Professional Services Withholding Tax

Issue 44 - June 2001 of Tax Briefing included an article on the effect of the change to a calendar year basis on claims for credit for Professional Services Withholding Tax [PSWT]. This article illustrates how the credit for PSWT will be affected in the most likely scenarios.

In general, persons who pay a substantial part of their income tax liability by way of PSWT credit made up their accounts to 31 March each year. Where they continue to do so, the credit for PSWT will be as follows:

¹Basis period year ended 31 March 2002 is treated for PSWT purposes as the basis period for 2001 only

If, in order to avail of the credit for PSWT on a current basis, the taxpayer changes the accounting date to 31 December, the result will be as follows:

The change in accounting date for 2001 will mean that the basis period for 2000/01 may change to the year ended 31 Dec 2000 [the corresponding period - see pages 15 - 17, Tax Briefing Issue 45 - October 2001]. Strictly, the credit for PSWT should also change to the PSWT related to that period. However, in practice, the PSWT credit already allowed for the year 2000/01 will not be changed.