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Car transfer tax explained

Dear Claudienne:

On December 31, 2020 I went to the Old Harbour tax office with my spouse to conduct a motor vehicle transfer transaction. In 2019 my son migrated overseas and then decided to make his home there permanently.

While living here in Jamaica he owned a motor car and had decided that it was best to have the vehicle documents transferred in my name since I’m still living here in Jamaica. He felt that I could handle any transaction concerning the motor vehicle without him having to return to the island, and I agreed to transfer the vehicle into my name.

I started filling out the required information on the back of the title but, after a few days had passed, I got information from my immigration representative and realised that I too could be leaving the country by the latter part of 2021.

We then realised that it would not make much sense to have my name put on the title and so we decided to put the vehicle in my spouse’s name, since he has no immediate plans to migrate.

Because the vehicle was not sold or given to anyone outside of my immediate household, and we all are related and reside at the same local address here in Jamaica, we thought that we would have had no problem in transferring the vehicle to my spouse.

My spouse and I went to the tax office and the clerk who was assisting us leafed through the documents and asked me why my name was written on the back of the title. When I told her that I was no longer interested in adding my name she said that I should fill out and sign a ‘No Interest Form’, which I did.

At that point, she informed us she that she was going on her lunch break and was asking another lady to complete the transaction for us.

When the paper work was done we were given a breakdown of the payments, which at that time did not include a second sales tax. We were sent to the cashier to make the payment and told to listen for the name.

When we went to the cashier’s window we were informed that a second transfer sales tax of $12000 would have to be paid.

I went into shock and asked “What for?” She explained that because I had written my name in the transfer slot, even though I no longer wanted my name to be added to the title I would still have to pay the Government the transfer sales tax. With tears in my eyes I tried my best to again explain my ignorance, but no one would listen. I believe that the law is outrageous and I can’t understand why an innocent error can’t be pardoned. I feel robbed.

Please, can you get some clarification on this matter for me?

DTP

Dear DTP:

Tell Claudienne has been in communication with the head office of the Tax Administration of Jamaica (TAJ) on the matter.

The TAJ, which has done an investigation, said that they followed the required procedure. The TAJ has sent the Tell Claudienne column the following e-mail that explains why you were told to pay the sales tax:

“A complaint made by DTP to Tell Claudienne in relation to fees which were collected for a motor vehicle transfer transaction recently completed at a Tax Administration Jamaica (TAJ) location”

“While DTP’s concerns are understandable, please note that the transfer transaction was completed in accordance with statute and established TAJ procedure as it relates to the transfer and change of ownership, with appropriate discretion being applied where applicable.

THE ESTABLISHED PROCEDURE

The procedure prescribed for the transfer of a motor vehicle, as supported by the Road Traffic Act and its attendant regulations is for the reverse side of the title to be completed by the parties and the applicable fees, two of which are the transfer fee and the second sales/GCT (where applicable, based on the year of the vehicle), being collected.

GCT (second sales tax) is payable on the sale/transfer of second-hand vehicles that are over 10 years old. Based on this prescription, once there is a change in ownership of a vehicle over 10 years old, be it a sale or transfer, then the respective fees are due to be collected.

In doing a transfer, the Motor Vehicle Certificate of Title, which is the prescribed form to effect transfers of ownership, was designed to and only permits the change of ownership once on each title.

In the instant case with DTP, the full transfer of title was effected.

On TAJ being informed that the current registered title-holder (Ms DTP) had no further interest in retaining that interest, TAJ applied its discretion and allowed the taxpayer to complete an internal document called the ‘No Further Interest Letter’, which advised of her intention not to retain the interest but to transfer to a third party without having a Certificate of Title processed in her name. On the transfer to the third party (irrespective of the relationship between the parties), Ms DTP, being the transferor, is required, pursuant to the provisions of the Act, to pay the requisite duties since the transaction constitutes a transfer.

It should be noted that had it not been for this adopted discretionary practice, Miss DTP, for the fact that she completed the transfer, would have been required to pay all the required fees – and upon the Certificate of Title being processed in her name, and thereafter [having conducted a] transfer [of] the registered title to the third party – in order to effect her revised intention.

Based on TAJ’s understanding of the customer’s complaint, the point of concern is the payment of the fees involved to transfer the ownership from herself to the third party without a Certificate of Title being processed in her name.

TAJ understands the basis of the customer’s complaint, in terms of the payment of an expense which was not foreseen by the customer. TAJ, however reiterates that the transaction was completed in accordance with the requirements of the Act and on established procedure.”

We wish you all the best.

Have a problem with a store, utility, a company? Telephone 876-936-9436 or cell # 876-484-1349 or write to: Tell Claudienne c/o Sunday Finance, Jamaica Observer, 40-42 ½ Beechwood Avenue, Kingston 5; or e-mail:edwardsc@jamaicaobserver.com. Please include a contact phone number.