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CFR Income from Part-Time Work

FAQs related  to the Office of the Commissioner for Revenue. 

INCOME FROM PART-TIME WORK. 

T he information provided in the answers should serve only as guidance and does not have any legal force.  For online live FAQs updates refer here

Tax on Income

WHAT ARE THE BENEFITS OF THE PART-TIME RATE OF TAX?

An individual who works part-time is taxed at a fixed rate of 15%. This tax is final, therefore the income derived from part-time work need not be declared in the annual income tax return because it is not subject to further tax.

IS THE 15% RATE APPLICABLE ON ALL OF THE PART-TIME INCOME, WHATEVER THE AMOUNT EARNED?  

No, it is only applicable up to a maximum of €10,000 per annum in the case of part-time employment and to a maximum €12,000 per annum in the case of part-time self-employment. If the part-time income exceeds these amounts you will have to declare the excess in your tax return.

Example: If your part-time income from employment was €15,000, you pay 15% on the first €10,000. On the remaining €5,000 you will be taxed at the normal rates, and if you are a non-filer the €5,000 will be shown in your tax statement. If you submit the tax return, all you have to do is attach the FS3 and declare the € 5,000 under employment. If the €15,000 part-time is from self-employment you must declare €3,000 in your tax return.

In the case of a married couple, if both spouses qualify for the benefit, they are entitled to €10,000 each (employment) or €12,000 each (self-employment).

WHO CAN BENEFIT?

The following may benefit from the 15% rate:

  • full-time employees; or
  • pensioners; or
  • full-time students (including apprentices).

This is the most basic condition that must be fulfilled. If this condition is not satisfied you cannot qualify for this rate of tax.

DOES THIS MEAN THAT IF I ONLY WORK PART-TIME AND I DO NOT HAVE A FULL-TIME JOB, I DO NOT QUALIFY?

If a single person has a part-time job but is not employed full-time, that person does not qualify for the benefit. However you can still qualify if you are a pensioner or a full-time student.

If an individual is married, even though that person only works part-time, he/she may benefit from the part-time rate, as long as the husband or wife has a full-time employment or is a pensioner or is a student/apprentice.

MUST THE PART-TIME WORK NECESSARILY BE FROM EMPLOYMENT?

No. As long as you qualify you can benefit from the 15% rate:

on part-time employment –  see here or

on part-time self-employment –  see here.

Part Time Employment

ARE THERE ANY OTHER CONDITIONS THAT I MUST SATISFY SO THAT I CAN QUALIFY FOR THE 15% RATE?

If you are employed full-time and you are also employed part-time and you want to benefit from the 15% rate, you also have to satisfy the following conditions: 

  • your full-time employment and your part-time employment must both be registered with the Employment and Training Corporation (ETC);
  • the government is not to be considered as the "same employer" where the entities involved are different from one another;
  • you cannot work part-time for more than an average maximum of 30 hours a week (if a Wage Regulation Order establishes a lower number of hours, then the maximum will be less than 30).

WHAT DO YOU MEAN BY SAYING THAT THE WORK CANNOT BE CARRIED OUT WITH SAME EMPLOYER?

If the part-time work is carried out with the same employer with whom you work full-time or with another company within the same group of companies, that work does not qualify for the 15% rate but will be taxed at the normal rates.

Companies controlled a beneficially owned, directly or indirectly, to the extent of more than 50% by the same shareholders shall be considered as the same employer.

Notwithstanding that a government employee would still qualify for the part time rules if he or she works also on part time basis with another government department or entity.

(see also  here)

WHAT ARE THE EMPLOYER’S OBLIGATIONS?

The employer is obliged to follow the instructions given to him by the employee on the FS4. This form is to be filled-in in every case. A copy of the FS4 must always be kept by the employer as evidence of the authorisation given by the employee to stop deducting tax or to resume the deduction of tax, as the case may be.

The employer is also obliged to pass on the tax withheld every month to the Office of the Commissioner for Revenue together with the tax deducted from the other full-time employees, if any.

The 15% tax withheld has to be shown separately on each form FS3, FS5 and FS7 from other tax deducted from the other full-time employees.

WHAT SHOULD A PART-TIME EMPLOYEE DO IF HE IS NOT TAXABLE ON HIS TOTAL INCOME, INCLUDING HIS PART-TIME INCOME?

He should notify his employer by filling in an FS4 and ticking the appropriate box. In case the employee's circumstances change and he/she becomes taxable, a new FS4 must be filled-in so that the 15% tax will be withheld.

IF AFTER HAVING ADVISED MY EMPLOYER NOT TO DEDUCT TAX I REALISE DURING THE YEAR THAT I AM GOING TO BE TAXABLE AFTER ALL, WHAT SHOULD I DO

You have to fill in a new FS4 and tick the appropriate box to authorise your employer to deduct tax at 15% from that month onwards.

If I realise that it would have been more to my benefit had the 15% started to be deducted before, or I realise that my employer has not deducted all the tax at 15%, what should I do?

If you realise that it would have been more favourable had your employer started to deduct tax before, you can either inform your employer to deduct the tax due by the end of the year or pay the difference directly to the Department using form TA23.

Part Time Self Employment

IF I AM SELF-EMPLOYED ON A PART-TIME BASIS HOW CAN I QUALIFY FOR THE 15% RATE OF TAX?

First you must satisfy the basic condition, i.e. you have to be employed full-time, a pensioner or a full-time student/apprentice. You also have to satisfy some other conditions, that is you: 

  • Have registered the part-time work with the JOBSPLUS.
  • Do not engage more than 2 employees (and such employees shall be on a part-time basis) in your part-time activity.
  • Must keep proper books of accounts.
  • Perform such work for a company, organisation, enterprise or entity other than that with which you are employed on full-time basis.
  • Have to be registered for VAT (if you are obliged to register for VAT).
  • Must pay the tax due using form TA22 by 30th April of the following year.

WHAT MUST I DO TO PAY TAX AT 15%?

Fill in form  TA22.

Make sure that the tax you pay covers 15% of the net profit earned throughout the year from your part-time self-employment. The maximum payment each year is €1,800 (15% of €12,000).


Other Questions

IS THERE ANY PART-TIME INCOME WHICH DOES NOT QUALIFY FOR TAXATION AT THE 15% RATE?

Yes, here are a few examples: 

  • remuneration paid by Government to holders of an office, including members on boards or tribunals, and Members of Parliament and Local Councils;
  • fees and other payments made to members of the Board of Directors of companies or to members on boards of public corporations. 

Where the Commissioner for Revenue has reason to believe that an activity is not, in fact, carried on a part-time basis but is actually the individual’s normal activity or merely the performance of over-time, he shall consider such activity as not being on a part-time basis - even if tax would have been paid thereon at 15%.

WHAT SHOULD I DO IF I REALISE THAT IT WOULD HAVE BEEN MORE BENEFICIAL TO ME HAD THE 15% TAX NOT BEEN DEDUCTED?

You should declare your part-time income together with your other income in the income tax return. The tax due will be calculated on your total income and the tax that was withheld will be credited to your account and set-off against the tax due on your other income. Any overpaid tax will be refunded to you.


REDUCTION IN ADDITIONAL TAX AND INTEREST:

REDUCTION IN PENALTIES FOR EMPLOYERS.

WHAT MUST I DO TO ENJOY THE REDUCTION IN PENALTIES?

1. Ensure that all end-of-year documents (forms FS3 and FS7) are sent by 31 August, 2010; and

2. Pay according to one of these two methods:

Option 1: pay all outstanding income tax (FSS) and social security contributions (SSC) by 31 August - you will get a 90% reduction in penalties to which you have already become liable; or

Option 2: enter into an agreement with the Office of the Commissioner for Revenue to pay in monthly installments, and get an 80% reduction in penalties.

HOW CAN I BENEFIT FROM THE SCHEME?

- If you have already submitted all your end-of-year documents (FS3 and FS7), and you wish to reduce your penalties by 90%, you must sign Agreement No. 1 which is being sent to you, and send the full payment by 31 October 2010.

- If you have already submitted all your end-of-year documents (FS3 and FS7), and you wish to pay by monthly installments, you should sign Agreement No. 2 and pay 30% of the amount due by 31 October 2010. The rest are to be paid in monthly installments, depending on the amount, and as indicated by the Office of the Commissioner for Revenue. In this case the reduction in penalties will be 80%, as you would be given more time to pay. You need not send FS5 forms with your payment.

- If you choose to pay 30% down and the rest in installments, and then it is found that you are not keeping to the signed agreement, all balances will revert to the original amounts, and you will lose any reductions in terms of this Scheme. In this case, all payments made, if any, will be allocated first against penalties, and then against FSS tax and SS contributions. This means that the penalties will start running again.

- No adjustments may be made to end-of-year documents (FS3 or FS7) which have already been verified and confirmed.

- Where end-of-year documents remain unsubmitted, the Office of the Commissioner for Revenue will be initiating Court proceedings against the relative employer. It is to be noted that once these procedures are initiated they cannot be interrupted or withdrawn.

- If you no longer are an employer you are to inform the Office of the Commissioner for Revenue immediately by filling the appropriate form to avoid legal procedings against you.

- No compliance certificate will be issued to employers who do not regularize their position as regards the submission of documents as well as the remittance of the payments due.

- The Office of the Commissioner for Revenue reserves the right to collect unpaid social security contributions in respect of years prior to 1998.

IF I OPT NOT TO BENEFIT UNDER THE SCHEME?

If, as an employer you have not sent all end-of-year documents and/or payments due, and you opt to keep out of this Scheme, you will be charged full FSS additional tax and full additional SS contributions; civil and/or criminal proceedings will be initiated against you.

Employers who, after the closure of the Scheme, again fall behind in the remittance of the current payments of tax and social security contributions will be charged full penalties according to law.

WHERE CAN I GET MORE INFORMATION?

For more information you can call at the Taxpayer Service (Block 4, Floriana or Victoria, Gozo) or contact the Call Centre on 153 or on  taxpayerservice.cfr@gov.mt

Taxpayers

REDUCTION IN PENALTIES FOR TAXPAYERS.

WHAT ARE THE BENEFITS UNDER THIS SCHEME?

Phase 2 of the Scheme will be offering more flexible terms of payment. You may choose to settle the whole tax balance at one go by 31 October, 2010 – with very advantageous reductions in additional tax and interest. Or you may opt to make a downpayment of 30% of the amount due by 31 October 2010, and pay the rest in monthly installments, as determined by the Office of the Commissioner for Revenue. In this case the reduction in penalties will be slightly less. Phase 2 covers also year of assessment 2009.

HOW MUCH WILL I SAVE?

If the amount due is for years up to year of assessment 1998 (up to basis 1997):

If you pay the whole amount due by 31 October 2010, the amount due will be reduced by 25%. Otherwise if you pay by installments over a number of months, the reduction will be 20%.

If the amount due is for years of assessment 1999 to 2009:

If you settle the whole amount due by 31 October 2010, the relative additional tax and interest will be reduced by 85%. If you opt to make a 30% downpayment by 31 October 2010, and pay the rest in installments over a number of months, depending on the amount, the reduction in penalties will be 75% as you will be given more time to pay.

HOW CAN I BENEFIT FROM THE SCHEME?

Be sure that by 31 August 2010 you will have sent ALL your tax returns up to years of assessment 2009.

The Office of the Commissioner for Revenue will be sending you a letter informing you which tax returns are still outstanding and the amount of tax still due.

If you have outstanding tax for both the “old” years (up to year of assessment 1998) and also the more recent ones (years of asessment 1999-2009) you will be receiving two draft agreements (in two different colours). You may opt for either or both, but if you opt for both, you are to send both signed agreements together with your payment.

WHAT ARE THE CONSEQUENCES IF I SIGN AN INSTALLMENT AGREEMENT AND FOR SOME REASON DO NOT ABIDE BY IT?

If you do not keep to the agreed installment plan, all balances will revert to the original amounts, and you will forfeit any reductions in terms of this Scheme. In this case, all payments made, if any, will be allocated first against interest, additional tax, and then against pure tax. This means that additional tax and interest will start accruing again.

If I opt for the installment method of payment, will the additional tax and interest continue to increase as usual, until the whole amount is paid?

No, additional tax and interest will NOT continue to accrue. All penalties will be frozen in the same month in which you will be sent the Draft Agreement by the Office of the Commissioner for Revenue. It is only if you do not keep to the installment plan that all balances will revert to the original amounts, any reductions in terms of this Scheme will be lost, and interests will start accruing again.

CAN I CHOOSE TO BENEFIT IN RESPECT OF THE “OLD” YEARS ONLY (UP TO YEAR OF ASSESSMENT 1998) OR THE SELF-ASSESSMENT YEARS ONLY ( YEARS OF ASSESSMENT 1999-2009)? IN OTHER WORDS, IS IT ALL OR NOTHING?  

You may opt to benefit under this Scheme in respect of the "old" years only, or the "recent" (self-assessment) years only (1999-2009), or both.

I can’t see any reason why people who should have already paid their taxes are being given an amnesty, while people like myself who always pay their tax dues in time never receive any benefits!

If you have always paid all your tax in time, then it means that you have fully cooperated, and therefore you have never been charged additional tax or interest. One must however distinguish between a “scheme” and an “amnesty”. The Scheme we are talking about is NOT an amnesty, because those who will be benefiting from it will still have to pay ALL their tax together with a penalty. The scheme is offering only a reduction in penalties, linked with a number of conditions.

AMOUNTS DUE UP TO YEAR OF ASSESSMENT 1998:-

I HAVE A TAX BALANCE FOR SOME YEARS UP TO YEAR OF ASSESSMENT 1998, AS WELL AS FOR YEARS OF ASSESSMENT 1999-2009. CAN I OPT TO SETTLE THE TAX BALANCE UP TO THE YEAR OF ASSESSMENT 1998 ONLY?

Yes, you may opt to benefit from this Scheme in respect of the old years only (up to the year of assessment 1998), or the more recent years only (years of assessment 1999-2009), or both.

I HAVE NOT SUBMITTED ALL MY TAX RETURNS FOR THE YEARS UP TO YEAR OF ASSESSMENT 1998. DO I HAVE TO SUBMIT ALL THESE TO BENEFIT FROM THE SCHEME?

No, you do not have to send any missing tax returns up to year of assessment 1998.

I have a pending objection against an assessment for one of the years up to the year of assessment 1998. Can I benefit under the Scheme in respect of those years in respect of which I have no tax in dispute, and leave the years under objection for a later settlement?

If you choose to benefit from the Scheme in respect of the “old” years (up to year of assessment 1998) only, you have to fulfill your obligations under the Scheme in respect of ALL those years. In other words, you cannot pick and choose. This holds good whether you have a pending objection or not. When you sign the draft agreement you will be automatically withdrawing any objections or claims that you might have against any of these years.

I HAVE AN ASSESSMENT WHICH IS UNDER APPEAL BEFORE THE BOARD OF SPECIAL COMMISSIONERS OF THE COURT OF APPEAL. DOES THE SCHEME APPLY FOR ME TOO?

Yes, provided you sign the Draft Agreement and pay the tax due as indicated. When you sign the Draft Agreement you will be automatically withdrawing any appeal in respect of any year up to year of assessment 1998.

I cannot pay the full amount by 31 October 2010. Can I enter into an agreement with the Office of the Commissioner for Revenue, granting me the possibility of settling it by monthly payments?

Yes, you may opt to pay 30% of the amount due by 31 October 2010, and the rest in monthly installments. The reduction here is 20% (not 25%) as you will be given more time in which to pay. If you do not pay according to the signed agreement, the Office of the Commissioner for Revenue will take all the relative legal action to collect the outstanding tax. Additional tax and interest will revert to the original amounts, and will start accruing again, according to law.

I HAVE A TAX BALANCE UP TO YEAR OF ASSESSMENT 1998. I AM PAYING IT BY INSTALMENTS ACCORDING TO AN AGREEMENT WITH THE OFFICE OF THE COMMISSIONER FOR REVENUE. AM I ELIGIBLE FOR THE SCHEME REDUCTIONS TOO?

Yes, you too can benefit from a reduction of 25% – if you settle all of the remaining amount by 31 October 2010. Or you can enter into a new agreement and pay in monthly installments – the reduction here will be 20% of the amount still due.

I HAVE A PENDING OBJECTION UP TO THE YEAR OF ASSESSMENT 1998. AM I OBLIGED TO PARTICIPATE IN THE SCHEME?

No. You may choose to go on with the objection process, but if your objection is eventually refused you would have lost your opportunity to have your penalties reduced, as the deadline is 31 October 2010.

MAY I FILE AN OBJECTION NOW AGAINST ASSESSMENTS UP TO THE YEAR OF ASSESSMENT 1998?

No. Assessments for those years have become “final and conclusive”; they may not be re-opened by means of an objection. It is recommended that you take this opportunity by paying 75% of the amount due by 31 October 2010 (and save 25%) or pay by installments (and save 20%).

AMOUNTS DUE FOR YEARS OF ASSESSMENT 1999-2009:-

I OWE TAX, ADDITIONAL TAX AND INTEREST FOR THE YEARS OF ASSESSMENT 1999-2009. DOES THE SCHEME APPLY TO ME TOO?

Yes, and you may choose between two methods of payment. Option 1:full payment by 31 October 2010 – in this case additional tax and interest will be reduced by 85%.

Under Option 2 the reduction will be 75%, as you will be given more time to pay. In this case you will need to

  • pay 30% of the amount due by 31 October 2010
  • sign the Agreement
  • pay the remaining balance according to the Agreement

I HAVE BEEN CHARGED ADDITIONAL TAX FOR LATE SUBMISSION OF MY TAX RETURN, OR FOR NOT SUBMITTING ALL MY TAX RETURNS FOR YEARS OF ASSESSMENT 1999-2008.

AM I ELIGIBLE FOR THE REDUCTIONS?

To be eligible for the Scheme you have to send ALL your tax returns for years of assessment 1999-2009 by not later than 31 August, 2010. Following this, the Office of the Commissioner for Revenue will issue new tax statements in respect of these years, and send you a Draft Agreement showing the relative reductions in additional tax and interest.

IMPORTANT: 

You cannot benefit from the reductions offered by this Scheme if you do not submit  ALL your tax returns for the years of assessment 1999-2009 by 31 August 2010. In the near future the Office of the Commissioner for Revenue will be issuing tax assessments and not just estimations on all persons who do not send their tax forms. Subsequently, the Office of the Commissioner for Revenue intends to make full use of the legal means available to it to enforce collection of the relative tax.

I CANNOT PAY THE FULL AMOUNT BY 31 OCTOBER 2010. CAN I ENTER INTO AN AGREEMENT WITH THE OFFICE OF THE COMMISSIONER FOR REVENUE, GRANTING ME THE POSSIBILITY OF SETTLING IT BY MONTHLY PAYMENTS?

Yes, you may opt to pay 30% of the amount due by 31 October 2010 and the rest in monthly installments. The reduction here is 75% (not 85%) as you will be given more time in which to pay. If you do not pay according to the signed agreement, the Office of the Commissioner for Revenue will take all the relative legal action to collect the outstanding tax. In this case, additional tax and interest will revert to the original amounts, and will start being generated again, according to law.

I HAVE AN OUTSTANDING TAX BALANCE FOR VARIOUS YEARS 1999-2009. CAN I CHOOSE WHICH YEARS I WANT TO BENEFIT FROM THE SCHEME?

Although this Scheme allows you to choose whether to benefit in respect of the “old” years only, or the “recent” years only, or both, you must remember that if you choose to benefit from the Scheme in respect of the recent years (1999-2009), you have to fulfill your obligations under the Scheme in respect of ALL recent years. In other words, you cannot pick and choose.

CURRENTLY I AM BEING INVESTIGATED BY THE TAX AUDITS SECTION OR THE TAX COMPLIANCE UNIT. HOW CAN I ADJUST MY INCOME FOR THESE YEARS AND FINALISE MY CASE?

You may fill in an Adjustment Form (AF1 for individuals; AF2 for companies) by not later than 31 August 2010. It is recommended that before you send the Adjustment Form you contact the relative Tax Audits or TCU official. In this way, you too can have your penalties reduced by 85% or 75% - depending on the method of payment you choose.

I HAVE A PENDING OBJECTION AGAINST ASSESSMENTS FOR YEARS OF ASSESSMENT 1999-2009, AND I AM STILL WAITING TO BE CALLED FOR AN APPOINTMENT TO DISCUSS MY OBJECTIONS. HOW CAN I BENEFIT UNDER THE SCHEME?

In your case too, you may choose between the two Agreements which are being sent by the Office of the Commissioner for Revenue. When you sign the Agreement you will not only be signifying your withdrawal of any objection in respect of these years, but you will be also choosing the method of payment and the rate of reduction in penalties (i.e. 85% if paid at one go; 75% if by instalments).

I HAVE AN ASSESSMENT WHICH IS UNDER APPEAL BEFORE THE BOARD OF SPECIAL COMMISSIONERS OR THE COURT OF APPEAL. DOES THE SCHEME APPLY TO ME TOO?

Yes, provided you sign the Draft Agreement and pay the tax due as indicated. When you sign the Draft Agreement you will be automatically withdrawing any appeal in respect of years of assessment 1999-2009. In this way, you too can have your penalties reduced by 85% or 75% - depending on the method of payment you choose.

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