Corporate tax return guidance notes: Section 5

Payments under deduction of tax

This section will only be presented to entities which are resident in Jersey.

The most common type of payments which are made under deduction of tax are lump sum donations to charities and deeds of covenant.

Charitable giving tax information

Question 25: Has the entity made any annual payments after the deduction of Jersey tax?

If you have made any annual payments such as lump sum donations to charities or payments under a deed of covenant you should answer yes to question 25.

Question 25a: Number of payments

Enter in the box alongside question 25a the number of persons to whom you have made annual payments during the year of assessment.

The number of payments made should equal the number of separate payee details entered in questions 25b to questions 25f.

If the number of payments made does not match the number of payee details entered, then the warning invalid count will appear.

You will need to amend the number of payments returned or add / delete the number of payee(s) details entered.

Question 25b: Name of payee

Enter the name of the payee to who the annual payment is made.

Question 25c: Type of payment

Enter details of the type of annual payment made (e.g. Lump sum donation, deed of covenant etc.)

Question 25d: Gross payment

Enter the gross amount of the annual payment.

To work out the gross payment multiply the net donation by 1.25

Question 25e: Tax deducted

Enter the amount of tax deducted.

To work out the tax deducted divide the gross payment by 5

Question 25f: Date of payment

Enter the date on which the annual payment was made.

For a lump sum donation this is the date of the payment, for a deed of covenant it is the date of the final payment in that year.

Question 25g: The amount of tax payable in respect of the annual payment

The amount of tax payable in respect of the annual payment is the adjustment required to the assessment of the payer in respect of the annual payment.

An adjustment may be required where the payer has not paid a sufficient amount of tax on their income to account for the tax they have deducted when making the annual payment.

For example:

Company O is subject to tax at the rate of 0% under the provisions of Article 123C(2).
It has profits subject to tax of £1,000 and made a lump sum donation to charity of £400 (net donation). The assessment is as follows:
Profits subject to tax £1,000 @ 0% = Add Tax payable in respect of annual payment Tax collectable	£0 £100* £100
The company can't account for the tax deducted from the lump sum donation as the profits are charged at the rate 0%. The amount the company must declare in the box alongside question 25 is £100.
*£400 donated net of tax. Multiply by 1.25 to get the gross donation of £500. The tax is 20% of the gross donation (£500 divide by 5 = £100)