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Income Tax Act 1974

SAMOA

INCOME TAX ACT 1974

Arrangement of Provisions

PART I
PRELIMINARY

1. Short Title etc.
2. Interpretation
3. Meaning of expression "dividends"
   

PART II
INCOME TAX
Division 1
Liability for Income Tax

4. Income tax imposed
5. Income credited in account or otherwise dealt with
6. Income to be expressed in Samoa currency
   

Division 2
Exempt Income

7. Exempt Income

7A. Exempt Hotel Income

Division 3

Assessable Income

8. Items included in assessable income
9. Retiring allowances
10. Sale of patent rights
11. Capitalisation of mortgage interest
12. Amounts remitted are assessable income
13. Apportionment of income received in anticipation
    

Division 3A
Salary and Wage Income
Division 4
Assessable Income Trading Stock

14. Valuation of trading stock
15. Sale of trading stock with other assets
16. Sale of trading stock for inadequate consideration
    

Division 5

Deductions

17. Allowable deductions
18. Expenditure and losses
19. Certain deductions not permitted
20. Bad debts and irrecoverable sums
21. Repairs
22. Expenditure in borrowing money or obtaining lease
23. Premium in respect of leased equipment
24. Expenditure on scientific research
25. Testamentary annuities
26. Contribution to employees’ superannuation fund
27. Retiring allowances payable by employers
28. Pensions to former employees
29. Educational and other beneficial gifts

29A. Income tax liability deduction for Companies

Division 6
Deductions, Depreciation
and Incentive Allowances

30. Depreciation and special depreciation allowances
31. Tourism Investment Tax Credit
    

Division 7
Carry Forward of Losses

32. Losses may be set off against future profits
    

Division 8
Companies

33. Companies

34. Insurance companies

35. Co-operative societies and their members
    

Division 9
Trusts

36. Income derived by trustee
37. Beneficiary's income
    

Division 10
Overseas Freight and Passage Money

38. Overseas freight and passage money
    

Division 11

Film Business of Non-Resident

39. Film Business of non-resident
    

Division 12
Withholding Income

40. Liability for income tax on withholding income
    

Division 13
Anti-avoidance Provisions

41. Interest on debentures issued by reference to shares
42. Excessive remuneration or share of profits
43. Excessive remuneration to shareholder or director
44. Leases for other than an adequate rent
45. Arm's length test applied to certain businesses and other activities
46. Tax avoidance arrangements void
    

Division 14
Country of Derivation of Income

47. Liability of income for assessment
48. Place of resident, how determined
49. Classes of income deemed to be derived from Samoa
50. Apportionment where income derived partly in Samoa and partly elsewhere
    

Division 15
Relief from Double Taxation

51. Credits in respect of income tax paid in a country or territory outside Samoa
52. Arrangements for relief from double taxation
53. Arrangements for exchange of information
    

Division 16
Special Exemptions

54. Limitation to individual residents

54A Application of this Division

55. Personal exemption
56. Special exemption for married man
57. Special exemption for married woman
58. Special exemption for widowed or divorced taxpayer employing housekeeper
59. Special exemption for dependant relatives
60. Special exemption for life insurance premiums and superannuation contributions
61. Special exemption for charitable donations
62. Special exemption for school fees and educational gifts

62A. Special exemption concerning cash donations to the 2007 South Pacific Games Authority

PART III
AGENTS, ABSENTEES
AND NON-RESIDENTS

63. "Absentee" defined
64. Liability of principal not affected
65. Provisions applying to agents
66. Recovery of tax paid on behalf of another person
67. Agents of absentees and non-residents
68. Agents of non-residents carrying on business in Samoa
69. Non-resident trader or agent to give security
    

PART IV
CAPITAL GAINS AND LOSSES

70.Application of this Part

71. Interpretation
72. Disposal and acquisition
73. Disposal price and acquisition value
74. Calculation of adjusted acquisition value
75. Buildings in certain cases to be assets separate from land
76. Effect of capital improvements to assets other than land
77. Apportionment of disposal price or acquisition value where part of asset disposed of is exempt from this Part
78. Loss or destruction of capital asset
79. Bankruptcy etc.
80. Calculation of capital profit or loss on disposal
81. Capital gains realised on foreign currency transactions
82. Tax imposed under this Part
83. Rate of tax under this Part
84. Tax not to be cumulative etc.

INCOME TAX ACT 1974

1974 No.15

AN ACT to consolidate and amend the law relating to the imposition of income tax.

[Assent date: 30 December 1974]
[Commencement date: 1 January 1975]

PART I
PRELIMINARY

1. Short Title etc. - (1) This Act may be cited as the Income Tax Act 1974.
(2) Except where otherwise provided, this Act comes into force on 1 January 1975 and applies with respect to tax for the income year commencing on that date and for every subsequent year.
(3) This Act is declared to be one of the Inland Revenue Acts within the meaning of the Income Tax Administration Act 1974.

2. Interpretation - (1) In this Act, unless the context otherwise requires:

“agent” includes every person declared by this Act to be an agent;

“assessable income" means income of any kind which is not exempted from income tax otherwise than by way of a special exemption expressly authorised as such by this Act but does not include salary and wage income;

“approved company” means a company that has been issued with a certificate in accordance with section 7(1)(za)(ii);

“business” includes any profession, trade, manufacture, or undertaking carried on for pecuniary profit;

“charitable purpose” includes every charitable purpose, whether it relates to the relief of poverty, the advancement of education or religion, or any other matter beneficial to the community including any other object which is charitable according to Samoan usage and custom;

“Commercial fishing” means the catching of fish, including shell fish and other seafood:

(a) using a fishing boat 11metres or more in length;

(b) by a company or trust; or

(c) by any partnership or joint venture in which one or more of the partners or joint venturers is a company or trust,

but does not include game fishing (the income from which is not exempt under section 7);

“debenture” includes any acknowledgement of indebtedness by a company;

“emoluments” in relation to any person, means all benefits included in the assessable income of that person under section 8(b) but excluding any commissions but does not include salary and wage income;

“factory” means a building or buildings principally and directly used in the manufacture of goods;

“fixed establishment” in relation to any person, means a fixed place of business in which substantial business is carried on by that person; and includes:

(a) a branch, factory, shop, or workshop in which in each case substantial business is carried on; and

(b) a mine, quarry, oil well, or other place of natural resources subject to exploitation; and

(c)an agricultural, pastoral, or forestry property; but does not include;

(d) the use of facilities solely for the purpose of the storage, display, or delivery of goods or merchandise belonging to a business; or

(e) the purpose of purchasing goods or merchandise or for collecting information or for advertising for a business;

“fortnight” means a period of 2 weeks consisting of 14 consecutive days;

“income tax” means income tax imposed by this Act but does not include salary and wage tax;

“Income Tax Administration Act” means the Income Tax Administration Act 1974;

“lease” means any disposition whatever by which a leasehold estate is created;

“leasehold estate” includes any estate howsoever created other than a freehold estate;

“minerals” includes all minerals, metals, coal, oil, clay, stone, gravel, sand and precious stones;

“non-Resident” means a person who is not deemed to be resident in Samoa under this Act, or a person who derives income to which sections 7(1)(na) or 8(fa) apply;

“non-Resident agent” means an agent within the meaning of this Act who, being in Samoa, has no fixed and permanent place of business or abode there;

“non-Resident trader” means any person who, being in Samoa, carries on business there without having any fixed permanent place of business or abode there;

“overseas company” means any company other than one incorporated in Samoa;

“paid” in relation to an approved company and any obligation imposed by this Act means the provision of full consideration including the discharge of an original liability by the issue and acceptance of valuable debt and equity securities, and “pay” and “payment” have a corresponding meaning;

“relative” in relation to any person, means any other person connected with the first-mentioned person by blood relationship, marriage, or adoption; and includes a trustee for a relative; and for the purposes of this definition:

(a) persons are connected by blood relationship if in relation to any person the other is a parent, grandparent, brother, sister, brother or sister of a parent, nephew, niece or lineal descendant of the first-mentioned person;

(b) persons are connected by marriage if one is married to the other or to a person who is connected by blood relationship to the other;

(c) persons are connected by adoption if one has been adopted as the child of the other or as a child of a person who is connected by blood relationship to the other (but excluding the adopted child of a nephew or niece of the other);

(d) illegitimate relationship is equivalent to legitimate relationship;

“resident” means a person who is deemed to be a resident in Samoa under this Act except a person who derives income to which sections 7(1)(na) or 8(fa) apply;

“residual assessable income” means the amount remaining after deducting from assessable income all allowable deductions;

“salary and wage assessment” means the fortnightly ascertainment of the salary and wage tax payable under this Act in respect of salary and wage income;

“salary and wage income” means all benefits whether in money or otherwise and whether earned in or derived from Samoa and which are salary, wage, extra salary or wage, overtime pay, stipend, allowances, bonuses, gratuities, commissions or other reward or remuneration in respect of employment or service but does not include exempt income within the meaning of section 7 or income assessable pursuant to section 40:
PROVIDED THAT, without limiting the meaning of the term “benefit” it includes the value of the provision by an employer (with a deduction from that value of the value of any consideration given for it) of all or any of the following:

(i) any board or lodging;

(ii) any house or quarters or the use thereof;

(iii) any motor vehicles or the use thereof;

(iv) any other asset or the use thereof;

(v) any service;

(vi) any other benefit as the Commissioner may determine but excluding any benefit to an employee arising from a payment by an employer which is an allowable deduction under section 26;

(vii) any benefit in lieu of any of the benefits described in sub-paragraphs (i) to (vi):

FURTHER PROVIDED THAT the Commissioner may from time to time determine whether and to what extent any allowance in respect of or in relation to the employment or service of any person constitutes a reimbursement of expenditure incurred in gaining or producing his or her income from employment and the allowance to the extent so determined shall be exempt from salary and wage tax;

“salary and wage tax” means the fortnightly tax deduction authorised by this Act from the salary and wage income of an employee.

“superannuation fund” means the Government Superannuation Fund and the National Provident Fund and any superannuation or provident fund established for the benefit of the employees of any employer and approved for the time being by the Commissioner;

“tax” means income tax;

“taxable income” means the amount remaining after deducting from residual assessable income all special exemptions to which the taxpayer is entitled and includes taxable income deemed to have been derived under Divisions 10, 11, and 12 of Part II;

“taxpayer” means a person chargeable with income tax, whether on his or her own account or as the agent or trustee of any other person, and includes the executor or administrator of a deceased taxpayer:

“Samoa company” means a company incorporated in Samoa.
(2) In this Act, unless the context otherwise requires, the following terms shall have the meaning given to them in the Income Tax Administration Act:

(a) “gross”;

(b) “income year”;

(c) “year”;

(d) “year of assessment”;

(3)The provisions of subsection (1) of section 2 of the Income Tax Administration Act defining certain terms for the purposes of the Inland Revenue Acts apply for the purposes of this Act.
(4)For the purposes of the Inland Revenue Acts each fortnight shall commence on a Monday and fortnights shall follow consecutively from the 1st day of January 1990.

3. Meaning of expression “dividends” - (1) For the purposes of this Act, “dividend”, in relation to any company, is deemed to include:

(a) all sum distributed in any manner and under any name among all or any of the shareholders of the company;

(b) the value of any other property of any kind whatsoever (including bonus shares in the company) distributed by the company to any of its shareholders as such;

(c) all amounts received by any shareholder in respect of his or her shares whether in money or money’s worth upon the winding up of the company in excess of the amount paid up on his or her shares;

(d) where any property of the company (including shares in the company) is sold or otherwise disposed of to a shareholder without consideration or for a consideration which, in the opinion of the Commissioner is less than its market price or its true value the excess of the market price of that property on the day it was sold or disposed of over the price (if any) realised on the sale or disposition, or if there is no market price, the excess of the price deemed to have been realised pursuant to a determination of the Commissioner under section 30(6)(b) over the price (if any) realised on the sale or disposition;

(e) all interest received by debenture holders under debentures to which section 41 applies;

(f) any money advanced by the company to or for the benefit of any of its shareholders if, in the opinion of the Commissioner, the making of the advance was not a bona fide investment by the company but was virtually a distribution of profits but shall not in any case include any payment or other transaction to such extent as that payment or transaction is, or is equivalent to, a return of sharecapital or constitutes a return to shareholders of premiums paid to the company in respect of the issue of share capital by the company:
PROVIDED THAT where any money advanced by a company to or for the benefit of any shareholder and deemed by virtue of this paragraph to constitute a dividend is subsequently repaid to the company, the Commissioner may amend in such manner as may be thereby rendered necessary the assessment made in respect of income derived by that shareholder during the income year in which the advance was made.
(2) Where any company that has reduced the amount of the paid-up capital of any shareholder by writing off losses incurred by the company is subsequently wound up and there is distributed to that shareholder upon the winding up an amount (whether in money or money's worth) in excess of the amount paid upon his or her shares in the company, the expression "dividends" is, for the purposes of this Act, deemed not to include the amount so distributed to such extent as the Commissioner thinks just and reasonable, having regard to the amount of the paid-up capital lost by the shareholder and any other relevant considerations.
(3) Where:

(a) any capital asset of a company has been realised, whether voluntarily or involuntarily, and the Commissioner is satisfied that the whole or part of any profit arising from any such realisation in excess of the cost to the company of that asset (not being an amount that is required to be taken into account under any provision of this Act for the purpose of assessing income tax) is subsequently included in any payment or other transaction referred to in subsection (1); or

(b) the Commissioner is satisfied that a company has otherwise made a capital profit or a capital gain, including a capital gain by way of gift, and that the whole or part of any such profit or gain (not being an amount that is required to be taken into account under any provision of this Act for the purpose of assessing income tax) is subsequently included in any payment or other transaction referred to in subsection (1) -
the expression "dividends" is, for the purposes of this Act, deemed not to include that profit or gain to the extent to which that profit or gain exceeds any capital losses incurred in the income year (or, as the case may be, the accounting year of the company corresponding with that year) in which that profit or gain was made or in any subsequent year (being losses not already taken into account under this subsection or in calculating the assessable income of the company for any year):
PROVIDED THAT where any amount, being the whole or part of any increase arising from the writing up of any asset, has been excluded from the expression "dividends" under this subsection, the cost of that asset is, for the purposes of this subsection, deemed to be increased by that amount.

PART II
INCOME TAX

Division 1
Liability for Income Tax

4. Income tax imposed - (1) Subject to the provisions of this Act, income tax shall be levied and paid for the use of the Government of Samoa in and for the year commencing on the 1st day of January in each year.
(2) Income tax shall be assessed and levied on the taxable income of every taxpayer at such rate or rates as may be fixed from time to time by Acts to be passed for that purpose.
(3) The Act by which the rate or rates of income tax are so fixed from time to time is in this Act referred to as the Income Tax Rate Act.
(4) Subject to the provisions of this Act income tax shall be payable by every taxpayer on all income derived by him or her during the year for which the tax is payable.
4A. Despite anything else in this or any other Act where in any year a taxpayer earns or derives residual assessable income and salary and wage income the amount of tax payable in respect of that residual assessable income shall be the value "C" calculated in accordance with the following formula:

A-B = C

Where:

“A” is the amount of tax which would be payable upon the aggregate of:

(i) the taxpayer's residual assessable income for the year.

(ii) an amount of residual assessable income equal to the amount of salary and wage income for that year.

“B” is the amount of tax which would be payable upon an amount of residual assessable income equal to the amount of salary and wage income earned or derived by the taxpayer for that year.

“C” is the amount of tax payable in respect of the taxpayer's residual assessable income for that year.

5. Income credited in account or otherwise dealt with - For the purposes of this Act, income is deemed to have been derived by a person although it has not been actually paid to or received by him or her, or already become due or receivable, but has been credited in account, or re-invested, or accumulated, or capitalised, or carried to any reserve, sinking or insurance fund, or otherwise dealt with in his or her interest or on his or her behalf.

6. Income to be expressed in Samoa currency - (1) For the purposes of the Inland Revenue Acts, income wherever derived and expenditures and losses wherever incurred shall be expressed in terms of Samoa currency.
(2) Where income or expenditure or a loss is expressed in terms of any currency other than Samoa currency, it shall be converted into Samoa currency at the official exchange rate between Samoa currency and the other currency.
(3) For the purposes of subsection (2), the official exchange rate:

(a) where income is remitted to Samoa or the amount of any deduction is remitted from Samoa during the income year in which it is derived or incurred, as the case may be, shall be the rate in force at the date of the remittance; or

(b) where income or the amount of a deduction is not remitted during the income year in which it is derived or incurred, as the case may be, shall be the rate in force at the end of that income year.

Division 2

Exempt Income

7. Exempt Income -(1)The following income shall be exempt from taxation:

(a) income, other than income received in trust, derived by any public authority or local authority;

(aa) income derived by residents and non-residents from the payment of dividends by companies registered in Samoa;

(ab) income received by resident and non-resident beneficiaries of trusts settled in Samoa and in respect of which tax has been paid in Samoa as income derived by the trust;

(ac) income derived in Samoa by a non-resident shareholder in a company established under the Companies Act 1955 or the Companies Act 2001, as the case may be, where:

(i) the company is nominated in writing by the Attorney General to the Minister of Finance (and in doing so the Attorney General shall exercise this power once only); and

(ii) the Minister of Finance continues to be satisfied that the non-resident shareholder’s income in Samoa is taxable in another country; and

(iii) despite the other provisions in this paragraph and this Act, the Minister of Finance, acting on the written advice of the Chief Executive Officer of the Ministry of Finance, may exempt the company nominated under subparagraph (i) from taxation under this Act up to a maximum period of 3years if the Minister is satisfied that the exemption will materially assist the company to contribute to the development of Samoa;

(b) income derived from sinking funds in respect of any public debt or of the debt of any local authority;

(c) income derived by any person from any pension or allowance granted by any Government in respect of any war, or in respect of any disability or disablement attributable to or aggravated by service in any naval, military, air or police forces;

(ca) income derived by any person from any pension payable by or through the Samoa National Provident Fund established under the National Provident Fund Act 1972;

(cb) income derived by beneficiary from the Fund under the Parliamentary Pension Scheme Act 1998

(d)income derived from Samoa by any person (not being a company or a public authority, or an unincorporated body, or a non-resident, or a trustee assessable for income tax under section 36) from interest (not being interest exempt from income tax under any provision of this Act):
PROVIDED THAT the amount of the exemption under this paragraph in any income year shall not exceed $50 of the aggregate of that income:

(e) income derived by any person by way of maintenance or alimony received from the husband or wife or former husband or wife of that person;

(f) income derived by the trustee of a superannuation fund;

(g) income (not being income of the kind referred to in paragraph (h) hereof) derived by trustees in trust for charitable purposes, or derived by any society or institution established exclusively for such purposes;

(h) income derived directly or indirectly from any business carried on by or on behalf of or for the benefit of trustees in trust for charitable purposes within Samoa, or derived directly or indirectly from any business carried on by or on behalf of or for the benefit of any society or institution established exclusively for such purposes:
PROVIDED THAT if the aforesaid purposes are not limited to Samoa the Commissioner may apportion the income in such manner as the Commissioner deems just and reasonable between such purposes within Samoa and the like purposes out of Samoa, and may allow to the trustees, society or institution a partial exemption accordingly:

(i) income derived by any society or association, whether incorporated or not, which is, in the opinion of the Commissioner, established substantially or primarily for the purpose of promoting any amateur game or sport if that game or sport is conducted for the recreation or entertainment of the general public, and if no part of the income or other funds of the society or association is used or available to be used for the private pecuniary profit of any proprietor, member or shareholder thereof;

(j) income derived by any society or association whether incorporated or not, which is, in the opinion of the Commissioner, established substantially or primarily for the purpose of advertising, beautifying or developing any town or other district so as to attract trade, tourists, visitors, or population, or to create, increase, expand or develop amenities for the general public, if no part of the income or other funds of the society or association is used or is or may become available to be used for any other purposes, not being a charitable purpose;

(k) income derived by any person from any maintenance or allowance provided for or paid to him or her in respect of attendance at an educational institution in terms of a scholarship or bursary;

(l) income derived by any person, in respect of any period of incapacity of work, from any sick pay or other allowances paid to him or her from any sick, accident or death benefit fund to which he or she was a contributor at the date of the commencement of the period of incapacity;

(m) income derived by any trustee in trust for any sick, accident, or death benefit fund, not being income derived directly or indirectly from any business carried on by or on behalf of or for the benefit of that trustee;

(ma) notwithstanding the Income Tax Ordinance 1955, income derived in Samoa (in respect of his or her office) by any Minister of religion, being a person approved by the Commissioner for the purposes of this paragraph, for the period beginning on 1 January 1956 and ending on 31 December 1977;

(mb) income derived in Samoa by any Minister of religion whose sole occupation is the spiritual guidance of a specific congregation, being a person approved by the Commissioner for the purposes of this paragraph, from charitable donations received from members of the congregation of that Minister of religion on or after 1 January 1978;

(n) income derived by any person who is a non-resident (and who for purposes of this paragraph is approved by the Minister or is a member of a class approved by the Minister) from personal including professional services performed by that person within Samoa if in the opinion of the Minister the services rendered or to be rendered by the non-resident are primarily and principally directed to assisting the Government in the settlement or development of Samoa and the income derived by the non-resident is liable to income tax in the country in which he or she is resident;

(na) income derived by any person from personal (including professional) services performed by that person for the Government of Samoa pursuant to an arrangement for assistance entered into by the Government of Samoa with the Government of any other country or international organisation to the extent such arrangement provides that income so derived is to be exempt from income tax;

(o) income derived by any person who is a non-resident and who (for the purposes of this paragraph) is approved by the Minister or is in a class approved by the Minister:

(i) from personal (including professional) services performed by that person within Samoa for or on behalf of an employer who is a non-resident; or

(ii) from any maintenance allowance, scholarship or bursary provided for or paid to that person; if that income is derived by that person during and in respect of his or her presence within Samoa for the purpose of providing professional expert advice or assistance, or of teaching or lecturing, or of making investigations or of receiving education, training or experience pursuant in every such case to any arrangement for assistance entered into by the Government of Samoa with the Government of any other country or with any international organisation for the purpose of providing (whether upon a mutual, co-operative, multi-lateral, bilateral or unilateral basis) professional, expert, educational, economic, technical or cultural assistance or administrative or other training, or the means of facilities for making investigations;

(oa) income received by any person whether before or after the coming into force of this section as an employee of a company registered under the Trustee Companies Act 1987 or licenced under the Off-shore Banking Act 1987 or the International Insurance Act 1988 where that person is not a Samoan citizen and has entered into and remains in Samoa solely for the purposes of that employment;

(p) income derived by any international organisation;

(q) income derived by a non-resident from:

(i) stock or debentures which have been issued by the Government, or by any local or public authority, and the interest on which is payable out of Samoa; or

(ii) loans the interest on which is, pursuant to an agreement or arrangement made with the Government of Samoa, to be exempt from income tax in Samoa;

(r) income derived by a non-resident from personal (including professional) services performed by that person within Samoa during a visit to Samoa, if:

(i) that visit does not exceed a period of 30 days; and

(ii) in the country or territory in which that person is resident, that income, being exempt from income tax in Samoa is chargeable with any tax which in the opinion of the Commissioner is substantially of the same nature as income tax under this Act; and

(iii) these services are performed for or on behalf of a non-resident:
PROVIDED THAT this paragraph shall not apply to the income of public entertainers (including, but without limiting the generality of the term "public entertainers", theatre, motion picture, television and radio artists, singers, musicians, dancers, lecturers, circus performers, boxers, wrestlers, golfers, athletes, and other professional sportsmen):
PROVIDED ALSO THAT this paragraph shall not apply to the income derived in any income year by a person who is present within Samoa for a period or periods exceeding in the aggregate 30 days during that year.

(s) income derived by the producer of primary production from the sale or other disposal of primary production other than commercial fishing;

(t) emoluments derived by a person who:

(i) is not a citizen of Samoa; and

(ii) holds office in Samoa as an official of an international organisation or of a government other than the Government of Samoa and is posted to Samoa for that purpose.

(u) income derived by any person by way of compensation received by him or her under the Accident Compensation Ordinance 1960 whether as a lump sum or by periodical payments;

(v) income expressly exempted from income tax or from payment of income tax by any other Act to the extent of the exemption so provided;

(w) interest on loans from a non-resident which, in the opinion of the Minister of Finance, are obtained and applied for the economic benefit of Samoa;

(x) grants and any other payments or benefits made available to an enterprise under the Pacific Islands Industrial Development Scheme of the New Zealand Government;

(y) income derived by a non-resident from the operation of shipping or air services provided the Minister is satisfied that an equivalent exemption from income tax is granted to persons resident in Samoa carrying on a similar business, by the country in which such non-resident resides;

For the purposes of this paragraph, a company is deemed to be resident only in that country in which the central management and control of its business is situated.

(z) income derived by any resident person (not being a company, or a public authority or an unincorporated body of persons) from bonus payments made solely for the purpose of home purchase by a savings institution approved by the Commissioner:
PROVIDED THAT the amount of the exemption under this paragraph shall not exceed $500.

(za )income derived outside Samoa by any resident company that:

(i) in the opinion of Cabinet would not, but for this exemption, have been derived by that company; and

(ii) in the opinion of Cabinet, significantly contributes to the economic welfare of Samoa and receives a certificate on the authority of Cabinet to that effect; and

(iii) does not have a fixed establishment in Samoa;

(zb) income received by a Samoan Venture Capital Fund approved by the Minister of Finance for the period ending 31st December 2014 provided that –

(i) only 1 Fund may be approved under this paragraph; and

(ii) the Fund meets and continues to meet any conditions required by the Minister of Finance, including but not limited to the Fund’s constitution and name.
(2) For the purposes of this section the expression "sick, accident, or death benefit fund" means any fund established for the benefit of the employees of any employer or of the members of any incorporated society or for the benefit of the widows and dependents of any deceased employees of any employer, or of any deceased members of any incorporated society, and approved for the time being by the Commissioner.
(3) In this section, “charitable purposes” means objects that:

(a) are of a public character; and

(b) are not carried on for private pecuniary profit; and

(c) are exclusively for any one or more of the following:

(i) the advancement of religion;

(ii) the advancement of education;

(iii) the relief of poverty, sickness and disability;

(iv) the promotion of any other object beneficial to the community including any other object which is charitable according to Samoan custom and usage.
(4) In this section, "international organisation" means any organisation the members of which are sovereign powers, whether Commonwealth powers or other foreign powers, or the Government thereof.
(5) If any question arises as to whether income derived by any person is exempt from taxation under subsection (1)(n), (o), (p) and (t) that question shall be determined by the Minister after considering the recommendation of the Commissioner.
(6) In this section:
"primary production" means production (other than production from enterprises which receive or have in any previous year received exemption from income tax under the Enterprises Incentives Act 1965) resulting directly from:

(a) the farming of land including the production of crops and animal husbandry but excluding silviculture; and

b) the making of Samoan handicrafts including all arts and crafts made in Samoa primarily and principally from the natural produce of Samoa; and

(c) the catching of fish, including shell fish and other seafood, other than commercial fishing, within the territorial waters of Samoa by a resident;
“producer” means the person farming the land, the maker of the Samoan handicrafts or the fisherman as the case may be.
(7) Despite the Income Tax Ordinance 1955, all income derived from the sale of any of the natural products of Samoa by the grower of that produce, during the period beginning on 1 July 1972 and ending on the date of repeal of that Ordinance, is hereby declared to have been income exempted from taxation under section 47 of that Ordinance during that period; and any tax already paid on such income shall be refundable as if excess tax to which section 101 of the Income Tax Administration Act 1974 applies.
(8) Despite subsection (1)(s), income derived by the producer of primary production from the sale or other disposal of primary production in the income years beginning on 1 January 1998 and ending 31 December 2002 shall be exempt from taxation.

7A. Exempt hotel income – (1) In this section, unless the context otherwise requires:

“Category 1 Hotel” means a hotel providing first class accommodation and facilities which is approved by the Minister of Finance, acting on the advice of Cabinet, where the capital investment in the hotel is over $1 million and up to and including $3 million;

“Category 2 Hotel” means a hotel providing first class accommodation and facilities which is approved by the Minister of Finance, acting on the advice of Cabinet, where the capital investment in the hotel is over $3 million and up to and including $20 million;

“Category 3 Hotel” means a hotel providing first class accommodation and facilities which is approved by the Minister of Finance, acting on the advice of Cabinet, where the capital investment in the hotel is over $20 million;

“Hotel” means a Category 1 or Category 2 or Category 3 Hotel.
(2) For the purposes of this section, any exemption from taxation referred to in subsection (3) shall be granted by the Commissioner:

(a) only where the Commissioner is satisfied that the capital investment referred to in subsection (1) has been made after 30 June 2003; and

(b) only where the capital investment referred to in subsection (1) is held in a form and for a period approved in writing by the Minister of Finance.
(3) Subject to this section, the Commissioner shall grant an exemption from income tax for the taxable income (after deduction of all losses carried forward) derived from the operation of a Hotel as follows:

(a) Category 1 Hotel – exemption for 5 years following the capital investment referred to in subsection (1);

(b) Category 2 Hotel – exemption for 10 years following the capital investment referred to in subsection (1);

(c) Category 3 Hotel – exemption for 15 years following the capital investment referred to in subsection (1).
(4) For the purposes of subsection (3), the Commissioner shall determine in writing when the period of exemption commences and end.

Division 3
Assessable Income

8. Items included in assessable income - Without i limiting the meaning of “assessable income”, the assessable income of any person is, for the purposes of this Act, deemed to include, save as far as express provision is made in this Act to the contrary, all income of the following kinds or derived from the following sources:

(a) the gross income derived from any business (including any increase in the value of stock on hand at the time of the transfer or sale of the business or on the reconstruction of a company);

(b) all benefits, whether in money or otherwise, and whether accrued in or derived from Samoa, and which are either superannuation, compensation for loss of office, retiring or other allowance, pension (including any pension in respect of which a deduction is allowed under Section 28) annuity or other reward, in respect of or in relation to past employment or service or loss or reduction of future income of that person, or of any person of whom that person is or has been the wife or husband or a child or dependent;

(c) all sums or benefits (whether in money or otherwise) derived from the sale or other disposition of any real or personal property or any interest therein if the property was acquired for the purpose or with the intention of selling or otherwise disposing of it or any part of it or any property including it, and all sums and benefits (whether in money or otherwise) derived from the carrying on or carrying out of any undertaking or scheme entered into or devised for the purpose of making a profit, irrespective of the time at which the undertaking or scheme was entered into or devised;

(d) all rents, fines, premiums, or other revenues (including payments for or in respect of the goodwill of any business, or the benefit of any statutory licence or privilege) derived from any lease, licence or easement, or from the grant of any right of taking the profits thereof;

(e) all royalties or other like payments, depending upon production from or the use of any real or personal property whether or not they are installments of the purchase price of any property which are derived by any person resident in Samoa;

(f) all payments derived by any person resident in Samoa for the supply of scientific, technical, industrial or commercial knowledge information or assistance except to the extent that the Commissioner is satisfied such payments constitute whole reimbursement of expenditure that is of a kind that is deductible under this Act and is incurred in relation to the payments by the person to whom the payments are made;

(fa) income derived by any person from personal (including professional) services performed by that person for the Government of Samoa where such income is paid from funds obtained pursuant to an arrangement for assistance entered into by the Government of Samoa with the Government of any other country or international organisation;

(g) all interest derived by any person resident in Samoa, dividends derived from outside Samoa by any person resident in Samoa, annuities and pensions other than annuities and pensions referred to paragraph (b):
PROVIDED THAT where any securities have been acquired by purchase or otherwise during the income year, the Commissioner may, where he or she considers it equitable so to do, apportion between the transferor and the transferee any interest due or accruing due at the date of the transfer and not then paid:

(h) all sums or benefits payable in any income year from the extraction removal or sale, (including any disposition by way of licence or easement, or the grant of any right of taking any profits or produce from any land) of any minerals or timber (including standing timber);

(i) income derived from any other source whatsoever;

(j) income according to ordinary concepts.

9. Retiring allowances - (1) Subject to the provisions of this section, where any payment is made in a lump sum by way of a bonus, gratuity, or retiring allowance in respect of the full time employment or service of a taxpayer on the occasion of his or her retirement from that employment or service, and the Commissioner is satisfied that the taxpayer did not retire from the employment or service before attaining the appropriate retiring age, the payment is deemed to be assessable income of the taxpayer to the following extent only:

(a) where the amount of the payment does not exceed the specified sum, 5%of the amount of the payment;

(b) where the amount of the payment exceeds the specified sum, the total of:

(i) 5%of so much of the amount of the payment as is equal to the specified sum; and

(ii) the amount by which the amount of the payment exceeds the specified sum.
(2) Where any payment of the kind referred to in subsection (1) is made to a taxpayer, and a further payment of that kind is made to him or her on the occasion of his or her retirement from any subsequent employment or service, then, for the purposes of subsection (1), the period of employment or service, and any remuneration in respect thereof, before the date of his or her earlier retirement shall be disregarded in calculating the specified sum in relation to his or her subsequent retirement.
(3) In this section:

“appropriate retiring age” means:

(a) not less than 55 years of age in the case of a male taxpayer; or

(b) not less than 50 years of age in the case of a female taxpayer; or

(c) such earlier age as the Commissioner considers reasonable having regard to the nature of the taxpayer's employment or service or the general terms of employment in the business or occupation in which the taxpayer was employed; or

(d) the age at which the taxpayer retired in the case of retirement by reason of his or her serious illness, or permanent disability;

“employment or service” includes any employment or service of the taxpayer which:

(a) was with any company which consisted in the opinion of the Commissioner wholly or substantially of the same shareholders or was in the opinion of the Commissioner under the control of the same persons as the company from whose employment or service the taxpayer retired; or

(b) was with the same employer, whether or not the business of the employer was the same; or

(c) was with the same business, whether or not a change of the ownership of the business had occurred; or

(d) was, in the opinion of the Commissioner, substantially the same employment or service as that from which the taxpayer retired;

“specified sum” means:

(a) in any case where the taxpayer has completed 10 years or more of service in the employment or service, an amount equal to one-third of the total remuneration of the taxpayer from that employment or service in respect of his or her service in that employment or service in the period of 3 years immediately preceding the date of his retirement;

(b) in any other case, an amount calculated in accordance with the following formula.

a b
----- X
10

where-

a = is the number of complete years of service of the taxpayer in that employment or service; and

b = is an amount equal to one-third of the total remuneration of the taxpayer from that employment or service in respect of his or her services in that employment or service in the period of 3 years immediately preceding the date of his or her retirement.
(4) Where the Commissioner is satisfied that any taxpayer has ceased to be employed in any full-time employment or service by reason of redundancy or loss of office, or other similar circumstances and has suffered hardship as a result thereof, then, for the purposes of this section:

(a) any payment made to him or her in a lump sum on the occasion and by reason of ceasing to be so employed may be deemed to be a retiring allowance paid on the occasion of his or her retirement from that employment or service; and

(b) the taxpayer in such case is deemed to have attained the appropriate retiring age on the date on which he or she ceased to be so employed and to have retired from that employment or service on that date.
(5) This section shall not apply to any payment by way of bonus, gratuity, or retiring allowance (to which payment this section would have been applied but for this subsection) which is made to any relative of the employer or where the employer is a partnership to any relative of any partner or where the employer is a company to any of its shareholders or to any relative of any of its shareholders except to the extent that the Commissioner determines would be reasonable if the employer and the taxpayer were at arm’s length and the amount so determined is deemed to be the amount of that payment for the purposes of subsection (1)(a) and (b).

10. Sale of Patent rights - (1) Where any taxpayer sells any patent rights, any sum received by the taxpayer or owing to him or her in respect of the sale is deemed to be assessable income and, after deducting the appropriate amount specified in subsection (2) (so far as that amount has not been otherwise allowed as a deduction from his or her assessable income for that or any other income year), is deemed to be included in his or her residual assessable income and is deemed to be derived by the taxpayer during the income year in which the sum is received by or becomes owing to him or her:
PROVIDED THAT the Commissioner may, upon application made in writing by or on behalf of the taxpayer not later than 12 months after the end of that income year or within such further period as the Commissioner in his or her discretion allows, apportion that income between that income year and any number of subsequent years not exceeding 5, and in every such case the amount of income so apportioned to any income year is deemed to have been derived in that year.
(2) The total amount that may be deducted from any such sum shall:

(a) where the taxpayer actually devised the invention to which the patent relates, be the amount of the expenditure incurred by the taxpayer in connection with the devising of the invention, or (where the sale does not include the whole of the patent rights in respect of the invention) such proportion of that expenditure as the Commissioner thinks just;

(b) where the taxpayer acquired the patent rights, be an amount bearing to the total cost of the patent rights to the taxpayer the same proportion as the unexpired term of the patent rights at the date of the sale bears to the unexpired term thereof at the date of their acquisition by the taxpayer.
(3) The foregoing provisions of this section shall, as far as they are applicable and with the necessary modifications, apply in any case where the sale is in respect of a share or interest in any patent rights.

11. Capitalisation of mortgage interest - (1) Where any interest payable under any mortgage of real or personal property has been capitalised, the Commissioner may determine the year or years in which it became payable, and the interest attributed to any year by any such determination of the Commissioner is deemed to have been derived in that year.
(2) For the purpose of giving effect to the provisions of this section the Commissioner may at any time alter any assessment notwithstanding anything to the contrary in Part III of the Income Tax Administration Act.

12. Amounts remitted are assessable income - (1) Where the amount of any expenditure or loss incurred by a taxpayer has been taken into account in calculating his or her residual assessable income for any income year, and subsequently the liability of the taxpayer in respect of that amount is remitted in whole or in part, the amount so remitted is deemed to be assessable income derived in the year in which the amount is remitted.
(2) For the purposes of this section, a liability in respect of any expenditure or loss is deemed to have been remitted to the extent to which the taxpayer has been discharged from that liability without fully adequate consideration in money or money's worth.
(3) For the purposes of this section, the Commissioner may at any time alter any assessment, despite anything to the contrary in Part III of the Income Tax Administration Act.

13. Apportionment of income received in anticipation - When income is derived by any person in any year by way of premium or payment in advance on the grant or renewal of any lease, licence or easement affecting property or from the grant of any right of taking the profits thereof or in any like manner by way of anticipation the Commissioner may at the request of that person during the next succeeding year, apportion that income between the income year and any number of subsequent years not exceeding 5, and the part so apportioned to each of those years is deemed to be assessable income derived in that year.

Division 3A
Salary and Wage Income

13A. A person who derives salary and wage income is liable to pay salary and wage tax upon such income earned or derived in each fortnight at the rates declared by Act and such tax is a final tax upon such salary and wage income.
13B. (1) Salary and wage tax when it becomes due and payable is a debt due to the State and payable to the Commissioner.
(2)Subject to subsection (3) if any salary or wage tax remains unpaid after the time it becomes due and payable additional salary and wage tax becomes due at the rate of 20% per year and is due and payable in respect of the amount unpaid.
(3)The Commissioner may in any case for any reason the Commissioner thinks sufficient remit the additional tax or any part of it.

3C. (1) The ascertainment of the amount of salary and wage tax is deemed to be an assessment for all purposes of the Inland Revenue Acts.
(2) The assessment to liability for salary and wage tax in respect of salary and wage income shall be made at the end of each fortnight in respect of the salary and wage income derived during that fortnight.
(3) The Commissioner may serve on a person by post or otherwise a notice in writing in which is specified:

(a) the amount of the salary or wage tax that the Commissioner has ascertained is payable by that person; and

(b) the date on which that tax become due and payable.
(4) The production of a notice served under subsection (3) or a document under the hand of the Commissioner purporting to be a copy of such a notice is evidence that the amount of salary and wage tax specified in the notice or document became due and payable by the person on whom the notice was served on the date so specified. Any notice under subsection (3) may relate to more than one fortnight.

Division 4
Assessable Income Trading Stock

14. Valuation of trading stock - (1) In this section," trading stock" includes:

(a) anything produced or manufactured;

(b) anything acquired or purchased for manufacture, sale or exchange;

(c) livestock;

(d) any share or interest in trading stock as defined under the preceding provisions of this subsection.
(2) Where any taxpayer owns or carries on any business, the value of his or her trading stock at the beginning and at the end of every income year shall be taken into account in ascertaining whether or not he or she has derived residual assessable income during that year.
(3) The value of the trading stock of any taxpayer to be taken into account at the beginning of any income year shall be its value as at the end of the last preceding income year:
PROVIDED THAT where the taxpayer's business is commenced and his or her trading stock is acquired during the income year, the value of the trading stock as at the beginning of the income year is deemed to be an amount equal to its cost price:
PROVIDED ALSO THAT where during the income year any asset previously owned by the taxpayer, but not used in his or her business, was committed by him or her to use as trading stock of his or her business, the value of that trading stock as at the beginning of the year is deemed to be an amount equal to its market selling value on the day when it was so committed to use in the business.
(4) Subject to subsections (5) and (10), the value of the trading stock of any taxpayer to be taken into account, at the end of any income year shall be, at the option of the taxpayer, its cost price, its market selling value, or the price at which it can be replaced.
(5) Despite anything to the contrary in subsection (4), where the Commissioner is satisfied that, by reason of obsolescence of, or any other special circumstances relating to, any trading stock, (not being livestock) of any taxpayer, the value of that trading stock to be taken into account, at the end of any income year should be an amount (being less than the amount that is the lowest value that could be applicable under that subsection) determined by the Commissioner to be the fair and reasonable value of that trading stock, having regard to:

(a) the quantity of that trading stock on hand at the end of that income year; and

(b) the quantity of that trading stock sold, exchanged, or used in manufacture by the taxpayer after the end of that income year and the prospects of sale, exchange, or use in manufacture of further quantities of that trading stock; and

(c) the quantity of trading stock of the same kind sold, exchanged, or used in manufacture by the taxpayer during that income year and preceding income years; and

(d) such other matters as the Commissioner considers relevant the value of that trading stock to be so taken into account shall notwithstanding any exercise of the option of the taxpayer under subsection (4), be the value so determined by the Commissioner:
PROVIDED THAT this subsection does not apply in relation to any taxpayer, unless by written notice signed by or on behalf of the taxpayer and given to the Commissioner within the time within which the taxpayer is required to furnish a return of his or her income for the income year at the end of which the value of the trading stock is to be taken into account, or within such further time as the Commissioner, in his or her discretion, may allow, the taxpayer notifies the Commissioner that he or she desires this subsection to apply.
(6) Where the value of the trading stock of any taxpayer at the end of any income year exceeds the value of his or her trading stock at the beginning of that year the amount of the excess shall be included in his or her assessable income for that year.
(7) Where the value of the trading stock of any taxpayer at the beginning of any income year exceeds the value of his or her trading stock at the end of that year the amount of the excess shall be allowed as a deduction in computing the residual assessable income of the taxpayer for that year.
(8) Where in any income year the whole or any part of the assets of a business owned or carried on by any taxpayer is sold or otherwise disposed of (whether by way of exchange, or gift, or distribution in terms of a will, or on an intestacy, or otherwise howsoever, and whether or not in the ordinary course of the business of the taxpayer or for the purpose of putting an end to that business or any part thereof), and the assets sold or otherwise disposed of consist of or include any trading stock the consideration received or receivable for the trading stock or (in any case where section 15 or 16 applies) the price which under that section the trading stock is deemed to have realised, shall be taken into account in computing the taxpayer's assessable income for that year, and the person acquiring the trading stock is, for the purpose of computing his or her residual assessable income for that year or for any subsequent income year, deemed to have purchased it at the amount of that consideration or price.
(9) Subject to sections 15 and 16, the price specified in any contract of sale or arrangement as the price at which any trading stock is sold or otherwise disposed of as aforesaid is deemed for the purposes of this section to be the consideration received or receivable for the trading stock.
(10) Despite anything to the contrary in subsection (4), any taxpayer who derives income from livestock may with the concurrence of the Commissioner adopt and fix a standard value in respect of that livestock or in respect of any class of such livestock. In any case where a standard value has been so fixed the taxpayer may with the concurrence of the Commissioner adopt or the Commissioner may require the adoption of either the true value or a different standard value instead of the standard value fixed as aforesaid:
PROVIDED THAT the adoption of a standard value, or the adoption of the true value instead of a standard value, or any alteration in the standard value as herein provided shall first take effect at the end and for the purposes of the income year or other period to which any return of assessable income relates.

15. Sale of trading stock with other assets - (1) Where any trading stock is sold together with other assets the part of the consideration attributable to the trading stock shall, for the purposes of this Act, be determined by the Commissioner, and the part of the consideration so determined is deemed to be the price paid for the trading stock by the purchaser.
(2) For the purposes of this section, any trading stock which has been disposed of otherwise than by sale is deemed to have been sold, and any trading stock so disposed of and any trading stock which has been sold for a consideration other than cash are deemed to have realised the market price of the day on which they were so disposed of and sold, but where there is no market price, trading stock is deemed to have realised such price as the Commissioner determines.
(3) In this section,“trading stock” includes "trading stock" as defined in section 14(1) and also includes any other real or personal property which as and when realised produces assessable income of the taxpayer under section 8(c).

16. Sale of trading stock for inadequate consideration - (1) Where any trading stock is sold or otherwise disposed of without consideration in money or money's worth or for a consideration that is less than the market price or the true value thereof on the day of the sale or other disposition, the following provisions shall apply, namely:

(a) the trading stock is deemed for the purposes of this Act to have been sold at and to have realised the market price of the day of the sale or other disposition, but, where there is no market price, is deemed to have been sold at and to have realised such price as the Commissioner determines;

(b) the price which under this section the trading stock is deemed to have realised is to be taken into account in calculating the assessable income of the person selling or otherwise disposing of the trading stock;

(c) the person acquiring the trading stock is, for the purpose of calculating his or her residual assessable income, deemed to have purchased the trading stock at the price which under this section the trading stock is deemed to have realised.
(2) In this section, “trading stock” has the meaning given to it in section 15(3).

Division 5
Deductions

17. Allowable deductions - (1) In calculating the residual assessable income of a taxpayer the assessable income shall be totalled and from there shall be deducted all allowable deductions.
(2) Except as expressly provided in this Act, no deduction shall be made in respect of any expenditure or loss or allowance of any kind for the purpose of calculating the residual assessable income of any taxpayer.

18. Expenditure and losses -(1) In calculating the residual assessable income of any taxpayer, any expenditure or loss to the extent to which it:

(a) is incurred in gaining or producing the assessable income (other than emoluments) for any income year; or

(b) is necessarily incurred in carrying on a business for the purpose of gaining or producing the assessable income for any income year,-
may, except as expressly provided in this Act, be deducted from the assessable income of the taxpayer in the income year in which the expenditure or loss is incurred.
(1A) No expenditure or loss described in subsection (1) may be deducted from salary and wage income.
(2) Any expenditure on or in relation to property (including the cost of acquisition) which when realised produces assessable income under section 8(c) and any expenditure on or in relation to minerals and timber which when realised produces assessable income under section 8(h) and which in either case otherwise satisfies the requirements of subsection (1) and the value of any property contributed to any undertaking or scheme which produces assessable income under section 8(c) such value to be ascertained as at the date when the undertaking or scheme is entered into or devised shall be deductible from the residual assessable income of the taxpayer in the year in which such assessable income is derived by the taxpayer.
(3) A taxpayer who in any fortnight derives salary and income is deemed to have incurred expenditure in gaining or producing that income and be entitled to a deduction in calculating his or her salary and wage income of $2 or the amount of the salary and wage income which ever is the smaller.
(4) The Commissioner may, in calculating the residual assessable income of an approved company, allow a deduction for any expenditure or loss (other than withholding income) under this section as if section 7(1)(za) did not apply.

18A. Despite section 18(3), the Commissioner shall in the calculation of a resident taxpayer’s salary and wage income per fortnight allow a deduction on of account periodical subscriptions by the taxpayer during that fortnight in respect of membership of trade, business or professional associations of $1 per fortnight.

19. Certain deductions not permitted – Despite anything to the contrary in section 18 or 18A in calculating the residual assessable income derived by any person no deduction shall, except as expressly provided in this Act, be made in respect of the following sums or matters:

(a) any investment, expenditure or loss to the extent to which it is of capital or of a capital nature:
PROVIDED THAT nothing in this paragraph prohibits the deduction of any expenditure deductible under section 18(2):
PROVIDED FURTHER THAT where the Commissioner is satisfied that any expenditure in relation to alterations or improvements to any buildings, plant, machinery or equipment does not increase the capital value of the buildings, plant, machinery or equipment, or that that expenditure increases that value by an amount less than the amount of that expenditure; the Commissioner may allow such deduction as the Commissioner thinks just:

(b) any expenditure or loss to the extent to which it is of a private or domestic nature;

(c) any expenditure or loss to the extent to which it is incurred in gaining or producing income which is exempt from income tax;

(d) any expenditure or loss recoverable under any insurance or contract or right of indemnity;

(e) income tax and any tax imposed in any country or territory outside Samoa which, in the opinion of the Commissioner, is substantially of the same nature as income tax.

20. Bad debts and irrecoverable sums - (1) Subject to subsection (2), the Commissioner may, in calculating the residual assessable income of any taxpayer for any income year, allow a taxpayer to deduct the amount of any debt or sum which is proved to the Commissioner’s satisfaction to have become bad or irrecoverable by the taxpayer and, in the case of a bad debt to have been actually written off as a bad debt by the taxpayer in that income year.
(2) An amount allowed as a deduction under this section which is subsequently received by the taxpayer on account of any bad debt or irrecoverable sum is deemed to be assessable income derived in the income year in which it is received.

21. Repairs -Subject to sections 18 and 19, any expenditure incurred by a taxpayer on the repair of premises, plant, machinery or equipment used by the taxpayer in gaining or producing the assessable income or necessarily incurred in carrying on a business for that purpose shall be an allowable deduction.
22. Expenditure in borrowing money or obtaining lease -The Commissioner may, in calculating the residual assessable income of any taxpayer, allow such deduction as the Commissioner thinks fit in respect of expenditure incurred by the taxpayer during the income year for the preparation, stamping, and registration of any lease of property used in gaining or producing his or her assessable income or in carrying on a business for that purpose, or for any renewal of such lease, or in borrowing of money employed by the taxpayer as capital in gaining or producing the assessable income or in carrying on a business for that purpose.

23. Premium in respect of leased equipment -(1) The Commissioner may, in the calculation of the residual assessable income of any taxpayer, allow such deduction as he or she thinks fit in respect of any premium, fine, or fore-gift, or any consideration in the nature of a premium, fine or fore-gift, paid by the taxpayer in respect of the lease of any plant, machinery or equipment used by him or her in gaining or producing the assessable income or carrying on a business for that purpose, or in respect of the renewal of any such lease, or in respect of the assignment or transfer of any such lease.
(2) In ascertaining the amount that may be deducted in any year under this section the total amount paid by the taxpayer as aforesaid shall be apportioned by the Commissioner over the period of the lease unexpired at the date of payment, and the amount deducted for any year shall not in any case exceed the amount apportioned to that year.

24. Expenditure on scientific research -In calculating the residual assessable income derived by any taxpayer during any income year, the Commissioner may allow such deduction as he thinks fit in respect of any expenditure incurred by the taxpayer during that year in connection with scientific research directly relating to the trade or business carried on by the taxpayer, except so far as the expenditure relates to an asset in respect of which a deduction for depreciation is allowable under section 30.

25. Testamentary annuities -(1) Where property has been devised or bequeathed by will subject to the payment of an annuity or has been made subject to the payment of an annuity by a deed of family arrangement, and that property or any property substituted therefore has been transferred to a beneficiary and is charged with payment of the annuity or any part thereof, the amount paid in any income year on account of that annuity by the owner of that property or substituted property shall be allowed as a deduction in calculating the residual assessable income derived by the owner from that property or substituted property in that income year:
PROVIDED THAT no deduction shall be allowed under this section where the owner for the time being of the property or substituted property (not being a beneficiary) is a person who has acquired the same by purchase subject to the condition that he or she assumes the liability for the whole or any part of the annuity charged thereon:
PROVIDED ALSO THAT, to the extent that an annuity payable by the owner of the property or substituted property under a deed of family arrangement represents, in the opinion of the Commissioner, consideration for the purchase of the property or substituted property by the owner, the annuity shall not be allowed as a deduction under this section.
(2) In this section, “beneficiary”, in relation to any property, means a person to whom that property has been devised or bequeathed by will, or a person who is entitled, pursuant to a provision in a will, to purchase, subject to payment of an annuity, that property, being property that forms part of the estate of the testator, and includes a person who is entitled to the property pursuant to a deed of family arrangement.

26. Contribution to employees' superannuation fund - (1)In calculating the residual assessable income of any employer the Commissioner may allow a deduction of any amount set aside or paid by the employer as or to a fund to provide individual personal benefits, pensions, or retiring allowances to employees of that employer.
(2) Without limiting the discretion of the Commissioner to refuse to allow a deduction under subsections (1) and (3), no deduction shall be allowed under this section unless the fund has been established and is administered under a deed of trust and the Commissioner is satisfied:

(a) that the fund has been established and any payment to be deducted pursuant to this section made in such manner that the rights of the employees to receive the benefits, pensions or retiring allowances have been fully secured;

(b) that the contributions to the fund by the employer and any contributions by employees are reasonable;

(c) that the eligibility and withdrawal provisions and the retirement ages specified are reasonable;

(d) that the benefits, pensions or retiring allowances payable from the fund to employees are reasonable;

(e) that the powers of investment of the money in the fund are reasonable;

(f) that any provisions for variation of the terms of the trust are reasonable and that any such variation is subject to the prior approval of the Commissioner.
(3) Subject to subsection (2), the Commissioner shall have an absolute discretion as to whether or not a deduction should be allowed under this section of the whole or any part of any amount set aside or paid as mentioned in this section.

27. Retiring allowances payable by employers -The Commissioner may, in calculating the residual assessable income derived in any income year by any taxpayer from any business, allow a deduction in respect of the amount of any payment (being a payment which is not deductible otherwise than under this section) made in a lump sum by the taxpayer in that income year by way of a bonus, gratuity or retiring allowance and which satisfies the requirements of section 9(1) and (5).

28. Pensions to former employees -(1) Subject to the provisions of this section, the Commissioner may, in calculating the residual assessable income derived in any income year by any taxpayer from any business, allow a deduction in respect of any amount (being an amount which is not deductible otherwise than under this section and which is, in the opinion of the Commissioner, reasonable in the particular circumstances of the case) paid by the taxpayer in that income year by way of a pension to any former employee of the taxpayer in that business, or to the widow of any such employee, in consideration of the past services of that employee in that business of the taxpayer, where the Commissioner is satisfied that:

(a) the pension is receivable by the recipient as of right under a deed for a fixed period or for life, or, in the case of a pension receivable by a widow, for a fixed period or for life or until she remarries; and

(b) except in the case of the death of the employee while in the employment of the taxpayer, or the early retirement of the employee from that employment by reason of his or her serious illness or permanent disability, the employee did not retire from that employment before attaining the normal retiring age, not being less than the age of 55 years, in the case of a male employee, or 50 years in the case of a female employee, or such earlier age as the Commissioner considers reasonable, having regard to the nature of the business of the taxpayer in which the employee was employed.
(2) This section shall not apply where:

(a) the taxpayer is a company and the employee was or is a director thereof, and either:

(i) the employee was not employed as a full-time permanent employee by the taxpayer; or

(ii) the employee or, as the case may be, the widow of the employee has in the opinion of the Commissioner sufficient income or capital for his or her own support whether by reason of his or her shareholding in the company or otherwise; or

(b) in any other case, because of any relationship to or with the employer or otherwise, the former employee or the widow of such person had or has, in the opinion of the Commissioner, any control in relation to the payment of the pension by the taxpayer.

29. Education and other beneficial gifts -(1) For the purpose of encouraging education, a deduction, if and as approved for the time being by the Minister, may be allowed from the residual assessable income of any taxpayer in respect of the amount (to which section 18 does not apply) of any maintenance, allowance, scholarship or bursary paid or provided by that taxpayer, for or towards the education of any citizen or child or a citizen of Samoa (not being a child of that taxpayer) at any place of learning in Samoa or elsewhere, or of the amount of any gift or benefit made or provided by that taxpayer to or for the purposes of any place of learning in Samoa.
(2) For the purpose of encouraging the economic, social or cultural development of Samoa, a deduction, if and as approved for the time being by the Minister, may be allowed from the residual assessable income of any taxpayer in respect of the amount or value (to which section 18 does not apply) of any gift or benefit (other than a fee or tax) made or provided by that taxpayer to or for any of the purposes of any public or local authority, or the Government.
(3) Despite anything to the contrary in this Act, there shall be deducted from the residual assessable income of any taxpayer the amount of any donation or gift made by him or her to and for the purposes of the Council established under the Youth, Sports and Cultural Affairs Act 1993/1994:
PROVIDED THAT in respect of all donations or gifts made in the income year commencing on 1 January 1977 and for every subsequent year the amount or value of such a deduction shall not exceed one-tenth of the residual assessable income of the taxpayer or $500 whichever is the smaller.

29A. Income tax liability deduction for Companies-(1) A company is eligible to have 100% of a donation made to a sporting body deducted from the amount of its income tax liability where the following requirements are met:

(a) the donation is made in cash;

(b) the donation is $5000.00 or more;

(c) the donation is made to a sporting body registered under the Incorporated Societies Ordinance 1952 or the Samoa Association of Sports and National Olympic Committee; and

(d) the accounts of the recipient sporting body are audited by an accounting firm.

(2) A company may apply to the Commissioner to qualify for a deduction under subsection (1).

(3) The Commissioner may grant deductions for an application made under subsection (2) as prescribed on a case by case basis.

Division 6
Deductions, Depreciation and Incentive Allowances

30. Depreciation and special depreciation allowances -(1) Where depreciation of any premises, plant, machinery or equipment owned by the taxpayer and used by the taxpayer in gaining or producing the assessable income or in carrying on a business for that purpose is caused by fair wear and tear or by the fact of the asset becoming obsolete or useless the Commissioner may allow such deduction as the Commissioner thinks just. The Commissioner may prescribe a schedule of allowable methods and rates of depreciation (including accelerated depreciation) for particular classes of assets and may vary the schedule and the Commissioner may in the exercise of the Commissioner’s discretion under this subsection allow a deduction in conformity with the Schedule.
(2) Where the Commissioner is satisfied that any premises being Commercial Buildings first used as such on or after 1 January 1990 have been erected or extended or improvements thereto have been effected by a taxpayer after 1 January 1990 and those commercial buildings are thereafter used as such in any income year by the taxpayer in gaining or producing assessable income or carrying on a business for that purpose he or she may allow, in addition to or in substitution for any depreciation which the Commissioner has power to allow under subsection (1), such deduction as the Commissioner thinks just within the following limitations:

(a) the amount of any deduction allowed shall not exceed in the aggregate 20% of the cost of the premises or of the extensions or improvements as the case may be;

(b) unless in any case the Commissioner otherwise determines the amount of any deduction allowed under this subsection shall be allowed in respect of the taxable income derived by the taxpayer during the period of 4 years from the date on which the taxpayer has commenced to use the premises in gaining or producing the assessable income or carrying on a business for that purpose;

(c) all references in this subsection to "the taxpayer" in relation to a taxpayer who has died after erecting or extending any premises or effecting improvements thereto are deemed references to his personal representatives and to the trustees of his estate (in so far as the Commissioner thinks just).
(3) For the purpose of encouraging the economic development of Samoa the Minister may determine that a deduction shall be allowed in respect of any asset of a taxpayer at such rate of depreciation as the Minister may determine and in addition to or in substitution for any deduction allowed under subsections (1) and (2) as the Minister may determine and in any such case the Commissioner shall allow such deduction.
(4) Where the Commissioner has for any year of assessment allowed a deduction under this section in respect of any asset and the taxpayer at any time thereafter sells or otherwise disposes of that asset at a price or for a consideration in excess of the amount to which the value of the asset has been reduced by such allowance the Commissioner may notwithstanding anything to the contrary in Part III of the Income Tax Administration Act make a revised assessment for that or any subsequent year without allowing that deduction or without allowing such portion thereof as he or she thinks fit and may recover the additional amount of income tax accordingly:
PROVIDED THAT in any case where the asset comprises a building (other than a temporary building) this subsection does not apply in respect of any deduction allowed under the provisions of any former legislation corresponding to subsection (1).
(5) Where the Commissioner has for any year of assessment allowed a deduction under this section in respect of any asset and the taxpayer at any time thereafter sells or otherwise disposes of that asset at a price or for a consideration which is less than the amount to which the value of the asset has been reduced by such allowance the Commissioner may allow a deduction in the income year of sale or other disposal of the whole or such portion of the difference as he thinks just.
(6) For the purposes of this section:

(a) where any asset has been sold together with other assets of a business or other income-earning activity, the part of the consideration attributable to that asset shall be determined by the Commissioner, and the part of the consideration so determined id deemed to be the price at which that asset was sold by the vendor and purchased by the purchaser;

(b) where any property is sold or otherwise disposed of without consideration or for a consideration which, in the opinion of the Commissioner, is less than the market price or the true value of the property on the day it was sold, distributed or otherwise disposed of, that property is deemed to have been sold at and to have realised such market price, or if there is no market price, is deemed to have been sold at and to have realised such price as the Commissioner determines;

(c) where an amount is recoverable under any insurance or contract or right of indemnity in respect of an asset, the amount recoverable is deemed to be consideration receivable by the taxpayer in relation to the disposal of that asset;

(d) where any asset previously owned by a taxpayer but not used by him or her in gaining or producing assessable income or in carrying on a business for that purpose is committed by him or her to such use it is deemed to have been acquired on the day it was committed by him or her to such use at its market selling value on that day.
(7) Without limiting the discretion of the Commissioner under this section,the Commissioner may refuse in whole or in part to allow any deduction in any case where the Commissioner is not satisfied that complete and satisfactory accounts have been kept by or on behalf of the taxpayer.

31. Tourism Investment Tax Credit-(1) Subject to this section, any person who invests $100,000 or more in an Approved Tourism Development shall be allowed a credit against income tax payable in respect of the person’s income at the rate of 100% of the investment.
(2) For the purposes of this section an Approved Tourism Development shall be a tourism development which provides first class hotel accommodation in Samoa as approved by the Minister of Finance acting on the advice of the Cabinet.
(3) A credit under subsection (1) may only be claimed against income in the year or years approved by the Commissioner.
(4) An investment under subsection (1) shall be held for a period of at least 5 years in a form approved in writing by the Minister of Finance.
(5) Where an investment is not held in accordance with subsection (4) any credit provided under subsection (1) shall be cancelled by the Commissioner and the person concerned shall be liable for income tax as if no credit applied.
(6) Where a credit is cancelled under subsection (5) the Commissioner shall assess or reassess, as the case may require, the person’s tax liability under subsection (5).
(7) Save that subsections (3), (4), (5) and (6) shall continue to apply as necessary, this section expires on 30 June 2013.
(8) Despite any other law, a person investing $100,000 or more in an Approved Tourism Development between 1 July 2008 and the date of commencement of this Act in accordance with subsections (1) to (6) shall be allowed a credit against income tax in respect of the person at a rate of 100% of that investment.

Division 7
Carry Forward of Losses

32. Losses may be set off against future profits - (1) In this section, “loss” means the amount of the deficit where the allowable deductions exceed the assessable income in an income year.
(2) Any taxpayer who satisfies the Commissioner that the taxpayer has in any year incurred a loss shall be entitled to claim that such loss be carried forward, and, so far as may be, deducted from or set off against his or her residual assessable income for the succeeding year:
PROVIDED THAT any relief under this section shall be given so far as possible from the first succeeding assessment, and so far as it cannot then be given , shall be given from the next succeeding assessment, and so on.
(2A) Despite subsection (2), an approved company that has incurred a loss that is able to be carried forward under subsection (2) may, at the discretion of the Commissioner, elect to either:

(a) receive an income tax refund of an amount equal to the product of any proportion of that loss and 90% of the rate of company tax; or

(b) carry forward that loss (in whole or in part) in accordance with subsection (2):
PROVIDED THAT an approved company shall not be entitled to carry forward any amount of tax loss for which a refund has been made under this subsection.
(3) Despite anything in any other provision of this section, if any taxpayer, being a company having the liability of its members limited by its memorandum of association to the amount, if any, unpaid on the shares respectively held by them, claims to carry forward to any income year any loss incurred by it in any former income year, the claim shall not be allowed unless the Commissioner is satisfied that:

(a) at the end of each of those income years not less than 40% in nominal value of the allotted shares in the company was held by or on behalf of the same person; and

(b) where the company has paid-up capital at the end of each of those income years, not less than 40%of the paid-up capital at the end of each of those income years was held by or on behalf of the same persons.
(4) For the purposes of this section:

(a) shares in one company held by or on behalf of another company are deemed to be held by the shareholders in the last-mentioned company;

(b) shares held by or on behalf of the trustee of the estate of a deceased shareholder, or by or on behalf of the persons entitled to those shares as beneficiaries under the will or intestacy of a deceased shareholder, are deemed to be held by that deceased shareholder;

(c) where any company claims to carry forward a loss incurred by it in any former income year to any other income year, and the Commissioner is of the opinion that, at any time during the period commencing on the 1st day of the former income year and ending with the end of the other income year:

(i) any shares in that company, being shares held by or on behalf of the same person at the end of both of those income years, have been subject to any transaction, or series of related or connected transactions; or

(ii) any shares so held have had any rights attaching to them extinguished or altered, directly or indirectly, by any means whatsoever,-
in either case for the purpose, or for purposes including the purpose, of enabling the company to meet the requirements of subsection (3)(a) or (b), the Commissioner may, for the purposes of that subsection, deem those shares not to be held by or on behalf of the same person at the end of each of those income years.

Division 8
Companies

33. Companies -Subject to the provisions of this Act, the residual assessable income of a company shall be calculated in the same manner as the residual assessable income of an individual taxpayer is calculated.

34. Insurance companies -(1) The taxable income derived by an insurer from the business of insurance in Samoa, shall be calculated under this section:
PROVIDED THAT nothing in this section applies to:

(a) dividends received by an insurer; or

(b) the business of a resident insurer in so far as it relates to any insurance business other than life insurance or, except as provided in subsection (7), reinsurance;

(c) income taxable pursuant to Part IV.
(2) Where an insurer carries on life insurance business in conjunction with insurance business of any other class, the life insurance business of the insurer shall be treated as a separate class of business from any other class of insurance business carried on by the insurer.
(3) The amount of gross premiums derived by a non-resident insurer in respect of life insurance business transacted in Samoais deemed to be the taxable income derived by the life insurer from the business of insurance in Samoa and the insurer shall be assessable and liable for income tax thereon at the rate set out in the Income Tax Rate Act 1974:
PROVIDED THAT the amount of such gross premiums retained by the insurer in Samoa and invested in investments in Samoa approved in writing by the Minister, or in a class of investments in Samoa approved in writing by the Minister, shall be assessable; and liable for income tax thereon at two-thirds of that rate.
(4) The amount of income derived from investment of life insurance funds is deemed to be the taxable income derived by a resident life insurer from the business of insurance in Samoa and the insurer shall be assessable and liable for income tax thereon at the rate set out in the Income Tax Rate Act 1974.
(5) The amount of gross premiums (except premiums in respect of life insurance policies) derived by a non-resident insurer in respect of business transacted in Samoa other than from the business of reinsurance is deemed to be the taxable income derived by the insurer from the business of insurance (other than life insurance business) in Samoa and the insurer shall be assessable and liable for income tax thereon at the rate set out in the Income Tax Rate Act 1974:
PROVIDED THAT the amount of such gross premiums retained by the insurer in Samoa and invested in investments in Samoa approved in writing by the Minister, or in a class of investments in Samoa approved in writing by the Minister, shall be assessable and liable for income tax thereon at two-thirds of that rate.
(6) The amount of gross premiums derived by a non-resident insurer in respect of reinsurance from insurance business transacted in Samoais deemed to be the taxable income derived by the insurer from the business of reinsurance and the insurer shall be assessable and be liable for income tax thereon at the rate set out in the Income Tax Rate Act 1974.
(7) The amount of gross premiums derived from countries outside Samoa by a resident insurer who is engaged solely in the business of reinsurance is deemed to be the taxable income derived by the insurer from the business of reinsurance in Samoa and the insurer shall be assessable and liable for income tax thereon at the rate set out in the Income Tax Rate Act 1974.
(8) If any question arises as to the application of the proviso to subsection (3) or of the proviso to subsection (5), that question shall be determined by the Minister after considering the recommendation of the Commissioner.
(9) In this section:

“business transacted in Samoa” is deemed to include every instance where any person in Samoa enters into a contract of insurance or guarantee against loss, damage, or risk of any kind whatsoever;

“insurer” means a person whose principal business is the business of insurance or guarantee against loss, damage, or risk of any kind whatsoever;

“life insurance”includes the granting of annuities on human life.

35. Co-operative societies and their members -(1) The taxable income derived by a co-operative society registered under the Co-operative Societies Ordinance 1952 shall be calculated in accordance with this section.
(2) A co-operative society shall for the purposes of calculating its taxable income be entitled to deduct from its residual assessable income:

(i) the amount of any rebate paid by the society to a member in respect of his or her transactions with the society in that income year being transactions which are taken into account in calculating that residual assessable income; and

(ii) the amount of any distribution whether by way of dividend or otherwise, made to any member in that income year not being expenditure which is an allowable deduction in calculating the residual assessable income for any income year.
(3) Where any rebate or part of a rebate paid to any member by a co-operative society is paid in respect of transactions which are taken into account in calculating the residual, assessable income of that member that rebate, or as the case may be that part of a rebate shall form part of the assessable income of that member.
(4) For the purposes of this section, a rebate is deemed to have been paid to a member when it has been credited in account or otherwise dealt with in his or her interest or on his or her behalf.

Division 9
Trusts

36. Income derived by trustee - (1) The residual assessable income of a trust is deemed to be derived by the trustee of the trust.
(2) The trustee of a trust shall be assessable and liable for income tax as if he or she was beneficially entitled to the residual assessable income of the trust except that:

(a) the trustee is not entitled to any deductions by way of special exemption; and

(b) the rate of tax shall be computed by reference to that income alone and at the rate set out in the Income Tax Rate Act for taxable income derived by a trustee.

37. Beneficiary's income -If the Commissioner is satisfied that pursuant to a testamentary trust or a trust created by operation of law a beneficiary has an indefeasibly vested interest in income derived in an income year and that such income is not within the possession or control of the trustee and cannot be brought by the trustee within his or her possession or control (whether or not as trustee) the Commissioner may assess the trustee in respect of such income as agent for the beneficiary in which case all the provisions of this Act as to agents shall, so far as applicable, apply accordingly.

Division 10
Overseas Freight and Passage Money

38. Overseas freight and passage money-(1) The taxable income of any non-resident from the operations by sea referred to in this section shall be calculated in accordance with this section.
(2) Where a ship belonging to or chartered by any non-resident carries outside Samoa merchandise, goods, livestock, mails or passengers shipped or embarked in Samoa by sea the gross amount paid or payable to that person in respect of that carriage wherever paid or payable is deemed to be the taxable income derived by him or her from Samoa from the business of shipping and that person shall be assessable and liable for income tax thereon at the rate set out in the Income Tax Rate Act.
(3) For the purposes of this section, merchandise, goods, livestock, mails or passengers shipped or embarked on any ship at any port in Samoa for carriage outside Samoaare deemed to be carried outside Samoa from that port even if the ship calls at anyone or more other ports in Samoa before finally leaving Samoa on the voyage.

Division 11
Film Business of Non-Resident

39. Film business of non-resident -(1) The taxable income of any non-resident from the use of films referred to in this section shall be calculated under this section.
(2) Where any non-resident derives any sums in relation to the distribution or exhibiting of cinematograph films in Samoa or to the leasing of such films for distribution or exhibition in Samoa or to the licensing of any person to distribute or exhibit such films in Samoa, the gross amount paid or payable to that non-resident therefor wherever paid or payable is deemed to be taxable income derived by him or her from Samoa from the business of film distribution and that non-resident shall be assessable and liable for income tax at the rate set out in the Income Tax Rate Act.

Division 12
Withholding Income

40. Liability for income tax on withholding income -(1) This section applies to gross income (in this Act referred to as withholding income and deemed to be taxable income) being gross income:

(a) Repealed by the Income Tax Amendment Act 1999 (No. 14)

(aa) that consists of interest derived by any person (not being a company or public authority, or an unincorporated body, or a non-resident, or a trustee assessable for income tax under section 36) from any registered or approved financial institution in Samoa;

(b) that consists of interest other than interest exempted from tax under section 7(1)(w), derived from Samoa by any non-resident;

(c) that consists of income of any of the kinds referred to in section 8(e) and (f) derived by any non-resident;

(d) that consists of income referred to in section 8(fa);

(e) that consists of payments of any kind to the captain and crew (other than salary, wages or other benefits paid to employees) by the owner or operator of a commercial fishing venture or business, and such payments shall include the sharing of catch.
(2) A person who derives withholding income shall be assessable and liable for income tax thereon at the rates set out in the Income Tax Rate Act.
(3) In this section "approved" means approved by the Minister.

Division 13
Anti-avoidance Provisions

41. Interest on debentures issued by reference to shares -(1) In this section:

“the amount of the debenture”means, in respect of any debenture, the principal sum expressed to be secured by or owing under that debenture;

“shareholder” includes, in respect of any company, a person by whom or on whose behalf shares in the company have at any time been held.
(2) Where a company has issued debentures to its shareholders or to any class of its shareholders, and the amount of the debenture or debentures issued to each shareholder of the company or of that class has been determined by reference to the number or to the nominal value or to the paid up value of, or by reference otherwise howsoever to the shares in that company or in any other company (whether or not that other company is being or has been wound up) that were held by or on behalf of the shareholder at the time the debentures were issued or at any earlier time, the interest paid by the company on the debentures so issued shall not be an allowable deduction in computing the residual assessable income of the company and is, for the purposes of this Act,deemed to be a dividend paid by the company to the shareholders or a class of shareholders and received by them as shareholders of the company.

42. Excessive remuneration or share of profits -(1) Where:

(a) any taxpayer carries on any business or other income earning activity and employs or engages any relatives, or, being a company, employs or engages any relative of a director or shareholders of the company, to perform services in connection with that business or activity; or

(b) any taxpayer carries on business or other income earning activity in partnership with any person, whether or not any other person is a member of the partnership, and:

(i) any relative of the taxpayer is employed or engaged by the partnership to perform services in connection with the business or activity; or

(ii) where one of the partners is a company, any relative of a director or shareholder of the company is employed or engaged by the partnership to perform services in connection with the business or activity; or

(c) any taxpayer carries on business or other income earning activity in partnership with any relative or with any company a director or shareholder of which is a relative of the taxpayer or, being a company, carries on business or other income earning activity in partnership with any relative of a director or shareholder of the company whether or not any other person is a member of the partnership,-
and the Commissioner is of opinion that the remuneration, salary, share of profits or other income payable to or for the benefit of that relative or company under the contract of employment or engagement or the terms of the partnership exceeds such an amount as is reasonable having regard to the nature and extent of the services rendered, the value of the contributions made by the respective partners by way of services or capital or otherwise, and any other relevant matters, the Commissioner may for the purposes of this Act allocate the total profits or income of the business or other income earning activity for deduction of any amount payable to that relative or company between the parties to the contract or the partners or any of them in such shares and proportions as he or she considers reasonable, and the amounts so allocated are deemed to be income derived by the persons to whom those amounts are so allocated and by no other person.
(2) Where any sum paid or credited by a company, being or purporting to be remuneration for services rendered by any person who is a relative of a director or shareholder of the company, is allocated to that company under subsection (1), the amount so allocated to the company is deemed to be a dividend paid by the company to that person and received by him or her as a shareholder of the company.
(3) This section does not apply to a bona fide contract of employment or to a bona fide contract of partnership. For the purposes of this section, a contract of employment or a contract of partnership is deemed to be a bona fide if it complies with the following conditions:

(a) the contract is in writing or by deed signed by all parties thereto;

(b) no partner and no person employed or engaged under the contract was under the age of 21 years at the date on which the contract was signed;

(c) the contract is binding on the parties thereto for a term of not less than 3 years and is not capable of being terminated by any party thereto before the expiry of that term;

(d) each party to the contract has a real and effective control of the remuneration, salary, share of profits, or other income to which he or she is entitled under the contract;

(e) the remuneration, salary, share of profits or other income payable to a relative or to a company a director or shareholder of which is a relative, is not of such an amount that the transaction constitutes a gift or other disposition of property without fully adequate consideration in money or money's worth.

43. Excessive remuneration to shareholder or director -Where any sum paid or credited by a company, being or purporting to be remuneration for services rendered by any person who is a shareholder or director of the company, exceeds such amount as in the opinion of the Commissioner is reasonable, the amount of the excess shall not be an allowable deduction in computing the residual assessable income of the company, andis, for the purposes of this Act, deemed to be a dividend paid by the company to that person and received by him or her as a shareholder of the company.

44. Leases for other than an adequate rent -(1)Where any property owned by any person or by two or more persons (whether jointly or in common) or by any partnership is leased to a relative of any of those persons or of any member of the partnership or to a related company or by a company to any person and the rent is other than an adequate rent for that property or the lease makes no provision for the payment of rent:

(i) there shall be deemed to be payable under the lease a rent that is equal to an adequate rent for the property, and that rent is deemed to be payable by the lessee to the lessor on the days provided in the lease for payment thereof, or if no rent is payable under the lease, on such days as the Commissioner determines, and is deemed to be income derived by the lessor on the days on which the rent is payable as aforesaid; and

(ii) the rent deemed to be payable under sub-paragraph (i) is deemed to accrue from day to day during the period in respect of which it is payable, and shall be apportionable accordingly.
(2) In this section:

“adequate rent”, in relation to any property means the amount of rent that the Commissioner determines to be adequate for that property during the period in respect of which the determination is made;

“lease” means a tenancy of any duration whether in writing or otherwise, and includes a sublease, and also includes bailment; and "lessor" and "lessee" have corresponding meanings;

“related company” means a company that is under the control of the lessor or any relative or relatives of the lessor or any one or more of them, or, where there are several lessors or the lessor is a partnership, under the control of any of the lessors or partners or any relative or relatives of any of the lessors or partners;

“rent” includes any premium or other consideration for the lease.

45. Arm's length test applied to certain businesses and other activities -(1) This section applies if the following conditions are satisfied:

(a) any business or other income earning activity carried on in Samoa;

(i) is controlled by persons not resident in Samoa;

(ii) is carried on by a company not resident in Samoa or by a company in which more than one half of the shares are held by persons not resident in Samoa;

(iii) is carried on by a company which holds, or on behalf of which other persons hold, more than one half of the shares in a company not resident in Samoa; or

(b) if in the carrying on of any business or other income earning activity in Samoa any person or persons controlling that business or activity are by reason of their relationships or otherwise with any other person or persons not in the opinion of the Commissioner at arm's length with respect to any commercial or financial transactions; and

(c) in either case, it appears to the Commissioner that the business or other income earning activity produces no residual assessable income or less than the amount of residual assessable income which in the opinion of the Commissioner might be expected to arise from that business or activity.
(2) In any case where the conditions referred to in subsection (1) are satisfied the residual assessable income of the person carrying on that business or activity in Samoa shall despite anything to the contrary in this Act be the amount the Commissioner determines would have been derived from that business or activity had all its commercial and financial transactions and relations been wholly at arm's length.

46. Tax avoidance arrangements void-(1) Anarrangement shall be absolutely void as against the Commissioner for income tax purposes if and to the extent that its purpose or one of its main purposes is tax avoidance.
(2) In determining whether the purpose or one of the main purposes of an arrangement is tax avoidance the following consideration shall be taken into account:

(i) whether the arrangement might reasonably be expected to have been entered into and implemented in that particular way if tax avoidance had not been its purpose or one of its main purposes;

(ii) whether the rights and obligations arising under the arrangement might reasonably be expected to have been created under an arrangement not having tax avoidance as its purpose or one of its main purposes;

(iii) the extent to which the emphasis in the arrangement is substantially on income factors;

(iv) the overall effect of the arrangement on the practical carrying on of any existing business or other activity to which it relates;

(v) the dependence on the taxpayer for the earning or accruing of income under the arrangement;

(vi) the extent of the control over the earning and disposition of income under the arrangement in practice achieved by the taxpayer;

(vii) any disadvantage accruing to the taxpayer from the arrangement;

(viii) the tax advantage obtained through the arrangement;

(ix) the income tax and other implications of other courses of action open to the taxpayer at the time he or she entered into the arrangement;

(x) any other relevant consideration.
(3) Where an arrangement is void under this section, the residual assessable income or salary and wage income of a taxpayer affected by the arrangement shall be adjusted as the Commissioner considers appropriate so as to counteract the tax advantage obtained by the taxpayer under the arrangement and without limiting the foregoing the Commissioner shall have regard to the income that in his or her opinion would in all likelihood have been derived by the taxpayer (including deductions that in the opinion of the Commissioner would in all likelihood have been incurred by the taxpayer) had the arrangement not been entered into.
(4) Where by reason of the operation of this section an amount is included in or not deducted in arriving at the residual assessable income or salary and wage income of any taxpayer which in the opinion of the Commissioner is directly or indirectly included or reflected in the residual assessable income or salary and wage income of any other taxpayer the residual assessable income or salary and wage income of the other taxpayer shall be reduced by that amount.
(5) In this section:

“arrangement” means any agreement plan or understanding whether enforceable or unenforceable including all steps and transactions by which it is carried into effect;

“liability” includes a potential or prospective liability in respect of future income;

“purpose”means the end in view or object of the arrangement and does not include the motive or intention of the taxpayer except insofar as evidenced in the arrangement;

“tax avoidance” includes directly or indirectly:

(a) altering the incidence of any income tax;

(b) relieving any person from liability to pay income tax;or

(c) avoiding reducing or postponing any liability to pay income tax.
(6) In this section:

“income”includes salary and wage income;

“income tax” includes salary and wage tax;

“tax” includes salary and wage tax.

46A Definition – In this Division:

“emoluments” includes salary and wage income;

“income” includes salary and wage income;

“income tax”includes salary and wage tax.

Division 14
Country of Derivation of Income

47. Liability of income for assessment - (1) Subject to this Act, all income derived by any person who is resident in Samoa at the time when he or she derived that income shall be assessable for income tax whether it is derived from Samoa or from elsewhere.
(2) Subject to this Act, all income derived from Samoa shall be assessable for income tax, whether the person deriving that income is resident in Samoa or elsewhere.
(3) Subject to this Act, no income which is neither derived from Samoa nor derived by a person then resident in Samoa shall be assessable for income tax.

48. Place of resident, how determined - (1) A person other than a company is deemed to be resident in Samoa within the meaning of this Part if his or her home is in Samoa:
PROVIDED THAT any person who is absent from Samoa in the service of the Government, and the wife or husband of any such person absent with and accompanying such person, are deemed to be resident in Samoa.
(2) Despite any other provision of this section, any person other than a company who visits Samoa for a continuous period in excess of 6 months but not exceeding 3 years for the purpose of employment may elect to be treated as a non-resident for the purposes of this Act, for the duration of the visit.
(2A) The election referred to in subsection (2) shall be made in writing and lodged with the Commissioner not later than 6 months after the date on which the first income tax return is due from such person.
(2B) Where no election referred to in subsections (2) and (2A) is made, a visitor shall be treated as a resident for the purposes of this Act.
(3) A company is deemed to be resident in Samoa within the meaning of this Part if it:

(a) is incorporated in Samoa; or

(b) has its head office in Samoa.
(4) The head office of a company means the centre of its administrative management.

49. Classes of income deemed to be derived from Samoa- (1) Subject to section 50, the following classes of income are deemed to be derived from Samoa:

(a) income derived from any business wholly or partly carried on in Samoa;

(b) income derived from any business carried on out of Samoa to the extent that that income consists of income of the kinds referred to in paragraph (d), (e), (f), (h) or (i);

(c) all emoluments of any kind earned in Samoa in the service of any employer or principal wherever resident;

(d) income derived by any person as the owner of land in Samoa;

(e) income derived from shares in or membership of a Samoa company, or from debentures issued by a Samoa company or by a local or public authority;

(f) income derived from debentures or other securities issued by the Government of Samoa, or from any contract made with that Government;

(g) any pension or annuity payable by the Government of Samoa or out of any superannuation fund established in Samoa;

(h) income derived from the sale or other disposition of any property situated in Samoa.

(i) income derived by any person from money lent –

(ia) in Samoa; or

(ib) outside Samoa to:

(i) any person who is a resident (other than a banking company that is a resident), except where the money lent is used by him or her for the purpose of a business carried on by him or her outside Samoa through a fixed establishment outside Samoa; or

(ii) any person who is non-resident if the money lent is used by him or her for the purpose of a business carried on by him or her in Samoa through a fixed establishment in Samoa, not being money lent that is used by that person in the business of the borrowing and lending of money;

(j) income derived from Samoa by a trustee;

(k) income derived from contracts made or wholly or partly performed in Samoa;

(l) income derived from the carriage by sea or air of merchandise, goods, livestock, mails or passengers shipped or embarked in Samoa;

(m) royalties and other like payments of any of the kinds referred to in section 8(e) and payments of any kinds referred to in section 8(f) being royalties or payments:

(i) that are paid by a person who is a resident, and are not paid in respect of a business carried on by him or her outside Samoa through a fixed establishment outside Samoa; or

(ii) that are paid by a person who is a non-resident, and are deductible by him or her in calculating his or her residual assessable income for the purposes of taxation in Samoa;

(n) income derived directly or indirectly from any other source in Samoa.
(2) In subsection (1)(i), "money lent" includes:

(a) money advanced, deposited or otherwise let out whether on current account or otherwise; and

(b) any credit given (including the forbearance of any debt), whether on current account or otherwise.

50. Apportionment where income derived partly in Samoa and partly elsewhere -Whenever by reason of the manufacture, production, or purchase of goods in one country and their sale in another, or by reason of successive steps of production or manufacture in different countries, or by reason of the making of contracts in one country and their performance in another, or for any other reason whatever, the source of any income is not exclusively in Samoa, that income shall be apportioned between its source in Samoa and its source elsewhere, or attributed to one of such sources to the exclusion of the other, in such manner as the Commissioner thinks just and reasonable, having regard to the nature and relative importance of the source of that income; and the income, so far as so apportioned or attributed to a source in Samoa, is deemed to be derived from Samoa, and shall be assessable for income tax accordingly.

Division 15
Relief from Double Taxation

51. Credits in respect of income tax paid in a country or territory outside Samoa-(1) In this section,"income tax" means:

(a) in respect of any country or territory outside Samoa, any tax which, in the opinion of the Commissioner, is substantially of the same nature as income tax imposed under this Part; but does not include–

(i) any additional tax for any default in payment of tax or any interest or any penalty or additional tax imposed under the penal provisions of the laws of that country or territory;

(ii) any amount in respect of tax which under the law of that country or territory a company paying a dividend has deducted, or was authorised to deduct, from the dividend and which the person deriving the dividend was not personally liable to pay;

(b) in respect of Samoa, income tax imposed under this Part; but does not include any additional tax for any default in payment of tax or any interest or any penalty or additional tax imposed under this Act.
(2) Subject to the provisions of this section, where a person who is resident in Samoa derives income from a country or territory outside Samoa, income tax paid in that country or territory in respect of that income shall be allowed as a credit against income tax payable in Samoa in respect of that income.
(3) Part VIII of the Income Tax Administration Act, as far as it is applicable and with the necessary modifications, applies , for the purposes of subsection (2) of this section, as if that subsection were an agreement as defined in section 93 of that Act made between the Government of the country or territory outside Samoa and the Government of Samoa.

52. Arrangements for relief from double taxation -(1) The Minister may enter into arrangements with the Government of any country or territory outside Samoa with a view to affording relief from double taxation in relation to income tax and any taxes of a similar character imposed by the laws of that country or territory, and such arrangements shall, notwithstanding anything to the contrary in this Act or any other enactment, have effect in relation to income tax and every such arrangement shall, subject to the provisions of this section, have effect according to its tenor.
(2) Without limiting subsection (1), any arrangement to which effect is given under this section may contain provision, in relation to any of those taxes:

(a) for relief from tax;

(b) for charging the income derived from any sources in Samoa to persons not resident in Samoa;

(c) for determining the income to be attributed to persons not resident in Samoa and their agencies, branches, or establishments in Samoa;

(d) for determining the income to be attributed to persons resident in Samoa who have special relationships with persons not so resident.
(3) Any such arrangements may include provision for relief from tax for periods before the commencement of this Act or before the making of the arrangements, and provisions as to income which is not itself subject to double taxation.
(4) Any such arrangements under this section may be at any time amended or revoked by a subsequent arrangement; and any such amending or revoking arrangement may contain such transitional provisions as appear to the Minister to be necessary or expedient.
(5) Where any arrangements are made under this section the obligations as to secrecy imposed under the Inland Revenue Acts shall not prevent the Commissioner from disclosing to any authorised officer of the Government with which the arrangements are made such information as is required to be disclosed under the arrangements.

53. Arrangements for exchange of information -(1) The Minister may enter into arrangements with the Government of any country or territory outside Samoa for exchange of information with a view to assisting in the determination of credits in respect of income tax and taxes of a similar character or in the prevention of fraud or in the administration of the laws in relation to income tax and taxes of a similar character of Samoa and the other country or territory.
(2) Section 52(5) applies with respect to any arrangements entered into under this section.

Division 16
Special Exemptions

54. Limitation to individual residents -The deductions under this Division shall be allowable only where the taxpayer is a resident and is not a company.

54A. Application of this Division -This Division does not apply in respect of income derived after 31 December 1989.

55. Personal exemption -Subject to this Act,a tax payer is, for the purpose of calculating his or her taxable income,entitled to a deduction by way of special exemption from his residual assessable income of $520.

56. Special exemption for married man -(1) Subject to this Act, a taxpayer who at any time during the income year is a married man is entitled in respect of his wife to a deduction by way of special exemption from his residual assessable income of $520 diminished at the rate of $1 for every complete $1 of the excess of the residual assessable income derived by his wife during the income year over $260.
(2) No exemption shall be allowed under this section in respect of a wife when her residual assessable income in her own right derived from all sources in the income year exceeded $780 or who in fact was not supported by her husband during the income year.

57. Special exemption for married woman - (1) Subject to this Act,ataxpayer who at any time during the income year is a married woman is entitled in respect of her husband to a deduction by way of special exemption from her residual assessable income of $520 diminished at the rate of $1 for every complete $ of the excess of the residual assessable income derived by her husband during the income year over $260.
(2) No exemption shall be allowed under this section in respect of a husband when his residual assessable income in his own right derived from all sources in the income year exceeded $780 or who in fact was not supported by his wife during the income year.

58. Special exemption for widowed or divorced taxpayer employing housekeeper -(1) Subject to this Act,ataxpayer who is a widow or a widower or a divorced person is entitled in respect of a housekeeper to a deduction by way of special exemption from his or her residual assessable income of the aggregate amount of the payments made by the taxpayer during that year for the services of the housekeeper or housekeepers:
PROVIDED THAT in no case shall the deduction allowed to the taxpayer under this section in any income year exceed $520.
(2) In this section,“housekeeper” means a person who is employed either in the home or elsewhere to have the care and control of any child or children who at any time during the income year was or were under the age of 18 years or of any child who at any time during the income year was suffering from any permanent mental or physical infirmity and was thereby permanently incapacitated from earning his or her own living.

59. Special exemption for dependant relatives - (1) Subject to this Act,a taxpayer is entitled in respect of each child of his or her but not exceeding 8 to a deduction by way of special exemption from his or her residual assessable income of $260.
(2) Where claims are made under this section by 2 or more taxpayers for deductions by way of special exemption in respect of the same child or children, or in any case where a claim is made by the wife instead of the husband, the Commissioner shall not allow a greater exemption in the aggregate than $260 in respect of each child, which may be apportioned among the taxpayers or the husband and wife as the case may be as the Commissioner thinks fit.
(3) No special exemption shall be allowed under this section in respect of any child if the Commissioner is satisfied that the child has sufficient income or capital for his own support and need not be dependent on the parent.
(4) In this section, “child” means a child including a step-child, grand-child, legally adopted child, or illegitimate child of the taxpayer where the Commissioner is satisfied that the child is supported by the taxpayer and any child for whose support the taxpayer is legally liable, if that child at any time during the income year:

(a) is under the age of 18 years and is dependent on the taxpayer; or

(b) is over the age of 18 years, is suffering from any permanent mental or physical infirmity which has permanently incapacitated him or her from earning his or her own living, and is dependent on the taxpayer; or

(c) is over the age of 18 years, is attending full-time at a University or other educational institution approved by the Commissioner and is dependent on the taxpayer.
(5) Subject to this Act,a taxpayer is entitled in respect of each dependent parent to a deduction by way of special exemption from his or her residual assessable income of $260.
(6) Where claims are made under this section by two or more taxpayers for deduction by way of special exemption in respect of the same dependent parent, or in any case where a claim is made by the wife instead of the husband, the Commissioner shall not allow a greater exemption in the aggregate than $260 in respect of each dependent parent, which may be apportioned among the taxpayers or among the husband and wife, as the case may be, in such manner as the Commissioner thinks fit.
(7) No special exemption shall be allowed under this section in respect of any parent if the Commissioner is satisfied that the parent has sufficient income or capital for his or her own support and need not be dependent on the person claiming the special exemption.
(8) In this section, “dependent parent” in relation to a taxpayer means a person:

(a) who is a parent of the taxpayer or of the wife or husband of the taxpayer; and

(b) who:

(i) being not less than 55 years of age, is permanently incapacitated by old age from earning his or her living; or

(ii) being not less than 55 years of age, is unable throughout the income year to secure employment; or

(iii) is permanently incapacitated through any permanent mental or physical infirmity from earning his or her own living; and

(c) whose residual income for the income year did not exceed $365; and

(d) who was maintained at the expense of the taxpayer.

60. Special exemption for life insurance premiums and superannuation contributions -(1) Subject to this Act, a taxpayer who in any income year pays premiums in respect of a policy of life insurance for the taxpayer's own benefit or for the benefit of the taxpayer's spouse or children is entitled to a deduction by way of special exemption from his or her residual assessable income of the amount of those premiums.
(2) Subject to this Act, a taxpayer who is a contributor to a superannuation fund is entitled to a deduction by way of special exemption from his or her residual assessable income of the amount of his or her contributions during the income year.
(3) The deduction by way of special exemptions provided for in this section shall not in any case exceed in the aggregate the sum of $400.
(4) In this section, “policy of life insurance” means a policy effected on the life of the taxpayer which provides for payment of a specified capital sum on the death of the life assured and which except, in the case of a whole or life policy, has a minimum term of at least 10 years.

61. Special exemption for charitable donations -Subject to this Act, a taxpayer is entitled in respect of gifts for charitable purposes cultural or traditional responsibilities to a deduction by way of special exemption from his or her residual assessable income of $104.

62. Special exemption for school fees and educational gifts - (1) Subject to this Act, a taxpayer shall be entitled to a deduction by way of special exemption from his or her residual assessable income of:

(a) the amount of any fees paid by him or her in the income year in respect of the education of a child of the taxpayer at any school in Samoa or elsewhere; and

(b) the amount of any gift made by him or her in the income year to or for the purposes of any school in Samoa which is not carried on for private pecuniary profit.
(2) The deduction by way of special exemption provided for in this section shall not in the case of any taxpayer in any income year exceed in the aggregate $104.
(3) In this section, “child” means a child as defined in section 59 who is under the age of 18 years at the beginning of the income year.
(4) No deduction by way of special exemption shall be allowed under this section in respect of any gift or, as the case may be, any fees, unless the taxpayer furnishes to the Commissioner in support of his or her claim for the deduction a receipt evidencing to the satisfaction of the Commissioner the making of the gift or, as the case may be, the payment of the fees by the taxpayer.

62A. Special exemption concerning cash donations to the 2007 South Pacific Games Authority-(1) Subject to this Act (other than section 54), a taxpayer is entitled to a deduction by way of special exemption from the taxpayer’s residual assessable income at the rate of 200% of the amount of any cash given by way of gift made by the taxpayer to the South Pacific Games Authority.
(2) To qualify for a deduction under subsection (1) cash given by way of gift to the Authority must be:

(a) paid into an account approved by the approved by the Chief Executive Officer of the Ministry of Finance and the Authority shall account for and have audited such account in accordance with instructions issued by the Chief Executive Officer; and

(b) paid into the account before a date determined by notice by the Chief Executive Officer; and

(c) an amount not less than $104.

(3) The notice under subsection (2)(b) shall be published in Samoan and English in the Savali and one other newspaper circulating in Samoa.

PART III
AGENTS, ABSENTEES AND NON-RESIDENTS

63. "Absentee" defined -In this Part, "absentee" means:

(a) any person (other than a company) who is for the time being out of Samoa;

(b) any overseas company, unless it has a fixed and permanent place of business in Samoa at which it carries on business in its own name;

(c) any overseas company which is declared by the Commissioner to be an absentee by notice given to that company or to its agent or attorney in Samoa so long as that declaration remains unrevoked.

64. Liability of principal not affected -(1) Nothing in this Act relating to an agent is to be so construed as to release the principal from liability to make returns and pay tax and the principal and agent shall be jointly and severally liable for the tax.
(2) When two or more persons are liable as agents in respect of the same tax they shall be jointly and severally liable therefor.

65. Provisions applying to agents -Subject to this Act and of the Income Tax Administration Act, the following provisions apply with respect to every agent:

(a) the agent shall be answerable for the doing of all such things as are required to be done pursuant to this Act in respect of income derived by the agent in his or her representative capacity, or derived by the principal by virtue of his or her agency, and for the payment of tax thereof;

(b) the agent shall in respect of that income make returns and be assessable thereon but in his or her representative capacity only, and each return and assessment shall be separate and distinct from any other;

(c) the agent is hereby authorised and required to retain from time to time out of any money which comes to the agent in his or her representative capacity so much as is sufficient to pay the tax which is or will become payable in respect of that income;

(d) the agent shall not make any payment of income to any non-resident or absentee or transfer out of Samoa any sum for the purpose of making any such payment, unless and until arrangements have been made to the satisfaction of the Commissioner for the payment of any income tax which is or will become payable in respect of that income;

(e) the agent is hereby made personally liable for the tax payable in respect of the income to the extent of any amount that he or she has retained, or should have retained under the last preceding paragraphs (c) and (d);

(f) the agent is hereby indemnified for all payments which he or she makes in pursuance of the Inland Revenue Acts or of any requirement of the Commissioner;

(g) where as 1 or 2 or more agents he or she pays an amount for which they are jointly liable, the other or others shall each be liable to pay him or her each his or her equal share of the amount so paid;

(h) for the purpose of ensuring the payment of tax the Commissioner shall to the extent provided in paragraph (e) have the same remedies against attachable property of any kind vested in or under the control or management or in the possession of any agent, as he or she would have against the property of any other taxpayer in respect of tax.

66. Recovery of tax paid on behalf of another person –A person who, pursuant to this Act or to the Income Tax Administration Act pays any tax on behalf of any other person may recover the same from that other person as a debt in any Court of competent jurisdiction or may retain or deduct the same out of any money at any time in his or her hands belonging or payable to that other person.

67. Agents of absentees and non-residents -Subject to this Act and of the Income Tax Administration Act, although there may be another agent in Samoa (who shall continue to be liable as such agent):

(a) every person who carries on any business in Samoa on behalf of a principal who is an absentee is deemed to be agent of that principal in respect of all income derived from that business and shall be liable for income tax thereon whether or not any income comes to him or her in his or her representative capacity;

(b) every person who carries on business in Samoa in partnership with an absentee is deemed to be agent of that absentee in respect of his or her share of the income of the partnership and shall be liable for income tax thereon whether or not any income comes to that person in his or her representative capacity;

(c) where any non-resident derives taxable income from Samoa from the business of shipping, the master of any ship and the captain of any aircraft to which section 38 applies is deemed to be agent of that non-resident in respect of all income derived from the carriage of merchandise, goods, livestock mails or passengers by that ship or aircraft as the case may be and shall be liable for income tax thereon whether or not any income comes to him or her in his or her representative capacity;

(d) where any non-resident derives taxable income from Samoa from the business of film distribution every person who pays or is liable to pay such income to that non-resident is deemed to be the agent of that non-resident and shall be liable for income tax thereon;

(e) every person who in Samoa collects or receives or in any way has the possession, control or disposal of any income derived by an absentee is deemed to be the agent of the absentee in respect of that income.

68. Agents of non-residents carrying on business in Samoa-(1) Where a non-resident sells goods or merchandise:

(a) by means of anything he or she does when he or she is in Samoa; or

(b) through the instrumentality of any person who is at the time in Samoa,-
and the goods or merchandise are in Samoa or are to be brought into Samoa for the purpose of or in pursuance or consequence of the sale, the non-resident is deemed to have sold the goods or merchandise in the course of carrying on business in Samoa whether the contract of sale is made in or outside Samoa.
(2) Where goods or merchandise are sold by a non-resident through the instrumentality of a person who is at the time in Samoa, that person is deemed to be the agent of the non-resident in respect of all income derived from the business in Samoa by the non-resident and shall be liable for income tax thereon, whether or not any income derived by the non-resident is received by him or her.

69. Non-resident trader or agent to give security -(1) The Commissioner may at any time require any non-resident trader or non-resident agent to give security by way of bond, deposit or otherwise to the satisfaction of the Commissioner, for the payment of any income tax which may become payable by him or her.
(2) After security has been so demanded and before it has been duly given, it shall not be lawful for the non-resident trader to carry on business or for the non-resident agent to act as agent, except with the prior approval in writing of the Commissioner.

PART IV
CAPITAL GAINS AND LOSSES

70. Application of this Part -(1) Except as otherwise provided in this Part, this Part does not apply to:

(a) any person in respect of an asset acquired by him or her on or before 31 December 1989;

(b) any person in respect of a dwelling where such dwelling has been occupied by that person or that person and members of his or her family as his, her or their principal place of residence for at least 3 years between the date of acquisition and the date of disposal and has for a period or periods totalling more than 6 months during the 3 years immediately prior to the disposal of that dwelling been solely or substantially occupied by any person other than that person or a member or members of his or her family;

(c) any person who not being a resident of Samoa on 31 December 1989 in respect of any capital asset outside Samoa acquired by him or her before he or she first became a resident of Samoa;

(d) any person in respect of any foreign currency gains or losses arising out of or attributable to any borrowing or dealing in foreign currency prior to 1 January 1990;

(e) any currency exchange loss incurred by a taxpayer except to the extent to which, if the loss were not of a capital nature, a deduction would be allowable under section 18 in respect of that loss;

(f) the disposal by the Executor or Administrator of the estate of a deceased person in any case where such disposal would not have been subject to the application of this Part had it been made by the deceased taxpayer immediately prior to his or her death.
(2) Except as provided in subsection (1) or any other section of this Act, this Part applies to:

(a) every person who is resident in Samoa in respect of every capital asset owned by him or her, and in respect of every currency exchange gain or loss attributed to any foreign exchange borrowing or dealing made by him or her on or after 1 January 1990;

(b) every person who is not resident in Samoa in respect of every capital asset owned by him or her in Samoa;

(c) every person who was, but ceased to be resident in Samoa in respect of every capital asset acquired by him or her while the person was resident in Samoa and in respect of every currency exchange gain or loss attributed to any foreign currency borrowing or dealings made by the person while he or she was resident in Samoa on or after 1 January 1990;

(d) all currency exchange gains and losses to the extent to which they are of a capital nature.

71. Interpretation -In this Part, unless the context otherwise requires:

“acquisition” in relation to an asset means the obtaining of ownership of the whole or part of that asset;

“acquisition value” means the acquisition value determined under section 73;

“adjusted acquisition value” means the adjusted acquisition value determined under section 74;

“asset” includes a capital asset;

“capital asset” means any form of property, and includes:

(a) an option, a debt, a chose in action, any other right, goodwill and any other form of incorporeal property;

(b) any form of property created or constructed or otherwise coming to be owned without being acquired which is in the nature of capital; and also includes a part of any such asset; but does not include primary produce owned by the producer thereof, stock in trade, or other things the sale or using up of which is intended to generate profit which constitutes assessable income under any other Part, nor does it include any personal asset, or any foreign currency;

“currency exchange gain” means a gain to the extent to which it is realised and attributable to foreign currency exchange rate fluctuations;

“currency exchange loss” means a loss to the extent to which it is realised and attributable to foreign currency exchange rate fluctuations;

“date of acquisition” in relation to any asset means:

(a) in any case where passage of title to, or property in, such asset is evidenced by a contract in writing, and such contract is performed, the date upon which that contract became binding on the parties thereto;

(b) in any case where there is no written evidence of a contract pursuant to which ownership shall have passed, the day on which title to, or property in, such asset passes to the new owner;

(c) in any case where ownership passes by reason of death, testamentary document, transmission, gift, or by any other manner not heretofore specified, the day upon which title to, or property in, the asset passes to the new owner thereof;

(d) in any other case the date upon which ownership is acquired by the owner thereof;

“date of disposition” has a meaning corresponding to and consistent with the meaning given to "date of acquisition";

“disposal” in relation to an asset has the meaning specified in section 72; and "dispose" and "disposition" have corresponding meanings;

“dwelling” includes any land and buildings adjacent to that dwelling the use and enjoyment whereof is incidental to the use and enjoyment of that dwelling but excludes any adjacent land and buildings or part for which a separate title is or may without further survey be held;

“family” and "member of the family" in relation to any person, means that person's spouse, father, mother, grandfather, grandmother, step-father, step-mother, foster-parent, child, grandchild, step-child, foster-child, brother, sister, half-brother or half-sister;

“foreign currency” means the legal currency of any country other than Samoa;

“inputs” in relation to any capital asset means the sum of the following:

(a) the amount of the incidental costs to the owner of the acquisition of that capital asset;

(b) the amount of any expenditure of a capital nature incurred by the owner to the extent that it was incurred for the purpose of enhancing the value of the capital asset and is reflected in the state or nature of that asset from time to time;

(c) the amount of any expenditure of a capital nature incurred by the owner to the extent that it was incurred in establishing preserving or defending the owners title to or a right over the capital asset; and

(d) the amount of the incidental costs to the owner of the disposal of the capital asset;

“outtakes” with respect to a capital asset means the sum of the following:

(a) all depreciation claimed with respect to that asset; and

(b) the amount of any input claimed to be set off from income and which has or will result in a reduction of income tax which would otherwise have been assessable under any other Part, -

and where an asset is disposed of before accounts have been submitted to the Commissioner in respect of any period of time before the disposal of that asset includes depreciation on inputs able to be so claimed in respect of that period of time;

“owner” includes a person who has any legal or beneficial right or title in any asset and in the case of a trust includes a trustee who holds the same or any part thereof in respect of any contingent or unascertained beneficiaries; but excludes a mortgagee or any other person who holds right or title by way of security only; and “ownership” has a meaning corresponding to the meaning;

“personal asset” means:

(a) all household furniture and effects acquired for the use of the owner or any member of his or her family in the owner or their home or homes and exclusively used for that purpose but excluding a motor vehicle;

(b) any item intended for the private use or adornment of the owner or any member of his or her family and used for that purpose where the acquisition value thereof does not exceed the sum of $1,000 or such higher sum as may be prescribed under the Income Tax Administration Act 1974.
72. Disposal and acquisition -Whenever a change occurs in the ownership of a capital asset, the change is deemed for the purposes of this Part, to have effected a disposal of the asset by the person who owned it immediately before the change and an acquisition of the asset by the person who owns it immediately after the change.

73. Disposal price and acquisition value -(1) Where a person disposes of any capital asset the consideration received or receivable by any person, of if no or inadequate consideration is received or receivable, the fair market value thereof at the time of disposal as determined by the Commissioner is deemed for the purposes of this Part to be:

(a) in relation to the person from whom ownership or the asset passes the disposal price; and

(b) in relation to the person acquiring the asset the acquisition value.
(2) Where a person comes to own an asset otherwise than by the receipt thereof from any other person, or where section 76 applies, the acquisition value shall be the net cost and expense incurred by that person (including the cost of labour and materials) in coming to own the same.

74. Calculation of adjusted acquisition value -(1) The adjusted acquisition value shall be determined in the following manner:

(a) on 1 January following the date of acquisition and on every first day of January thereafter until the date of disposition there shall be added to the acquisition value, (or the adjusted acquisition value as the case may be) the inputs occurring in the immediately preceding year, and there shall be deducted the outtakes occurring in the immediately preceding year; the resultant figure which shall be the adjusted acquisition value to apply until the end of the year in which the calculation has been made;

(b) where the date of disposition occurs during the course of any year the adjusted acquisition value at the date of disposition shall be determined by adding to the existing adjusted acquisition value the inputs and deducting the outtakes occurring from the commencement of that year down to the date of disposition.

75. Building in certain cases to be assets separate from land - Where any building is after 31 December 1989 erected on any land to which this Part does not apply or any improvements of a capital nature are after 31 December 1989 undertaken to any building on such land, that building is deemed to be a capital asset separate from the land and is deemed to have been acquired by the owner on the date of the commencement of the construction of the building or the commencement of the improvements or the first of those improvements as the case may be:
PROVIDED THAT this section does not apply to any improvements the total value whereof at the time of completion of the improvements (or if the improvements are incomplete at the date of disposal then at the date of disposal) does not exceed the sum of $2,000.

76. Effect of capital improvements to assets other than land - Where any improvements of a capital nature are effected to a capital asset (other than land) to which this Part does not apply,the asset is deemed to have been acquired on the date that the first of such improvements were commenced and this Part thereafter applies to that asset:
PROVIDED THAT this section does not apply in any case where the total value of the improvements does not exceed 25% of the value of that asset at the time the first of those improvements was commenced.

77. Apportionment of disposal price or acquisition valuewhere part of asset disposed of is exempt from this Part - (1) Where any land on which is erected any building to which section 75 applies is disposed of, the disposal price shall be equitably apportioned by the Commissioner between the land and affected buildings.
(2) Where a portion only of a capital asset is disposed of, the adjusted acquisition value of that portion shall be determined by the Commissioner and shall be an equitable proportion of the whole.
(3) If an asset is disposed of and portion of that asset is not subject to this Part,the Commissioner shall apportion the disposal price equitably between each such portion.

78. Loss or destruction of capital asset -For the purposes of this Part:

(a) the entire loss or destruction of a capital asset constitutes a disposal of that asset; and

(b) the loss or destruction of part of a capital asset constitutes a disposal of that part of that asset whether or not any amount of money or other consideration by way of compensation or otherwise is received as a result of or in respect of the loss or destruction.

79. Bankruptcy etc. -Where an asset owned by any person:

(a) becomes vested, as a result of the bankruptcy of that person in the official assignee in bankruptcy or in the holder of a similar office in a foreign country;

(b) becomes vested pursuant to any deed of settlement in a trustee for the benefit of creditors of that person; or

(c) in the case of a person being a corporation becomes vested in any person performing the function of a liquidator in respect of that corporation,-
this Part applies as if the asset continued to be vested in that first-mentioned person and any act done in relation to the asset by the person in whom the asset so vested were the act of the first-mentioned person; provided that any tax payable under this Part upon the disposition of the asset by the person in whom the asset became so vested shall be a debt provable in the bankruptcy or liquidation of that first-mentioned person, and if the Commissioner is a party to any deed of settlement for the benefit of the creditors, shall be a debt provable under that deed, unless such deed otherwise provides.

80. Calculation of capital profit or loss on disposal -Whenever a person disposes of a capital asset to which this Part applies:

(a):

(i) a capital profit is deemed to have accrued where the disposal price exceeds the total of the acquisition value (or as the case may be, the adjusted acquisition value) at the date of disposition together with the addition of an amount calculated under subparagraph (ii) and the difference between the two sums is deemed to be a capital profit for the purposes of this Part;

(ii) the amount referred to in subparagraph (i) shall be such amount as represents an accretion of 5%per year calculated at a flat rate upon the acquisition value, or on such adjusted acquisition value as may from time to time appear, and calculated from 1 January following the date of acquisition down to the date of disposition;

(b) a capital loss is deemed to have been suffered where the acquisition value (or the adjusted acquisition value as the case may be) at the date of disposition exceeds the disposal price and the difference is deemed to be a capital loss for the purposes of this Part.

81. Capital gains realised on foreign currency transactions -(1) This section applies in any case where a person:

(a) acquires foreign currency;

(b) makes or gives a loan denominated in a foreign currency;

(c) obtains a loan denominated in a foreign currency; or

(d) participates in any other dealing or transaction in which a foreign currency is denominated,-
whereby any subsequent dealing or transaction results in either a currency exchange gain or loss if:

(e) any such currency exchange gain would not be liable to be included as assessable income under any other provision of this Act; or

(f) any such currency exchange loss which, if the loss were not of a capital nature would otherwise be an allowable deduction under section 18.

(2) For the purposes of this Part:

(a) a capital gain is only deemed to have been made or a capital loss to have been suffered at the time such gain or loss is realised;

(b) a loss on a currency exchange transaction is deemed not to be a loss for the purposes of this Part if prior approval to enter into such transaction was not obtained from the Central Bank of Samoa.

82. Tax imposed under this Part - (1) Whenever a person disposes of a capital asset to which this Part applies within 3 years of its acquisition the capital profit or loss as the case may be is deemed to be a capital profit or a capital loss accruing to or suffered by that person.
(2) A capital profit under subsection (1) is deemed to be taxable income accruing to the person disposing of the asset at the date of disposal and he or she shall be assessed for income tax pursuant to this Part.
(3) Whenever a person realises a currency exchange transaction to which this Part applies, any gain made at the time of realization is deemed to be a capital profit accruing to that person and loss suffered is deemed to be a capital loss suffered by that person.
(4) A person to whom this Part applies is liable to be assessed for income tax on all capital profits accruing to that person in the income year in which those profits accrue.
(5) For the purpose of assessing tax under this Part, capital losses to which subsection (1) applies may be set off against capital profits in the year of occurrence of such losses or in any subsequent year but may not be set off against previous capital profits or against any other form of income.

83. Rate of tax under this Part -The rate at which income tax shall be assessed under this Part shall be the rate set out in the First Schedule to the Income Tax Rate Act 1974.

84. Tax not to be cumulative etc. -(1) Where, but for this section, income tax would be assessed upon the disposal of any capital asset under this Part and also under any other Part the assessment shall not be cumulative but the taxpayer shall be assessed at whichever of the rates is higher.
(2) Nothing in subsection (1) prevents the application of this Part in relation to a part or portion of the proceeds received from the disposal of any capital asset or currency exchange gains where any other Part applies only in respect of such remaining part or portion of such proceeds received or gains realised.
(3) Where, but for this section, a loss or deduction would be allowed in the calculation of any capital profit or any capital loss and such loss or deduction has been allowed or is allowable under any other Part the Commissioner shall not allow such a deduction under this Part.

REVISION NOTES 2008-2011

This Act has been revised under section 5 of the Revision and Publication of Laws Act 2008.

The following general revisions have been made:

(a) Amendments have been made to conform to modern drafting styles and to use modern language as applied in the laws of Samoa.

(b) Insertion of the commencement date

(c) References to the male gender made gender neutral

(d) Other minor editing has been done in accordance with the lawful powers of the Attorney General.

(i) Present tense drafting style:

• “shall be” and “has been” changed to “is/are”
• “shall be deemed” changed to “is/are taken”
• “shall have” changed to “has”
• “hereby” and “from time to time” removed

(ii) Removal/replacement of obsolete and archaic terms with plain language

• “notwithstanding” changed to “despite”
• “in accordance with the provisions of” changed to “under”
• “annum” changed to “year”

(iii) Numbers in words changed to figures
(iv) Removal of superfluous terms

• “the generality of”
• “the terms”, “the expression”, “for the purposes of” and “the provisions of”

(v) Removal of “and” from “and/or”

The following amendments have been made to specific sections of the Act to incorporate amendments made by an Act of Parliament passed since the publication of the Consolidated and Revised Statutes of Samoa 2007–

By theIncome Tax Amendment Act 2010 (commenced 9 December 2010)

Section 29A - A new section 29A was inserted after section 29.

Section 31 - In subsection (7), the date “30th day of June 2008” has been deleted and substituted “30th day of June 2013”.

- A new subsection (8) was inserted after subsection (7).

This Act has been consolidated and revised in 2008, 2009, 2010 and 2011 by the Attorney General under the authority of the Revision and Publication of Laws Act 2008 and is the official version of this Act as at 31 December 2011. It is an offence to publish this Act without approval or to make any unauthorised change to an electronic version of this Act.

Aumua Ming Leung Wai
Attorney General of Samoa

Revised and consolidated in 2008 by the Legislative Drafting Division under the supervision of Teleiai Lalotoa Sinaalamaimaleula Mulitalo (Parliamentary Counsel)

Revised in 2009, 2010 and 2011 by the Legislative Drafting Division under the supervision of Papalii Malietau Malietoa (Parliamentary Counsel).

Income Tax Act 1974 is administered
by the Ministry for Revenue.