Louis Andre Monteil v The Board of Inland Revenue
| Jurisdiction | Trinidad & Tobago |
| Judge | N. Bereaux J.A.,V. Kokaram J.A.,R. Boodoosingh J.A. |
| Judgment Date | 18 November 2022 |
| Neutral Citation | TT 2022 CA 43 |
| Docket Number | Civil Appeal No. P108 of 2017 |
| Court | Court of Appeal (Trinidad and Tobago) |
| Year | 2022 |
In the Matter of the Tax Appeal Board Act Chap 4:50
And in the Matter of the Income Tax Act Chap 75:01
And in the Matter of an Appeal by Way of Case Stated of the Decision of the Tax Appeal Board Delivered On 2 nd February 2017
TT 2022 CA 43
N. Bereaux J.A.
V. Kokaram J.A.
R. Boodoosingh J.A.
Civil Appeal No. P108 of 2017
Tax Appeal No. 14 of 2015
IN THE COURT OF APPEAL
Mr. Barrie Attzs for the Appellant.
Ms. Ufi Broomes for the Respondent.
I have read the judgment of Kokaram J.A. and I agree.
…………………………………………………
Nolan Bereaux
Justice of Appeal
I too have read the judgment and I also agree.
…………………………………………………
Ronnie Boodoosingh
Justice of Appeal
This is an appeal by way of case stated by the Tax Appeal Board (“the Board”) 1 raising the main question whether the Board of Inland Revenue (“BIR”) can recover and collect taxes from the Appellant employee, Mr. Louis Andre Monteil, in respect of his emolument income or whether the BIR is restricted to recovering such taxes which were not deducted or withheld by Mr. Monteil's employer only from that employer under the PAYE 2 regime set out in section 99 of the Income Tax Act Chap. 75:01 (“ITA”).
Counsel for the Appellant asserts that the PAYE regime prescribes a mandatory or exclusive procedure which obliges the BIR to collect and recover taxes in respect of emolument income from the income earner's employer only. Consequently, there is no obligation on Mr. Monteil as an individual in receipt of emolument income to pay the BIR any taxes which ought to have been deducted or withheld by his employer from the payment of that emolument income. In short, it is the employer only who is responsible for the payment of such taxes or against whom the BIR can recover and collect such taxes and not the individual in receipt of the income.
For the reasons set out in this judgment we agree with the Respondent that the PAYE regime is not the only statutory mechanism for the BIR to collect and recover taxes in respect of emolument income. Section 79(7) of the ITA imposes an independent liability on the income earner and an independent right of the BIR to recover and collect tax that has been assessed from the emolument earner. The BIR is not debarred from recovering same notwithstanding the failure of the employer to discharge its statutory
The material facts are not in dispute. The income tax liability of Mr. Monteil relates to his income derived from emoluments for the income year 2008. In his Income Tax Return to the BIR on 27 th July 2009 he declared his chargeable income and an income tax liability of which income tax was deducted as shown in TD 4 certificate in the aggregate sum of $1,260,985.00 resulting in a balance of tax declared to be payable of $189,843.00. His sources of income were entirely derived from emoluments of various sources.
Subsequent to an audit examination by the BIR, adjustments were made to his chargeable income leading to a resultant income tax liability of $12,407,191.56 3 adjusted thereafter to $12,060,822.10 4. By notice of assessment dated 1 st October 2012, the BIR assessed Mr. Monteil for his liability with respect to sums received from his employer, CL Financial Limited, as emoluments.
Mr. Monteil applied to the Board for his appeal against this assessment to be allowed in part with respect to the income tax that the BIR sought to recover from him on his emolument income. He contended that he should not be liable to do so on the basis that the PAYE regime prescribed a mandatory and exclusive procedure for the BIR to follow in order to collect and recover taxes in respect of emolument income from the employer. He contended that the BIR failed to follow the PAYE regime to recover tax in respect of this emolument income and cannot oblige him to pay any tax in respect of emolument income on the basis that (a) it is the obligation of Mr. Monteil's employer to remit same to BIR pursuant to section 99(1) of the ITA
The Board determined firstly that the PAYE regime in section 99(1) of the ITA is independent of the power of the BIR to raise an assessment or additional assessment on the individual emolument earner under sections 83 and 89 of the ITA. While section 99(1) of the ITA places a burden on the employer to deduct and remit PAYE to the BIR, where there is a deficit, the individual emolument earner remains liable to the BIR under section 79(7) of the ITA.
Essentially the Appellant contends that section 79 of the ITA cannot be relied upon by the BIR as a statutory basis let alone a free standing statutory basis to recover tax from the emolument earner as section 79 does not provide a mechanism for the recovery of tax. It is in fact a discrete statutory basis for the first stage in the imposition of a tax which is the declaration of liability. That stage involves the Appellant's self-estimated tax liability and ended with the filing of the tax return. The obligation to pay tax under section 79 is triggered therefore only by the taxpayer's self-estimation of tax payable and is not a statutory basis for the BIR to recover tax from him. That stage of his declaration of liability ended on 30 th April, the statutory deadline for the income earner to make their payment of their own estimation of tax liability.
Conversely, the PAYE regime and specifically section 99(1) of the ITA provides the only statutory mechanism for the BIR to engage in the third phase of the imposition of tax, the “recovery” phase. The Appellant notes that section 99(1) specially uses the “mandatory” language that tax “shall” be deducted or withheld by the employer. Further, the section applies “notwithstanding any provision of this Act to the contrary”. By extension therefore it takes priority over section 79 of the ITA.
The Respondent contends that section 99 of the ITA does not prevent the BIR from raising an assessment on an individual taxpayer earning emolument and income from other sources pursuant to sections 83 and 89 of the ITA. Notwithstanding that the onus is placed on the employer to deduct and remit PAYE to the BIR, the employee is still liable for income tax that has not been deducted as contemplated by section 79(7) of the ITA. It is the Respondent's contention that the Board's finding that section 79(7) of the ITA expressly provides that the obligation is on the individual earner and not on the employer of paying to the BIR any remainder of tax which has arisen from emolument, is correct in law.
In our view the Appellant's analysis of the ITA and the provisions governing the tax liability of the income earner and the PAYE regime is misplaced. The PAYE regime does not debar the BIR from raising its assessment of liability against the individual employee and to recover any shortfall from that employee. Construing the statute as a whole, the taxpayer, the income earner, remains liable to pay tax to the BIR. While the PAYE regime is a mechanism by which the income tax payable for an employee is paid by the employer, it does not remove that employee's primary liability for the payment of tax to the BIR on that emolument income.
Both parties relied upon Unilever Caribbean Limited v The Board of Inland Revenue Civil Appeal No. P041 of 2015 which examined the PAYE regime.
Unilever pronounced on matters of principle. First, the legislative underpinning for that regime is section 99 of the ITA. Second the regime provides for the withholding of tax by the employer on emolument income provided to the employee. The onus is placed on the employer to deduct and remit the tax deducted to the BIR. 5 Third, disputes that may arise between the BIR and employee as to nature of emoluments or who are its employees are determined by a prescribed process specified in section 99(1A) of the ITA.
Finally, the PAYE regime simply operationalises an administrative mechanism for a method of payment of tax on emoluments paid to income earners on the premise that the tax is payable on the emoluments earned by the income earner or is a liability of the income earner. This is recognised in section 99(10) that upon deduction or withholding of the tax due on the emolument income by the employer, the liability of the income earner to pay that tax is satisfied. Section 99(10) of the ITA recognises the primary liability of the income earner to this tax on the income earner's emolument.
The Court of Appeal in Unilever noted the following features of that statutory regime:
“26. The statutory regime prescribed by section 99 can be summarized as follows:-
a. Section 99 contemplates that there may be disputes as to, inter alia, whether an amount is an emolument in respect of which tax shall be deducted or withheld.
b. It provides that in that context a notice of determination is to be served on the person providing the emolument – in this case the employer.
c. It specifically provides that by its notice of determination it can demand
the tax to be deducted or withheld by the person providing the emolument. (This cannot as a matter of language or logic be construed to mean that such tax can only be recovered prospectively. The notice clearly refers to liability to pay tax that should have been deducted. The demand clearly must refer to the tax uncollected in past periods.d. It further provides that the notification of the right to object to the determination is to be served on the person providing the emolument – in this case the employer.
e. It further imposes liability on the person providing the...
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