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Personal Income Tax – Salary & Wage Earners

PAYE became a Final Withholding Tax on 1st January 2013. Final in the sense that once an employer deducts PAYE from the gross salary/wage of a particular employee, it represents the final tax liability on that income. As a result, most employees will not be required to lodge Form S returns. This is because the correct amount of PAYE would have been deducted, leaving them with no tax dues or tax refunds at the end of the tax year.

The PAYE Final Tax system requires employers to deduct from employees’ salaries/wages, the correct amount of PAYE.

Any tax overpaid will be refunded and any tax that has been short paid will be recovered from the employee.

PAYE is not a final tax for employees that have more than one employment during the tax year or who receive other incomes e.g.  business income, share of income from estates/ partnership etc.  Such persons must lodge a business return (Form B) and attach his/her employment Tax Withholding Certificate.


What is the current income tax threshold?

The income tax threshold for resident individuals is FJ$30,000 with effect from 1 August, 2017.

Previous years’ income tax threshold:

Years

Threshold (FJD)

2013 – July 2017

$16000

2012

$15600

2011

$15000

2010

$15000

2009

$15000

2008 June-December

$15000

2008 January-May

$9000

2007

$8840

2006

$8840

 

Employees may be required to lodge a tax return in the following situations:

–  has 2 or more employments during a year and total income received is above $30,000.00;

–  has other income derived from business sources

–  receives a demand notice from the Commissioner to lodge a return

Tax rates

Income tax is imposed on Chargeable income (i.e. Gross income less deductions).

All personal allowances such as Marital, Child, Elderly and FNPF are no longer available with effect from 1 January 2013.

There are separate rates of income tax for resident and non-resident individuals.

 

For Resident employees the current tax rates applicable on any excess income above FJ$30,000 are 18% and 20%. This tax rates are charged depending on the income bracket of the resident employee.

For Non-Resident employees, 20% is applicable from the first dollar of chargeable income.

 

What income of individuals are taxable?

The three main categories of taxable income for individuals, are as follows:

  • income from employment.
  • income from property.
  • income from business/investments.

 

Income from employment

Employment income includes the following-

  • salary, wages, or other remuneration derived by an employee in respect of employment, including leave pay, payment in lieu of leave, overtime pay, bonus, commission, fees, gratuity, or work condition supplements;
  • the value of a fringe benefit, other than an exempt fringe benefit, derived by an employee in respect of employment that is not subject to tax under the Fringe Benefits Tax;
  • the amount of any allowance derived by an employee in respect of employment, including a cost of living, subsistence, rent, utilities, education, entertainment, meeting or travel allowance, but not including any allowance to the extent expended in the performance of the employee’s duties of employment;
  • the amount of any expenditure incurred by an employee that is reimbursed by the employer, other than expenditure to the extent incurred on behalf of the employer in the performance of the employee’s duties of employment; salary, wages, overtime, bonus, remuneration.
  • retiring allowances or pension, accruing in, derived from or received in Fiji.
  • an amount derived by an employee as consideration for—
    • the agreement by the employee to enter into employment;
    • (ii) the employee to agree to any conditions of employment or any changes to the employee’s conditions of employment; or
    • (iii) the agreement of the employee to accept a restrictive covenant in respect of any past, present or prospective employment;
  • an amount derived by an employee on termination of employment, whether paid voluntarily or under an agreement, including a redundancy payment or other compensation for loss of employment, and golden handshake payments;
  • any pension, annuity or supplement to a pension or annuity derived by an employee in respect of employment, including a past employment;
  • the amount of any loan, payment for an asset or services, value of any asset or services provided, or any debt obligation released, by the company to, or in favor of, a member of the company or an associate of a member to the extent to which the transaction is, in substance, remuneration for services provided in any capacity to the company by the member.

 

All employment income is subject to PAYE Final Tax; however, some payments are exempt from tax and have special provisions for exemptions in the Income Tax (Exempt Income) Regulations 2016.

 

Income from property

This includes the following:

  • a dividend, interest, royalty, rent, natural resource amount, or other amount arising from the provision, use or exploitation of property;
  • the net gain from the disposal of an asset that was acquired for the purpose of disposal at a profit;
  • a pension, charge or annuity, or any supplement to a pension, charge or annuity;
  • a benefit paid by a retirement fund.

 

 

Income from business/investments

This includes the following:

  • interest received from loans/money lending whether licensed or not.

 

Note dividend income is exempt from income tax with effect from 1 August 2017

 

Resident, Temporary Resident & Non-Resident

A person is regarded as a resident if his/her permanent home or place of residence is in Fiji. If a person is not normally a resident in Fiji, he/she may be regarded as a resident if he/she has actually been in Fiji, continuously or regularly during more than one-half of the income year. He/she must satisfy the Chief Executive Officer that he/she will take up residency in Fiji.

Residents are taxed on their worldwide income (all sources) . A resident individual for income tax purposes is a person (other than a company) who resides in Fiji, is domiciled in Fiji or has been in Fiji for more than half of the income year

 

Temporary Residents are taxed on their income derived or earned in Fiji on resident tax rates. A Temporary Resident for tax purposes is an individual who is a resident individual solely or mainly for the purposes of engaging in employment in Fiji under a contract of employment of not more than 3 years. It does not include a Fiji citizen or permanent resident of Fiji.

 

Non-residents are taxed only on their income derived or earned in Fiji

 

Example:

An individual, who is a medical doctor, is granted leave by his employer to work in Australia for 2 years. He does not derive any income in Fiji during that period.

 

Since he is only working temporarily in Australia, he is still a Fiji resident for tax purposes, therefore is required to lodge returns for the income received in Australia. That income is taxable in Fiji and he will be allowed a credit for the tax paid in Australia.

Relief from Double Taxation

Double taxation of residents is avoided by allowing credits for foreign tax paid on income derived from countries with which Fiji has tax treaties. Fiji allows unilateral relief from double tax on income from non-treaty counties, provided the income has been subject to tax in that other country.
Fiji has entered into agreements for the avoidance of double tax with the following countries: 

  1. Qatar
  2. India
  3. Australia
  4. New Zealand
  5. Papua New Guinea
  6. Japan
  7. Korea
  8. Malaysia
  9. Singapore
  10. United Arab Emirates
  11. United Kingdom

 

How do I calculate the final tax payable/refund amount?

Click on the link for more information  Instructions IRS201 or go to the Tax calculator.

How will I be notified of the Tax payable or Refundable

Once an assessment has been completed, FRCS will issue a Commissioners Assessment to the salary & wage earner, which is posted to the individuals last known postal address. 

 

 Can I request for an amendment to my income tax return?

For PAYE final, you can request for a review of the tax assessed. If required to lodge a tax return, you can lodge an amended one within 6 years if you have made a mistake. If the CEO has made an adjustment and you disagree with the assessment, you can lodge an objection within sixty (60) days from the date of issuance of the Commissioners Assessment.

When and how should I pay my tax?

Any tax payable should be settled within thirty (30) days from the date of issue of the Commissioner’s Assessment. Payment of taxes can be made at our cashiers in all our FRCS offices – Fiji wide. Failure to settle within the due dates will result in the imposition of 25% Late Payment Penalty on the payable amount.

 

Further information

For further assistance you can on personal income tax for salary & wage earners, you may send an email request to tepu@frcs.org.fj or info@frcs.org.fj.

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