Tax season in full swing

Saturday 20 February 2021 | Written by Emmanuel Samoglou | Published in Economy, National

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Personal income tax returns are due on March 1, but thanks to a rule change, workers will be paying less in taxes this year and onward.

Cook Islands taxpayers filling out tax returns for 2020 will be the beneficiaries of a rule change that entitles them to more tax-free income.

Known as the ‘tax free threshold’, it is the amount of income that must be included in a tax return but won’t be taxed.

In 2019, this amount was $11,000, however when the government announced its economic aid package in response to the emerging Covid-19 pandemic last March, a provision was included that raises the threshold to $12,800 for 2020.

For 2021 the threshold will increase again to $14,600.

Fletcher Melvin, president of the Chamber of Commerce, said the increase in the tax free threshold is a win-win situation for both taxpayers and the nation’s economy. “It’s a good way of keeping money in people’s pockets,” he said.

“… people will be further well-off with the increase,” he said. “It puts more money in the economy, so it’s a good thing.”

Individual tax returns are due March 1, while all remaining taxpayers – including sole traders and businesses – must file by May 1.

Also of note for taxpayers, government support provided by the Covid-19 economic response plan such as sole trader grants, wage and training subsidies, interest relief payments, and unemployment benefits must also be included as earned income when filing out tax returns.

Melvin said getting through all the paperwork can be challenging, but assistance is available from government staff.

“It’s complex but it’s not impossible,” he said. “People are getting better at handing in their returns.”

Regarding the assistance on offer from staff at the Revenue Management Division (RMD), he said: “We’re a lot more experienced about how we help people as well. RMD has also increased the amount of people processing returns.”

Those who need assistance with filing their tax returns are urged by the Revenue Management Division to contact its dedicated outreach and education team at tax.info@cookislands.gov.ck. 

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