Exemptions & Deductions – Salary & Wage

Earners

What are the exemptions and deductions available to Salary and Wage earners?

Salary and Wage earners are entitled to claim the following Exemptions and Deductions.

Exemptions

• Pension Exemption
  
  Pension Income is not subject to income tax. This includes all pensions paid by the Fiji National Provident Fund or the Fiji Government.
  
  
• Lump sum payment exemption
  
  A lump sum payment is a payment made to compensate an employee for changes to his/her conditions of service. It includes payments made on retirement but does not include redundancy payments.
  
  The criterion for exemption is that a maximum exemption of up to FJ$5,000 is allowable if the necessary conditions are met.
  
  These are:
  
  
  • it must not be contractual.
    
  • if the payment is made on retirement, then it is only allowable if the person is not a member of the FNPF or an Approved Superannuation Fund.
    
    
• Redundancy Payment Exemption
  
  A redundancy payment is a payment made to compensate an employee for loss of office due to restructuring or downsizing in an organisation.
  
  Maximum exemption is FJ$15,000 and the balance is subject to tax at 15%.
  
  
• Dividend Exemption
  
  Dividend income received by an individual is exempt from tax if it is paid out of retained earnings that have been taxed at the corporate level.
  
  Dividends received from the following parties are fully exempt in the hands of the recipient:
  
  
  • Unit Trust of Fiji.
    
  • All Companies listed on the South Pacific Stock Exchange.
  
  Dividend Income received from parties other than those listed above is fully exempt only if already taxed at corporate level. Otherwise a determination will be made by the Commissioner on the amount to be taxed further in the hand of the recipient. If you have returned income from dividends, and are entitled to a deduction for that dividend income, you are to attach to your tax return, the original copy of your dividend certificate as evidence.

Deductions

• Employee Share Scheme
  
  The discount value of shares acquired by an individual taxpayer under an employee share scheme is taxable.
  
  A deduction of not more than FJ$1,000  is allowable on the value of the discount.
   
• Donation to approved charities
  
  This includes tax-deductible cash donations you have made to approved charitable organisations. These shall be allowed if you attach to your tax returns, the original receipts as evidence of donations made.
  
  A deduction of up to FJ$100,000 is allowable to certain approved charitable organisations. Click here to download list of approved charitable organisations.
  
• Interest on Housing Mortgage
  
  A deduction of up to FJ$400 is allowable for interest on housing mortgage as from 1 st January 2008.You have to provide statements or letter from the bank to confirm the interest charged on your mortgage.
  

How do I make a claim for allowable deductions?

• attach details of payment.
  
• provide dividend certificate showing the percentage of dividends to be allowed as a deduction.
  
• provide evidence of donations made to charitable organisation.