The LIRS has issued a Public Notice mandating employers to account for and remit CGT on termination benefits and any other capital sum paid to disengaging employees.
The collecting agents are required to file, alongside their respective annual returns, a statement showing all recipients of capital sums paid by the collecting agent in the format provided by the LIRS. Nil statements are to be filed where applicable.
The appointment of collecting agents for CGT purposes as contained in the Notice is effective from 1 January 2019.
Although the LIRS by this Notice is merely enforcing the law, the imposition of CGT on compensation for loss of employment may be regressive in the absence of a threshold. This is because the 10% CGT rate will be higher than the effective PIT rate for very low income earners. The LIRS should therefore consider a modification of the notice as stipulated under S.43(1) of the CGT Act to address this issue.
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