Frequently Asked Questions (FAQs)

Employers

1. Registration – Employers

An employer is any person (sole trader, business, partnership, company or other legal entity that hires an individual person to perform duties for a salary, wage or fee.

Once a person becomes an employer, registration as an Employer with the FRCA must be done within 30 days.

This applies even if the individual is to be employed on a casual or seasonal basis.

The responsibilities of an Employer are covered under Section 81 of the Income Tax Act 2002, and the Income Tax (Employments) Regulations.

Copies of the Regulations may be obtained from the FRCA upon request.

What is required of a person liable to taxation?

Every person liable to taxation under the provisions of the Act or who becomes liable to register under the provisions of the Decree must complete a registration form within the time specified in the legislation.

The Employer Details section of the Taxpayer Registration form(s) either
( IRS001 OR IRS003 ) must be completed.

When should an Employer register?

For income tax purposes, employers must register within 30 days of the commencement of any trade, business, profession or vocation; if the person will be required to pay Provisional tax (Section 83) and/or will have employees (Paragraph 3 (1), Section 81 – Income tax (Employment) Regulations; Subsidiary Legislation).

What are the Employer Details in the Application Form?

This section must be completed only for applications by sole traders who employ at least one person.

You must complete all items. If an item is not applicable write “N/A” in the box.

Write your postal address in the box provided. FRCA will send you forms and correspondence in relation to your PAYE matters. If this address is the same as the mailing/tax agent’s address in the personal details section, write “As above”.

Write your estimated monthly wages payment, and the number of employees who will have tax deducted from their wages, in the boxes provided.

If you wish to make separate PAYE payments for different branches of your business, complete the branch names and address in the boxes provided. If you have more than 2 branches attach a list to the application.

2.PAYE Process & Procedures – Employers

PAYE tax is collected through source deductions from salaries, wages and other remuneration receivable from employment.

The tax is calculated on chargeable income after the deduction of allowances.

Employers are responsible for the deduction and remittance of PAYE tax to the Fiji Islands Revenue & Customs Authority. They are also required to comply with other regulations and instructions that may be issued from time to time.

The features for these regulations are contained in Sections 80, 81 and 82 of the Income Tax Act.

PAYE Employee Declaration (IRS458)

An employee may file a declaration stating the PAYE allowance to which he/she may be entitled. This will enable the employer to determine the correct amount of tax to be deducted in each pay period.

An employee may file a declaration stating the PAYE allowance to which he/she may be entitled. This will enable the employer to determine the correct amount of tax to be deducted in each pay period.

Allowances

PAYE allowances that may be claimed as a deduction are:

  • marital status.
  • dependent child.
  • FNPF/Insurance.

The employer is required to ascertain the amount of total annual allowance applicable to each pay period:

  • weekly – divide total allowance by 52
  • fortnightly – divide total allowance by 26
  • bi-monthly – divide total allowance by 24
  • monthly – divide total allowance by 12

and enter the amount in the appropriate part of the PAYE declaration form.

This amount is referred to as the “Tax Free Emoluments”.

Overtime Payments

Overtime payments are to be included as part of the regular emoluments and PAYE tax is to be calculated on this total.
Tax deductions on extra ordinary payments (L/N 69)

If an employer makes a payment in respect of bonus, gratuity or other additional earnings or retrospective increase in emoluments the following basis for tax deduction should be made based on a reasonable estimate of what that employees total emolument will be from the present employer for that calendar year including the payments that is being made.

(w.e.f – 01/01/10)

Casual or seasonal employees

The Commissioner of Inland Revenue (CIR) may advise employers of the amount of tax to be deducted if the emoluments are of a nature that deduction of tax (by reference to the tax tables) would constitute undue hardship.

In the case of persons hired under a “contract of service”, the employer is not required to deduct tax if a valid “certificate of exemption” is produced.

Death of an employee

Deductions are to be made in accordance with the provisions of the regulation unless the Commissioner of Inland Revenue directs otherwise.

Exemptions from tax deductions

Tax shall not be deducted in the following cases:

  • emoluments exempted from the payment of tax (e.g. pension).
  • where total income or chargeable income falls below the tax threshold.
  • payments in respect of domestic services.

Payment of PAYE deducted

The employer is to remit to FRCA by the 30th of every month following the month in which the tax was deducted on remittance advice (IRS350).

Upon cessation of business, the PAYE payment is to be paid within 7 days of the day in which business ceased to operate.

PAYE Employee Certificate

The employer is required to furnish to the employee on or before the last day of February each year a PAYE Employee Certificate ( IRS452 ) in duplicate, showing the following details:

  • name and address.
  • tax identification number/employment number.
  • gross emoluments.
  • value of benefits.
  • total tax deducted.
  • total personal allowances claimed.
  • period of employment.

Two (2) further copies:

  • triplicate to Commissioner.
  • quadruplicate retained by employer for record purposes.

Other instances for certificate to be furnished to employees:

  • cessation of business – not later than 1 month after business ceases(PAYE Employee Certificate (IRS452))
  • cessation of employment – not later than 7 days (Employer’s Certificate of salary or wages paid (IRS460))
  • death of an employee – not later than 30 th of the following month to the legal representative or next of kin.

Salary/Wages advice slip

An employer is to furnish an employee particulars of payment including the gross emoluments and amount of tax deducted in the appropriate form.

Records to be kept

Annual return of total emoluments paid and taxes deducted for each employee is due by the end of February each year following the year in which tax was deducted. This should be submitted to the Commissioner in duplicate showing the following particulars:

  • name and address of employer.
  • gross amount of emoluments paid to all employees.
  • total tax deducted from all employees.

Inspection

All wages sheets and other records relating to the calculation or payment of emoluments must be produced for inspection whenever required by the Commissioner.

Books of Account

Every employer is required to keep adequate books of accounts for tax purposes. Every book of account and documents which are essential to explain any entry is to be preserved for a period of not less seven (7) years.

Electronic Reporting Requirements

In some cases an employer must provide details of payments to employees in electronic rather than the paper format.

Electronic reporting is required by the following employers:

  • all those in the public and the private sector.

What to do with the completed form?

You may either post the form to FRCA or bring it into any of our Customer Enquiry Centres.

3. Benefits – Employers

Where can I get the information on value of fringe benefits provided to employees by employers?

Click here to download that information.(Withdrawn as of 01/01/08)

Practice Statement No. 30 which provides the revised guidelines on the valuation of benefits provided under the PAY-AS-YOU-EARN. This Statement revokes and supercedes previous PAYE Circulars on valuation of benefits issued by FRCA or the previous Department of Inland Revenue.

4.Social Responsibility Levy

What it is?

It is a levy imposed on an individual who is liable for income tax.

It is a special contribution to the welfare of the underprivileged in Fiji.

Who is liable to pay the levy?

It applies to resident individuals who have a total chargeable income exceeding $270,000 during the income tax year.

It also applies to each and every dollar of chargeable income that is earned by non-residents.

(What is this supposed to mean?)

Who is responsible for the collection and payment of the levy?

For those that are solely salary & wage earners, employers will make the SRL calculations, deductions and remittances in the same manner as that of PAYE. Those that earn both employment income and business income [e.g rental income, taxi income, bank interest] will be required to either inform their employers of their estimated chargeable income for the year and/or make payments directly to FRCA.

The employer shall be liable to calculate the SRL amount payable and make the payment to FRCA.

Fiji nationals employed in international organizations, embassies and foreign missions will be required to make their own arrangements for payment if there is no PAYE system in their organisation.

For those that are self employed, they will be required to estimate their chargeable income similar to the Provisional Tax System and make payments directly to FRCA on a monthly basis.

When does it come into effect?

The levy comes into effect from 01January 2012.

How do we calculate the SRL amount payable?

SRL is computed by applying the rate to the chargeable income. The rates are provided in the Table A8 of the Fourth Schedule. The levy ranges from 23% to 29% per annum for resident individuals and from 19% to 29% for non-residents.

The resident individual who expects to earn over $270,000 in 2012 and subsequent years will be required to estimate their chargeable income. If the estimate exceeds $270,000 they must calculate the amount of levy that is due each month and make payments to FRCA. Employers will be required to make deductions and remittances as well.

However for non-residents the amount of levy that is due each month applies to each and every dollar of an individual’s chargeable income. The rates are provided in the Table B6 of the Fourth Schedule

Credit Card Levy

What it is?

It is a two percent (2%) levy that is imposed on all outstanding monthly balance on bank credit cards.

This includes interest and other bank charges outstanding on the last day of the month on an individuals credit card account.

Who is liable to pay the levy?

The owner of the bank credit card shall be liable to pay the levy and it will apply to all local bank credit card holders.

Who is exempted from the levy?

Exemptions will apply to foreign credit card balances for diplomats and non citizens who are exempted under the Diplomatic Privileges and Immunities Act. However local credit card balances for credit cards issued locally, will not be exempted from the levy.

Who is responsible for the collection and payment of the levy?

The bank shall be liable for the collection and payment of the levy which is due on or before the 15 days after the last day of each month. The payment should accompany the related return that is due on the same day.

Third Party Insurance Levy

What it is?

It is a 20% levy being charged on the total third party insurance premium collected in a month.

Who is responsible for the collection and payment of the levy?

The insurance company that is providing the third party insurance shall be liable for the levy.

Who is exempted from the levy?

The levy shall not be charged to the customer or included in the third party insurance premium paid by the customer to the insurance company.

6. PAYE Tax Table – Employers

Employers are required to use the prescribed tax tables.

The tax tables can also be obtained from any of our Customer Service Centres.

What are the restrictions?

It is restricted to third party insurance payments only and does not include any premiums paid for any other insurance covers.

Tax deductions on extra ordinary payments (L/N 69)

Instructions for the deduction of tax from extra ordinary payments are also given on the 1st page of the tax tables.

Extra ordinary payments include:

    • tax arrears.
    • bonus.
    • overtime.
    • gratuity.
    • lump sum payments.

When making deductions of tax from extra-ordinary payments, the employer must add that payment to the employee’s total estimated income for the year and apply the rate of tax under which the total estimated income falls.

If an employer makes a payment in respect of bonus, gratuity or other additional earnings or retrospective increase in emoluments the following basis for tax deduction should be made based on a reasonable estimate of what that employees total emolument will be from the present employer for that calendar year including the payments that is being made:

(w.e.f – 01/01/2010)

Tax rates

Normal tax is levied on Chargeable income (i.e. total income less allowances).

There are separate rates of normal tax for resident and non-resident sole-traders:

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HEAD OFFICE LOCATION

CONTACT DETAILS

Revenue & Customs Services Complex,
Lot 1 Corner of Queen Elizabeth Drive
& Ratu Sukuna Road,
Nasese,
Suva.
Phone: (+679) 3243000
Fax: (679) 3315537
Email: info@frca.org.fj