited by the Jersey Child Care Trust for the care of a qualifying child, or (ii) under Regulations made under Article 9 of the Education (Jersey) Law 1999 [2] for the attendance of a qualifying child below compulsory school age in a nursery school or nursery class maintained by the Minister for Education, Sports and Culture under that Law; (b) the claimant’s qualifying income; (c) in the case of a qualifying child whose date of birth is between 1st January and 31st August inclusive and who, in a year of assessment has not attained the age of 4 years, £12,000; (d) in the case of a qualifying child whose date of birth is between 1st September and 31st December inclusive and who, in a year of assessment – (A) has not attained the age of 4 years, or (B) has his or her 4th birthday, £12,000; or (e) in the case of any other qualifying child, £6,150, whichever is the lowest, but no amount which qualifies for relief under any other provision of this Law shall be included.”; (b) for paragraph (3) there shall be substituted the following paragraph – “(3) No increase claimed under paragraph (1) shall be allowed unless the eligible claimant provides the Comptroller with a certificate from, as the case requires, the registered day carer, nanny, nursery school or primary school in which the nursery class is held showing, in respect of the year of assessment – (a) the name and address of the registered day carer, nanny, nursery school or primary school; (b) in the case of a registered day carer, his or her registration number; (c) in the case of a nanny, his or her reference number from the Jersey Child Care Trust; (d) the full name and date of birth of the qualifying child; and (e) the amount received for the care of the child.”. 10 Years of assessment for which this Part has effect This Part shall have effect for the year of assessment 2011 and ensuing years. part 4 termination payments 11 Article 41B amended In Article 41B(1) of the principal Law after the words “to an employee” there shall be added the words “, including any payments made by an employer that fall within Article 62D.”. 12 Article 62D inserted After Article 62C of the principal Law there shall be inserted the following Article – “62D Application of Schedule D to termination and other payments (1) Tax shall be charged under Case II of Schedule D in respect of any payment made by or on behalf of an employer to an employee in consequence of – (a) the termination of the employee’s employment; or (b) any change in the duties or emoluments of the employment, regardless of whether the payment arises from a contractual or statutory entitlement, an order by a court or tribunal or is voluntary on the part of the employer. (2) For the purposes of paragraph (1) – (a) ‘employee’ refers to any person paid wages or salary by another person regardless of whether the first person is employed or is an office holder and ‘employer’ and ‘employment’ shall be construed accordingly; and (b) the reference to payment made to an employee includes payment to an employee’s estate.”. 13 Article 115A inserted After Article 115 of the principal Law there shall be inserted the following Article – “115A Exemption in respect of redundancy and other termination payments (1) Subject to the provisions of this Article, exemption from income tax shall be granted in respect of any termination payment made to an employee by or on behalf of an employer. (2) In this Article ‘termination payment’ means any payment made to an employee in consequence of the termination of the employee’s office or employment, including any redundancy payment, compensation for unfair dismissal or loss of office, compensation for injury, death or disability (whether or not any such payment is calculated on the basis of earnings), but disregarding any payment that falls within the description in paragraph (3). (3) For the purposes of paragraph (2) there shall be disregarded any payment that has the characteristics of remuneration or deferred pay under the terms and conditions governing the employment including bonuses, holiday pay, payment in lieu of notice, payments whilst suspended from duties, pension and other amounts of a like nature. (4) Subject to paragraph (5), a termination payment shall be exempt under paragraph (1) in respect of so much of the payment as does not exceed £50,000. (5) So much of a termination payment that is made as a consequence of injury, death or disability shall be exempt under paragraph (1) without limit. (6) For the purposes of determining whether a payment is a termination payment for the purposes of this Article it is irrelevant whether it is paid as a result of a contractual or statutory entitlement, an order by a court or tribunal or is voluntary on the part of the employer. (7) For the purposes of paragraph (1) – (a) ‘employee’ refers to any person paid wages or salary by another person regardless of whether the first person is employed or is an office holder and ‘employer’ and ‘employment’ shall be construed accordingly; and (b) the reference to payment made to an employee includes payment to an employee’s estate.”. 14 Years of assessment for which this Part has effect This Part shall have effect for the year of assessment 2012 and ensuing years. part 5 pensions 15 Article 3 amended In Article 3(1) of the principal Law in the appropriate alphabetical order there shall be inserted the following definition – “ ‘medical practitioner’ means a person who is a registered medical practitioner under the Medical Practitioners (Registration) (Jersey) Law 1960 [3] or who is the equivalent of such a person under the law of a country or territory outside Jersey;”. 16 Article 131 amended In Article 131 of the principal Law – (a) after paragraph (1)(ab) there shall be inserted the following sub-paragraph – “(ac) no deduction shall be allowed as an expense under this paragraph of a contribution paid in a year of assessment by an employed person whose income exceeds £150,000, unless the total contributions paid by the employed person in the year of assessment exceed the amount of the excess income (‘excess income’ being the amount of the employed person’s income less £150,000);”; (b) after paragraph (1) there shall be inserted the following paragraphs – “(1A) The amount that may be deducted in the circumstances described in paragraph (1)(ac) is £1 for every £1 by which the total contributions paid by the employed person in the year of assessment exceed the excess income. (1B) If an amount is deducted in the circumstances described in paragraph (1)(ac) no deduction shall be allowed under Article 131B(2B) and Article 131CA(2B). (1C) For the purposes of paragraph (1)(ac) and (1A) – (a) references to ‘income’ mean the employed person’s total income disregarding the aggregate of any of the following paid by the employed person in the year of assessment – (i) interest in respect of which the employed person is entitled to a marginal income deduction under Article 90AA, (ii) an ordinary annual contribution, (iii) a premium paid under an annuity contract as defined in Article 131B, (iv) a contribution to a retirement annuity trust scheme as defined in Article 131CA; (b) references to ‘total contributions’ mean the aggregate of any of the payments described in clauses (ii) to (iv) in sub-paragraph (a).”; (c) for paragraph (3)(iv) there shall be substituted the following clause – “(iv) notwithstanding that the rules of the fund or scheme provide for the transfer of a sum, representing the accrued rights of an employee, to – (A) another fund or scheme approved under this Article, (B) the annuity fund of an annuity contract as defined in Article 131B, (C) a retirement annuity trust scheme as defined in Article 131CA, (D) an approved drawdown contract, or (E) the employee in such circumstances as the Minister may specify by Order.”. 17 Article 131B amended In Article 131B of the principal Law – (a) in paragraph (2) before the words “Any premium paid” there shall be inserted the words “Subject to paragraph (2A),”; (b) after paragraph (2) there shall be inserted the following paragraphs – “(2A) In the case of a premium paid in a year of assessment under an annuity contract by an individual whose income in that year exceeds £150,000, no deduction shall be made under paragraph (2) unless the total contributions paid by the individual in the year of assessment exceed the amount of the excess income (‘excess income’ being the amount of the individual’s income less £150,000). (2B) In the circumstances described in paragraph (2A), the amount that may be deducted under paragraph (2) is £1 for every £1 by which the total contributions paid by the individual in the year of assessment exceed the excess income. (2C) If a deduction is made in the circumstances described in paragraph (2A) no deduction shall be allowed under Article 131(1A) or Article 131CA(2B). (2D) For the purposes of paragraphs (2A) and (2B) – (a) ‘income’ means the individual’s total income disregarding any of the following paid by the individual in the year of assessment – (i) any interest in respect of which the individual is entitled to a marginal income deduction under Article 90AA, and (ii) the aggregate of any payment described in sub-paragraphs (a) to (d) of paragraph (9); (b) ‘total contributions’ mean the aggregate of any payment described in sub-paragraphs (a) to (d) of paragraph (9).”; (c) for paragraph (3)(e) there shall be substituted the following sub-paragraph – “(e) the individual may elect to commute the whole of the fund in respect of which, if the election was not made, the payment of the annuity to him or her (such payment not yet having commenced) would be made by reason of the fact that the individual is in serious ill health, such term being construed in accordance with paragraph (3A),”; (d) After paragraph (3) there shall be inserted the following paragraph – “(3A) For the purposes of paragraph (3)(e)), an individual is not in serious ill health unless the person having control of the annuity fund has received evidence from a medical practitioner that the individual is expected to live for less than one year.”. 18 Article 131CA amended In Article 131CA of the principal Law – (a) in paragraph (2) before the words “Except in the circumstances described” there shall be inserted the words “Subject to paragraph (2A) and”; (b) after paragraph (2) there shall be inserted the following paragraphs – “(2A) In the case of a contribution paid in a year of assessment into a retirement annuity trust scheme by an individual whose income in that year exceeds £150,000, no deduction shall be made under paragraph (2) unless the total contributions paid by the individual in the year of assessment exceed the amount of the excess income (‘excess income’ being the amount of the individual’s income less £150,000). (2B) In the circumstances described in paragraph (2A), the amount that may be deducted under paragraph (2) is £1 for every £1 by which the total contributions paid by the individual in the year of assessment exceed the excess income. (2C) If a deduction is made in the circumstances described in paragraph (2A) no deduction shall be allowed under Article 131(1A) or Article 131B(2B). (2D) For the purposes of paragraphs (2A) and (2B) – (a) ‘income’ means the individual’s total income disregarding any of the following paid by the individual in the year of assessment – (i) any interest in respect of which the individual is entitled to a marginal income deduction under Article 90AA, (ii) the aggregate of any payment described in sub-paragraphs (a) to (d) of paragraph (12); (b) ‘total contributions’ mean the aggregate of any payment described in sub-paragraphs (a) to (d) of paragraph (12).”; (c) for paragraph (4)(f) there shall be substituted the following paragraph – “(f) for the primary beneficiary to elect to receive a lump sum by way of commutation of the whole of the fund in respect of which, if the election was not made, the payment of annuity equivalents to him or her (such payment not yet having commenced) would otherwise be made by reason of the fact that the primary beneficiary is in serious ill health, such term being construed in accordance with paragraph (4A);”; (d) after paragraph (4) there shall be inserted the following paragraph – “(4A) For the purposes of paragraph (4)(f) a primary beneficiary is not in serious ill health unless the trustees of the retirement annuity trust scheme have received evidence from a medical practitioner that the primary beneficiary is expected to live for less than one year.”. 19 Years of assessment for which this Part has effect This Part shall have effect for the year of assessment 2012 and ensuing years. part 6 miscellaneous 20 Article 41HA inserted After Article 41H there shall be inserted the following Article – “41HA Tax deducted under the Social Security (Jersey) Law 1974 (1) If the Minister of Social Security is required under the Social Security (Jersey) Law 1974 [4] to deduct income tax from a component of a benefit payable to a person under that Law, tax shall be deducted at the same effective rate which the person’s employer would have been required to deduct had such component been paid by the employer to the person as earnings when such earnings were due to be paid. (2) The Comptroller may issue a notice, in writing, to the Minister for Social Security, of the effective rate for the purposes of paragraph (1). (3) The amount of income tax deducted under paragraph (1) shall be remitted to the Comptroller and received by the Comptroller as a payment of tax by the person to whom the benefit is paid.”. 21 Article 55 amended In Article 55(2) of the principal Law for the word “76A” there shall be substituted the word “76C”. 22 Years of assessment for which this Part shall have effect This Part shall have effect for the year of assessment 2012 and ensuing years. Part 7 deemed dividend – computation and tax allowance 23 Article 81B amended (1) In Article 81B(1) of the principal Law, at the end of the definition “relevant dividend”, there shall be added the words “but, in either case, no later than 31st December 2011”. (2) This Article shall come into force forthwith. 24 Schedule 5 amended (1) In Schedule 5 to the principal Law, after paragraph 8 there shall be added the following paragraph – “8A Income Tax (Amendment No. 38) (Jersey) Law 201- and Income Tax (Amendment No. 40) (Jersey) Law 201-: deemed shareowners (1) This paragraph applies where – (a) pursuant to Article 82A, an individual is deemed to own shares in a Jersey trading company or Jersey financial services company (referred to in this paragraph as ‘Company A’); and (b) by virtue of Article 81D or 81G the individual is deemed to receive a dividend out of the relevant profits of Company A. (2) Tax in respect of – (a) income arising from dividends and distributions (other than relevant dividends) paid out of the relevant profits – (i) by Company A, (ii) to a company or other entity through which the individual is deemed to own the shares in Company A; and (b) income arising from dividends and distributions paid out of income described in sub-paragraph (a) – (i) by a company or other entity through which the individual is deemed to own the shares in Company A, (ii) to the individual or to another company or entity through which the individual is deemed to own the shares in Company A, shall not be charged on so much of the income as comprises or is derived from the amount of the dividend that the individual is deemed to receive from Company A. (3) Where, by virtue of sub-paragraph (2), the liability of a body of persons to tax on income arising from dividends or distributions is reduced, the amount of tax that the body of persons is entitled by virtue of Article 88(2) or (3) to deduct when paying a dividend out of that income, as described in sub-paragraph (2)(b), is correspondingly reduced.”. (2) This Article shall have effect for the year of assessment 2011 and ensuing years. part 8 closing 25 Citation This Law may be cited as the Income Tax (Amendment No. 40) (Jersey) Law 2012. m.n. de la haye Greffier of the States [1] chapter 24.750 [2] chapter 10.800 [3] chapter 20.600 [4] chapter 26.900