Gov't raises severance tax exemptions to $500K
Following reports that Petrotrin workers' severance packages were taxed, government said it has since increased the tax exemption for severance and termination benefits to $500,000.
In a statement issued Tuesday, Finance Minister Colm Imbert said that at its regular Cabinet meeting last Thursday (November 29, 2018), Government agreed to increase the allowance for exemption from income tax for severance/termination benefits from $300,000 to $500,000, effective immediately.
The increase, which is effective from November 29, applies to all workers in all state enterprises, statutory authorities and private companies.
Section 124 of the Income Tax Act states, “The President may remit or refund the whole or any part of the tax payable or paid, as the case may be, by any person if he is satisfied that it would be just and equitable to do so” was used as an interim mechanism to increase the allowance to $500,000, and in due course Section 5(6) of the Income Tax Act, which provides specifically for this allowance, will be amended accordingly.
Some Petrotrin workers reported that they had received their severance packages however the payments had been taxed by as much as 25 percent.
Workers were told via an internal release last Friday that their tax status would have to be confirmed as up-to-date in order for their severance packages to be exempt from taxes.
However, when workers returned to Petrotrin to file their up-to-date tax statused they were barred from entering the compound by security.
The company said in a release on Monday that a total of 3,400 workers were due to receive their severance payments on December 3, 2018.
The payments comprised a total of TT$2.7 billion: $1.8 billion in termination packages; $201 million for outstanding vacation; $560 million in backpay; $150 million for medical and other benefits; and $55 million in payments for outstanding promotions.
Petrotrin on Saturday said the transfers should be completed by today when all workers should have funds in their accounts.
All 3,400 permanent employees received exit payments and 1,229 (55 percent) of the Company’s temporary workers received ex-gratia payments.
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