Deductions & Allowances
Business & Self-Employed
As a general rule, deductions are allowed for any expense wholly and exclusively incurred for the purpose of the trade, business, profession, employment or vocation of the taxpayer.
Expenses which are personal and capital in nature are not allowable for taxation purposes when determining a taxpayer’s final chargeable income.
Examples of allowable deductions:
- repairs & maintenance of fixed assets of the business that are not capital in nature.
- legal fees incurred in relation to the recovery of debts.
- parking meter fees rather than parking fines.
- utility bills for the business premises (e.g. electricity, telephone & water).
- entertainment expenses for the purpose of business.
- accounting fees paid to registered tax agents.
- insurance premiums paid as cover for company assets.
- bad debts written off where the taxpayer has exhausted all avenues in recovering the debts.
For example the business expenses for a taxi proprietor would include:
- repair and maintenance of taxis registered under the business name.
- fuel and oil.
- wheel tax and fitness.
- base fees.
- bank interest if taxi is under mortgage, etc.
In addition, Section 21 of the Income Tax Act specifically permits the following deductions:
- depreciation on capital assets and buildings.
- employers’ contributions to an approved fund or the Fiji National Provident Fund.
- subject to the Commissioner’s discretion, expenditure incurred on experimentation, scientific research or investigation connected with the taxpayer’s business on prospecting for minerals (including natural gas or oil) in Fiji by a holder of a mining right lease etc. (conditions apply).
- 150% of the amount of any contributions by taxpayers carrying on business in Fiji to the Fiji Visitors Bureau.
- any consideration on the grant of a lease for business purposes or, expenditure incurred under an obligation to effect improvements on land or buildings where the right of use is granted to the tenant who carries out such improvements (conditions apply).
- any deduction authorised under the Hotels Aid Act.
- donations to approved charities – any amount paid up to a maximum of FJ$100,000.
- deposits by a company in a bank account set up as a cyclone reserve (conditions apply).
- 150% of the amount of salaries and wages paid to a new employee between 31st December, 2004 and 31st December, 2008 (conditions apply).
- 150% income tax deduction on capital investment (excluding motor vehicles/furniture and fittings) as from 1 st January 2008 (conditions apply).
- Income tax deduction allowance for interest on Housing Mortgage for first home buyers up to a maximum of $400 as from 1 st January 2008.
- subject to section 21D, an amount, not exceeding FJ$1,000 , being the value of discount included in total income under section 11A in respect of shares or options acquired in a qualifying employee share scheme.
- One and one half times the amount of cash donation exceeding $100,000 made by a taxpayer to a Sports Fund as approved by the Commissioner of Inland Revenue for the purposes of sports development in the Fiji Islands as from 1 st January 2008(conditions apply).
- 150% income tax deduction of up to FJ$50,000 to private companies that purchase and donate vehicles to the Fiji Police Force.(withdrawn as of 1 st January, 2008 )
- 150% income tax deduction for stock exchange listing costs.
- 150% income tax deduction for direct capital expenditure in rural banking program by commercial banks.
- 150% income tax deduction for contributions to the Fiji Heritage Foundation.
- 300% of capital expenditures spent to set up a business (1st July 2005 to 31st December 2010) on the island of Vanua Levu.
- 200% of the amount of wages or salaries paid from 1st January, 2006 to 31st December, 2008 by any person carrying on a trade or business on the island of Vanua Levu to a qualifying employee (conditions apply).
- 200% of the amount of capital spent on the primary industries of agriculture and fisheries, including purchase of farm implements, plant and machinery used on the farm, cost of irrigation, the preparation of land for agriculture or grazing, the planting of income generating trees or crops (available only to taxpayers who do not enjoy other incentives under the Income Tax Act; and for the period commencing 1st January, 2006 and ending 31st December, 2010.
- the amount spent in investment or re-investment by a taxpayer engaged in value adding processes using at least 50% of local materials in food processing, agriculture processing, fisheries or forestry business.
Allowable deductions for taxation purposes also include income from pension, cash donation to Approved Charities/Organisations, dividend (except Fijian Holdings Unit Trust as from 1st January, 2007) and redundancy payments approved by FIRCA, etc.
Deductible allowances include allowances for wife, children, elderly dependants, FNPF and insurance. These allowances can only be claimed by sole proprietors, partners in a partnership business and directors of a company.
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