Leasing Or Rental of Residential and Commercial Property

Leasing Or Rental of Residential and Commercial Property

Commissioner of Inland Revenue Mark Bell said today “Inland Revenue will be focusing on the taxation of leased or rented properties as highlighted in the recently launched Tax Compliance Focus 2013-2015”.

Mr Bell said “Inland Revenue is aware that a significant number of property tenants are not deducting (and then paying to Inland Revenue) 10% withholding tax from the gross rental payment they make to their landlords ”.

Mr Bell explained that withholding tax deductions are a legal requirement which is imposed on the tenant or person making the rental payment. The withholding tax deducted must be paid to Inland Revenue by the 15th of the month following the month in which rental payments are made.

Mr Bell said that Inland Revenue wants tenants to voluntarily comply with their withholding tax obligations. Inland Revenue prefers not to have to take action against tenants for failing to deduct and account to Inland Revenue for withholding tax.

Mr Bell went onto say that Inland Revenue will also be focusing on landlords. “While some landlords may be unhappy with a tax deduction from the monthly rental payment, they may not be aware that the tax that is withheld will be a credit against their annual income tax assessment” said the Commissioner.

Mr Bell said that Inland Revenue is currently pulling together details from a number of sources on those who own properties and intends contacting those property owners who do not appear to be doing the right thing by filing income tax returns and paying the tax due on rental income they have received.

He said that failure to comply with these income tax obligations can result in quite severe penalties being imposed on the offending taxpayer, so taxpayers should do the right thing by meeting all the tax obligations now before Inland Revenue contacts them.

The Commissioner said that fact sheets for tenants and landlords which provide more information about withholding tax on property rentals are on IRD’s internet site www.ird.gov.sb

The Commissioner said that if tenants, landlords and property owners have any queries then they are encouraged to contact the Inland Revenue Division who will work with them to help them comply with their tax obligations.

ENDS

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