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Notice to Employers, Employees & Self-Employed Persons | Changes to Income Tax Threshold (2023)

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Notice to Employers, Employees & Self-Employed Persons | Changes to Income Tax Threshold (2023)

February 15, 2023

In accordance with the Income Tax (Amendment) Act No. 3 of 2023, the personal allowance or free pay for employed and self-employed individuals was revised and takes effect from January 1, 2023:

The Annual Statutory Deduction in accordance with the amendment to Section 20 of the Income Tax Act, Chapter 81:01 is one million, twenty thousand dollars ($1,020,000).

Chargeable Income, taxable at the rate of twenty-eight percent (28%), is limited to two million, forty thousand dollars ($2,040,000) annually. While Chargeable Income in excess of two million, forty thousand dollars ($2,040,000) annually will be taxed at the rate of forty percent (40%) in accordance with Sections 20, 36 and 36A of the Income Tax Act, Chapter 81:01.

Additionally, Section 16(l) of the Income Tax Act, Chapter 81:01, was introduced in 2022 to provide for a deduction of medical and life insurance premiums from the Income of all individuals. The deduction is subject to premiums paid, a ceiling of ten percent (10%) of the individual income or three hundred and sixty thousand dollars ($360,000) annually, whichever is less. This measure is still effective in 2023.

Consequently, Employed Individuals earning remuneration up to two hundred and fifty-five thousand dollars ($255,000) monthly should be allowed, Personal Allowance (Free pay) of eighty-five thousand dollars ($85,000). In addition, National Insurance Scheme (NIS) Contribution of 5.6% and Medical and Life Insurance Premium Deductions (on the amount of premiums paid by the employee, which have a ceiling of ten percent (10%) of Gross Salary; or thirty thousand dollars ($30,000) monthly, whichever is less) will also be applicable in determining the Total Deductions allowed.

Employed Individuals earning remuneration above two hundred and fifty-five thousand dollars ($255,000) must be allowed a monthly Personal Allowance (Free pay) of one-third (1/3) of their Gross Income. In addition, National Insurance Scheme (NIS) Contribution of 5.6% and Medical and Life Insurance Premium Deductions (on the amount of premiums paid by the employee, which have a ceiling of ten percent (10%) of Gross Salary; or thirty thousand dollars ($30,000) monthly whichever is less) will also be applicable in determining the Total Deductions allowed.

The ceiling of the National Insurance Scheme Contribution is on the Gross Income up to two hundred and eighty thousand dollars ($280,000) per month or three million, three hundred and sixty thousand dollars ($3,360,000) which is applicable to employed persons and the employee’s contribution is 5.6% of their Salary.

Therefore, all employed persons should also be allowed a deduction of fifteen thousand, six hundred and eighty dollars ($15,680) monthly or one hundred and eighty-eight thousand, one hundred and sixty dollars ($188,160) annually when ascertaining Chargeable Income.

Self-Employed Individuals, whose Net Income (after expenses and allowances) for the year is three million, sixty thousand dollars ($3,060,000) and below, should be allowed a Personal Allowance (Free pay) of one million, twenty thousand dollars ($1,020,000); and Medical and Life Insurance Premium Deductions, (on the amount of premium paid for medical and life insurance, which have a ceiling of ten percent (10%) of Total Net Income; or three hundred and sixty thousand dollars ($360,000) annually, whichever is less), will also be applicable in determining the total deductions allowed.

Self-Employed Individuals, whose Net Income (after expenses and allowances) for the year is three million, sixty thousand dollar ($3,060,000) and above must be allowed a Personal Allowance (Free pay) of one third (1/3) on Net Profit; and Medical and Life Insurance Premium Deductions, (on the amount of premium paid for medical and life insurance, which have a ceiling of ten percent (10%) of Gross Salary; or three hundred and sixty thousand dollars ($360,000) annually whichever is less) will also be applicable in determining the total deductions allowed.

The Rate of Tax for all individuals is twenty-eight percent (28%) on Chargeable Income up to two million, forty thousand dollars ($2,040,000) annually and forty percent (40%) on the balance thereafter.

The General Threshold and Deductions for all Individuals are as follows:

PARTICULARS

DAILY

WEEKLY

FORTNIGHTLY

MONTHLY

YEARLY

Personal Allowance (Free Pay) $2,795 $19,615 $39,231 $85,000 $1,020,000
National Insurance Scheme (up to $280,000) 5.6% of Gross Salary 5.6% of Gross Salary 5.6% of Gross Salary 5.6% of Gross Salary 5.6% of Gross Salary
Medical and Life Insurance Premium Deduction (on the amount of premium paid by individuals for medical and life insurance premiums, limited to ten percent (10%) of  Gross Salary; or $360,000 annually whichever is less)
Rate of Tax of 28% on Chargeable Income of $2,040,000 28% 28% 28% 28% 28%
Rate of Tax of 40% on Balance of Chargeable Income in Excess of $2,040,000 Balance @40% Balance @40% Balance @40% Balance @40% Balance @40%
Salary | Net: Profit | Income Base per period $8,384 $58,846 $117,692 $255,000 $3,060,000

    PAYE INDIVIDUALS Weekly Income Tax Computation

(A)
Weekly Gross Salary (Inclusive of All Taxable Allowances)
$

Personal Allowance
($19,615)
A1
$

N.I.S Deduction
(5.6% of A)
(A2)
$

(B)
Total Deduction
(A1+A2)
$

(C)

Chargeable Income (CI)
(A -B)
$

( D)
Chargeable Income (CI)  @ 28%
(C*28%)
$

( E)
Remainder  @ 40%

$

Total Tax Payable
$

25,000 19,615 1,400 21,015 3,985 1,116 1,116
(3,985*28%)
50,000 19,615 2,800 22,415 27,585 7,724 7,724
(27,585*.28)
70,000 23,333 3,618 26,951 43,049 10,985 1,527 12,512
(64,615*.056) (39,231*.28) (43,049-39,231=3,818)

(3,818*.40)

    PAYE INDIVIDUALS Fortnightly Income Tax Computation

(A)
Fortnightly Gross Salary (Inclusive of All Taxable Allowances)
$

Personal Allowance
($39,231)
A1
$

N.I.S Deduction
(5.6% of A)
(A2)
$

(B)
Total Deduction
(A1+A2)
$

(C)

Chargeable Income (CI)
(A -B)
$

( D)
Chargeable Income (CI)  @ 28%
(C*28%)
$

( E)
Remainder  @ 40%

$

Total Tax Payable
$

80,000 39,231 4,480 43,711 36,289 10,161 10,161
(36,289*28%)
95,000 39,231 5,320 44,551 50,449 14,126 14,126
(50,449*.28)

PAYE INDIVIDUALS: Monthly Income Tax Computation on Income $255,000 and Under with Medical and Life Insurance Premium Deduction

(A )
Monthly Gross Salary (Inclusive of All Taxable Allowances)
$

Statutory
Deduction
($85,000)
A1
$

N.I.S Deduction
(5.6% of A)
(A2)
$

Medical and Life Insurance Premium Paid Monthly
$

Medical and Life Insurance Premium Deduction Allowed
(A3)
$

(B)
Total Deduction
(A1+A2+A3)
$

(C)

Chargeable Income (CI)
(A -B)
$

(D)
FIRST $170,000 @ 28%
$

Total Tax Payable
$

180,000 85,000 10,080 9,850 9,850 104,930 75,070 21,020 21,020
(up to 10% of Gross Salary $18,000/$30,000 whichever is less) (75,070*28%)
224,000 85,000 12,544 40,000 22,400 119,944 104,056 29,136 29,136
(up to 10% of Gross Salary $22,400/$30,000 whichever is less) (104,056*28%)

PAYE INDIVIDUALS Monthly Income Tax Computation on Income $255,001 and above

 

(A )
Monthly Gross Salary (Inclusive of All Taxable Allowances)
$

Personal Allowance
(1/3 of A)
A1
$

N.I.S Deduction
(5.6% of A)
(A2)
$

Medical and Life Insurance Premium Paid Monthly
$

Medical and Life Insurance Premium Deduction Allowed
(A3)
$

(B)
Total Deduction
(A1+A2+A3)
$

(C)

Chargeable Income (CI)
(A -B)
$

(D)
FIRST $170,000 @ 28%
$

(E)
Remainder @40%
$

Total Tax Payable
$

285,000 95,000 15,680 9,850 9,850 120,530 164,470 46,052 46,052
(up to 10% of Gross Salary $28,500/$30,000 whichever is less) (164,470*28%=46,052)
360,000 120,000 15,680 30,000 30,000 165,680 194,320 47,600 9,728 57,328
(170,000*.28=47,600) (194,320-170,000)=24,320 (47,600+9,728)
(up to 10% of Gross Salary $36,000/$30,000 whichever is less) (24,320*.40%)=9,728
750,000 250,000 15,680 40,000 30,000 295,680 454,320 47,600 113,728 161,328
(up to 10% of Gross Salary $75,000/$30,000 whichever is less) (170,000*.28)=47,600 454,320-170,000 = 284,320

(284,320*.40 = 113,728)

(47,600+113,728)

Self-Employed Individuals – YEARLY NET INCOME 3,060,000 and below

(A)
Yearly Net Income
(After Expense & Allowance)
$

Personal Allowance
($1,020,000)
A1
$

Medical and Life Insurance Premium Paid Annually
$
(A2)
$

Medical and Life Insurance Premium Deduction Allowed
A2
$

(B)
Total Deduction
A1+A2
$

(C)
Chargeable Income

(CI)
(A – B)
$

(D)
First $2,040,000 @ 28

Total Tax Payable
$

1,100,000 1,020,000 50,000 50,000 1,070,000 30,000 8,400 8,400
(up to 10% of Gross Salary $110,00/$360,000 whichever is less) (30,000*.28)=8,400
1,500,000 1,020,000 250,000 150,000 1,170,000 330,000 92,400 92,400
(up to 10% of Gross Salary $110,000/$360,000 whichever is less) (330,000*.28)=92,400
3,060,000 1,020,000 400,000 306,000 1,326,000 1,734,000 485,520 485,520
(up to 10% of Gross Salary $306,000/$360,000 whichever is less) (1,734,000*.28)=485,520

Self-Employed Individuals – YEARLY NET INCOME 3,060,001 and above

 

(A)
Yearly Net Income
(After Expense & Allowance)
$

Personal Allowance
(1/3 of A)
A1
$

Medical and Life Insurance Premium Paid Annually
$

Medical and Life Insurance Premium Deduction Allowed
A2

(B)
Total Deduction
A1+A2
$

(C)
Chargeable Income (CI)
(A – B)
$

(D)
First
$2,040,000 @ 28%
$

(E)
Remainder
@40%
(C-$1,800,000

(F)
Total Tax Payable
(D + E)
$

3,100,000 1,033,333 400,000 310,000 1,343,333 1,756,667 491,867 491,867
(up to 10% of Gross Salary $310,000/$360,000 whichever is less) (1,756,667*.28=491,867)
3,500,000 1,166,667 95,220 95,220 1,261,887 2,238,113 571,200 79,245 650,445
(up to 10% of Gross Salary $350,00/$360,000 whichever is less) (2,040,000*0.28=571,200) 2,238,113-2,040,000 = 198,113.

(198,113*0.40 = 79,245)

6,000,000 2,000,000 400,000 360,000 2,360,000 3,640,000 571,200 640,000 1,211,200
(up to 10% of Gross Salary $600,000/$360,000 whichever is less) (2,040,000*0.28=571,200) 3,640,000-2,040,000 = 1,600,000

(1,600,000*0.40 = 640,000)

4. Self-Employed persons should note that medical and life insurance premium should be deducted after determining the Balance of Income (that is deduced after deducting expenses and other allowances) and must not be included as an Expense in determining Chargeable Income.
5. Employed persons who have Private Medical and Life Insurance must obtain a statement of their premiums paid from their Approved Insurance Company and submit same on or before April 30, 2024, with the Statement of Earnings or their Form 7B when submitting their Income Tax Return to benefit from this deduction.
6. Self-Employed persons who have Private Medical and Life Insurance must obtain a statement of their premiums paid from their Approved Insurance Company and submit same on or before April 30, 2024, with their Financial Statements when submitting their Income Tax Return to benefit from this deduction.
7. Commencing February, 2023 (but not later than March 2023), employers will be required to make the adjustments to their employees’ tax payable using the schedule below. Employers should use the revised personal allowance to recomputed the employees tax payable and refund tax over-deducted until the employee is fully refunded.
8. The Schedule below must accompany the Form 5 for the month of February 2022 to reflect taxes over-deducted. (Please check on GRA’s Website for the new form)

No. Name of Employee Actual Deductions for the Month of January or February (Separately) Over-Deductions

(January) or (February)

(Payable to the employee)

Amount to be Remitted as PAYE (Payable to the GRA)
1 Mary White $10,480 $5,000 $5,480
For example, if the sum of $5,000 was over-deducted from an employee in January or February and the employee’s tax in the month of March is $10,480; then the employer must deduct the $5,000 from the $10,480; refund it to the employee and remit $5,480 to the Guyana Revenue Authority.

9. In cases where the amounts to be refunded are in excess of the month’s tax, then the difference will be carried forward to the next month or until it is fully refunded to the employee.
10. An amended Form 5 for January must be submitted to reflect the new threshold and deduction of Medical and Life Insurance Premiums, where the employer is responsible for any such deduction from the employee.
11. Where an employee or a self-employed person pays their own Medical and Life Insurance Premiums, the Employee or self-employed person will be required to submit their Income Tax Return on or before April 30 and attach a Statement from the Insurance company of premiums paid along with their Form 7B2 or Financial Statements.
12. Claims for Medical and Life Insurance Premium Deductions take effect from January 1, 2023.
13. Employers are reminded that they are obligated by law to issue their employees’ Statement of their earnings, for the employed period in the FORM 7A or 7B2.
14. All employers must ensure that the new Income Tax Thresholds and deductions are implemented immediately.

By Order of

Mr. Godfrey Statia
Commissioner General,
Guyana Revenue Authority

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