Income Tax (Amendment) Act 2013

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Income Tax (Amendment) Act 2012


Act No. 12 of 2013

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INCOME TAX (AMENDMENT) ACT 2013


Income Tax (Amendment) Act 2013 Arrangement of Sections





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Act No. 12 of 2013 Page 3




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INCOME TAX (AMENDMENT) ACT 2013

Arrangement of Sections

Section

1 Short title and Commencement .............................................................................. 4
2 Section 2 amended ................................................................................................. 4
3 Section 16 amended ............................................................................................... 5
4 Section 17 amended ............................................................................................... 5
5 Section 19(2) amended .......................................................................................... 6
6 Section 20 repealed and replaced ........................................................................... 6
7 Section 26(1) amended .......................................................................................... 6
8 Section 37(1) amended .......................................................................................... 6
9 Section 55 amended ............................................................................................... 6
10 New Section 65A ................................................................................................... 7
11 Section 86 amended ............................................................................................... 7
12 Section 90(1) amended .......................................................................................... 8
13 Second Schedule amended ..................................................................................... 8


Section 1 Income Tax (Amendment) Act 2013





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INCOME TAX (AMENDMENT) ACT 2013

Act No. 12 of 2013

AN ACT TO PROVIDE FOR SOME MINOR AMENDMENTS TO THE

INCOME TAX ACT 2007

I assent,

TUPOU VI,

28th June 2013.

BE IT ENACTED by the King and Legislative Assembly of Tonga in the

Legislature of the Kingdom as follows:

1 Short title and Commencement

(1) This Act may be cited as the Income Tax (Amendment) Act 2013.

(2) The Income Tax Act 2007, as amended, is in this Act referred to as the

Principal Act.

(3) This Act shall come into force upon gazettal except section 2 which shall

come into force on 1 July 2013.

2 Section 2 amended

Section 2 of the Principal Act is amended –

(a) in the definition of “Chief Executive Officer”:

(i) in the English version only, by deleting the word “services” and

replacing it with “and customs”; and

Income Tax (Amendment) Act 2013 Section 3





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(ii) in the Tongan version only by, deleting the words “ngaahi ngaue” and

inserting the words “mo e tute” after the words “tanaki pa‟anga hu

mai”; and

(b) in the definition of “Minister”:

(i) in the English version only, by deleting the word “services” and

replacing it with “and customs”; and

(ii) in the Tongan version only by, deleting the words “ngaahi ngaue” and

inserting the words “mo e tute” after the words “tanaki pa‟anga hu

mai”.

3 Section 16 amended

Section 16 of the Principal Act is amended by –

(a) repealing subsections (1), (2) and (3) and replacing it with the following –

“(1) The income derived by an individual entitled to privileges under the

Diplomatic Privileges Act, Consular Conventions Act, Consular

Relations Act and the Diplomatic Relations Act shall be exempt income

to the extent provided in those Acts.

(2) The income derived by an Organisation, State or Mission entitled to

privileges under the Diplomatic Privileges Act, Consular Conventions

Act, Consular Relations Act and the Diplomatic Relations Act shall be

exempt income to the extent provided in those Acts.

(3) The income derived by an individual or Organisation shall be exempt

income to the extent provided in the Bretton Woods Agreements Act.”

(b) inserting the following new subsections after subsection (6)-

“(7) The income derived by the Retirement Fund shall be exempt income to

the extent provided in the Retirement Fund Act 1998.

(8) The income derived by the Health Promotion Fund shall be exempt

income to the extent provided in the Health Promotion Fund Act 2007.

(9) The income derived by the National Retirement Benefits Scheme shall

be exempt income to the extent provided in the National Retirement

Benefits Scheme Act 2010.

(10) Interest income derived from investment in securities issued by the

Government of Tonga shall be exempt income.”

4 Section 17 amended

Section 17 of the Principal Act is amended by deleting the words “Any employment

income derived by an individual” and replacing it with “Any income derived by

a person”.

Section 5 Income Tax (Amendment) Act 2013





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5 Section 19(2) amended

Section 19(2) of the Principal Act is amended by adding the words “or lump sum”

after the words “any other pension”.

6 Section 20 repealed and replaced

Section 20 of the Principal Act is repealed and replaced with the following -

“20 Exempt retirement and death gratuities

Any amount received by way of gratuity or lump sum from an

approved retirement fund shall be exempt income if paid on the

approved fund member ceasing service on the following grounds –

(a) retirement;

(b) death;

(c) migration; or

(d) medical reasons.”.

7 Section 26(1) amended

Section 26(1) of the Principal Act is amended by inserting the following new

paragraphs in the appropriate place -

“(j) amount paid to a person who is not a tax agent for assisting in the

preparation of a tax return or objections to taxation decisions or

transacting business with the Minister under the revenue laws;

(k) amount paid as a donation exceeding $1,000; or

(l) amount paid for sponsorship exceeding 5% of the gross income of

the person.”.

8 Section 37(1) amended

Section 37(1) of the Principal Act is amended:

(a) in the English version only, by deleting the words “in computing the

chargeable” and replacing it with “against the business”; and

(b) in the Tongan version only, by deleting the words “„i hono fika‟i „o e pa‟anga

hu mai „oku ala totongi mei ai” and replacing it with “mei he pa‟anga hu mai

„a e pisinisi”.

9 Section 55 amended

Section 55 of the Principal Act is hereby repealed and replaced with the following:

“55 Taxation of Individuals

(1) In this section –

Income Tax (Amendment) Act 2013 Section 10





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“net business income” is gross business income less the total

amount of deductions allowable under this Act to the individual

in deriving taxable business income;

“net property income” is gross property income less the total

amount of deductions allowable under this Act to the individual

in deriving taxable property income; and

“property loss” for a fiscal year is where the total amount of

deductions allowed to the person in deriving taxable property

income for the year exceeds the total amount of that income and

the amount of the excess shall be the amount of the property loss.

(2) Subject to this Act, the chargeable income of an individual is

computed separately and the total amount of gross income of an

individual is the sum of the following:

(a) the gross amount of employment income;

(b) the net business income; or

(c) the net property income.

(3) A business loss or property loss cannot be offset against

employment income.

(4) A property loss cannot be offset against net business income or a

business loss.”

10 New Section 65A

The Principal Act is amended by inserting a new Section 65A in the appropriate

place:

“65A Tongan Source Income of Non-resident persons

Subject to this Act, a non-resident person receiving income for services

performed in Tonga on a project, wherever paid, shall be subject to tax at the

rate prescribed in the Order referred to in section 6 if the person is in Tonga

for a period or periods aggregating less than ninety (90) days within any

twelve month period.”

11 Section 86 amended

Section 86 of the Principal Act is amended by inserting new a subsection (4)

as follows:

“(4) An employer making a payment of employment income to an employee

shall be required to lodge a withholding tax statement as may be

prescribed in the Regulations even if no withholding tax is payable.”

Section 12 Income Tax (Amendment) Act 2013





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12 Section 90(1) amended

Section 90(1) of the Principal Act is amended by inserting the following paragraph

(d) -

“(d) section 79”.

13 Second Schedule amended

The Second Schedule of the Principal Act is amended in the table by deleting

“Buildings” and replacing it with “Structural improvements”.





Passed by the Legislative Assembly this 27
th
day of June 2013.

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