Govt says no change to student taxation, GSD questions further

The Gibraltar Government said there has been no change in the way the Tax Office applies tax rules on the exemption for student income.

It was responding after the GSD called for clarity and said the Government was failing in its political responsibility to clearly announce any new measures.

But the response drew a swift reply from the Opposition, which reiterated the need for clarity on the tax situation faced by students.

The GSD said it had received reports that some students were being taxed while others were not, linking this to a budget measure announced by Nigel Feetham, the minister responsible for taxation, who indicated he would be removing the blanket tax exemption on student income.

But, in a statement, the Government said there had been no change, underscoring too that the application of tax rules was a matter for the Tax Office, which operates independently of the Minister for Taxation.

“The Government is advised that there has been no change in the way the Tax Office applies the student income exemption,” No.6 Convent Place said in a statement.

“As in previous years, the exemption is applied once the Tax Office receives formal confirmation that the individual will continue as a full-time student for the academic year beginning 1st September 2024.”

“The issue raised by the Opposition is not linked to any new Budget measures.”

“Instead, it arises because some youngsters currently working during the summer months are unable to confirm their student status for September 2024.”

“Until that confirmation is received, the Tax Office cannot grant the exemption.”

“This procedure has been consistently applied in previous years and remains unchanged.”

Any student contacting the Tax Office directly will receive the same information, No.6 said.

The Government said that once the student status for the coming academic year is confirmed, the exemption will be applied and any tax paid will be refunded without delay.

“The GSD’s call for clarification misunderstands the Government’s role in this matter,” the statement added.

“Tax rules are administered by the Tax Office, and in this case, the same rule has been consistently enforced.”

“Contrary to what the GSD suggests, this has no connection to any Budget measures.”

“Had the Hon. Opposition spokesman [Roy Clinton] reached out to Minister Feetham, he would have received confirmation of this as well.”

OPPOSITION REACTS

Reacting to the Government statement, the GSD’s Mr Clinton rejected the position set out by Mr Feetham.

“The Minister should first of all note we requested clarification from the Income Tax Office (“ITO”) and not himself,” he said in a statement.

“He may also wish to look at the Guidance notes issued by the Income Tax Office with the PAYE tax tables for 2024/25 which reads in respect of students: ‘Students with an assessable income not exceeding £11,450, are exempt…’ And compare it to the guidance issued for 2023/24 which reads: ‘Students who are employed are exempt…’”

“It is evident that the Income Tax Office had an intention to implement the Minister’s Budget measures for 2024/25 contrary to the Minister’s assertions that there was no connection to the tax issues student were facing.”

“We have also seen correspondence from the ITO to that effect.”

“Whereas I welcome the Minister confirming that nothing should be changed by the Income Tax Office it is self-evident that there was clearly an attempt by the ITO to implement the Budget measures he announced without any legal backing.”

“It is also clear the Minister is wrong in saying this confusion has nothing to do with the Government’s policy changes announced at the budget.”

“The opposite seems true.”

“This confusion again could have been avoided if a Finance Bill had been introduced at the Budget.”

It was responding after the GSD called for clarity and said the Government was failing in its political responsibility to clearly announce any new measures.

The GSD said it had received reports that some students were being taxed while others were not, linking this to a budget measure announced by Nigel Feetham, the minister responsible for taxation, who indicated he would be removing the blanket tax exemption on student income.

But a in a statement, the Government said there had been no change, underscoring too that the application of tax rules was a matter for the Tax Office, which operates independently of the Minister for Taxation.

“The Government is advised that there has been no change in the way the Tax Office applies the student income exemption,” No.6 Convent Place said in a statement.

“As in previous years, the exemption is applied once the Tax Office receives formal confirmation that the individual will continue as a full-time student for the academic year beginning 1st September 2024.”

“The issue raised by the Opposition is not linked to any new Budget measures.”

“Instead, it arises because some youngsters currently working during the summer months are unable to confirm their student status for September 2024.”

“Until that confirmation is received, the Tax Office cannot grant the exemption.”

“This procedure has been consistently applied in previous years and remains unchanged.”

Any student contacting the Tax Office directly will receive the same information, No.6 said.

The Government said that once the student status for the coming academic year is confirmed, the exemption will be applied and any tax paid will be refunded without delay.

“The GSD’s call for clarification misunderstands the Government’s role in this matter,” the statement added.

“Tax rules are administered by the Tax Office, and in this case, the same rule has been consistently enforced.”

“Contrary to what the GSD suggests, this has no connection to any Budget measures.”

“Had the Hon. Opposition spokesman [Roy Clinton] reached out to Minister Feetham, he would have received confirmation of this as well.”