Opa at your service

Questions and Answers

Liquidator fee and liquidation expenses

Question: When a company is liquidated on a DC Case what is the maximum percentage the liquidator can take on the net assets after settling the liabilities. After deducting 8 percent as liquidator's fees can be made further deductions as advertising? Security charges, Staff cost, Projected expenses etc. Can you please refer me to the relevant Act in law regarding this?

Mrs A. Perera - Colombo 10

Answer: The Liquidator's fee is 8 percent. Apart from the Liquidator's fee, the Liquidator is allowed to charge all expenses incurred and to be incurred as liquidation expenses. All the expenses indicated by you such as advertising, security charges, staff cost and projected expenses. Some time even lawyers fee etc if there is any litigation in relation to the liquidation. There is no minimum or a maximum but all are justifiable actual expenses. The projected expenses will be small and is for finalizing such as providing the final report to court and filing the papers with the registrar of companies. The Act of Law covering liquidation is the Companies Act.

Starting new business as sole proprietor

Question: I want to start a new business to provide a service. How and where should I have it registered?

Nimal Silva, Ratmalana

Answer: Since you are residing in Ratmalana, You come under the Western Provincial Council. Therefore you have to register your business with the Registrar of Business, Western Province. You can call over at this office and a form will be available to be filled and submitted along with a fee of Rs.500/. If you pay an additional Rs.500/ you can avail yourself of the one day service. They will require a copy of your NIC and the original for inspection.

The office is at 157 1/2. Union Place, Colombo 2. Tel.2440187. From the 1st of April 2010, this office will be shifted to Duminda Diamante Building in Bambalapitiya.

Tax on EPF withdrawal

Question: My EPF Money which was lying since 1985 was withdrawn in the latter part of last year and I received Rs. 1.1 million.

No tax was withheld. About 90 percent of the money I recieved was on account of interest.

This being a once and for all receipt is there any Tax Liability on the interest component of this EPF Refund and if so what is the tax Liability and under what Section?

I am a Tax Payer with an Assessable Income of Rs. 450,000. Thanking you for your advice in advance.

A Perera, Dehiwela

Answer: Regulations regarding tax or withholding tax in relation to terminal benefits change from time to time. As it stand now EPF refund is a fee of any tax up to Rs.1.5 million for those who have served less than 20 years in service.

Those who have served more than 20 years are exempted up to Rs. 3 million. In your case since the amount is Rs. 1.1 million you have been exempted from the 10 percent withholding tax.

Usually the EPF section has to obtain the tax liability from the PAYE tax section and after deducting the applicable tax release the funds.

In your case they have released your total fund because it is below Rs.1.5 million. As it is there is no tax liability on your part. However once you invest this money you may be liable for WHT on the interest income if your total interest income from all sources exceed, Rs. 300,000 or Rs. 500,000 in State Banks.

It will be 2.5 per cent from Rs. 300,000 (or Rs. 500,000) from State banks) up to Rs. 1.0 million and 10 percent for over Rs. 1.0 million. Interest received on EPF becomes part of your EPF and not treated as taxable interest.

Non payment of Cost of Living allowance

Question: With reference to the letter on the above subject in the OPA at your service column on 04/03/2010 and your reply to it I am writing to you to get a point clarified as I too had to face a similar situation.

I am working in a semi Government institution on a contract basis after my retirement from Government service.

I am getting a Government pension which included a cost of living allowance. The cost of living allowance paid with the pension is less than half (Rs.2375) of what is paid to people in service with their salaries(Rs.5250)

In the institution where I work there are other officers who are reemployed after retirement on a contract basis but not drawing Government pension. such officers are paid the full cost of living allowance of Rs.5,250, where as I am not paid any cost of living allowance because I am paid Rs.2,375 as cost of living allowance with my pension.

I would be grateful to you if you could kindly clarify as to whether I should not be paid at least the difference between the amount paid as CLA to other officers like me and the amount paid to me as CLA with my pension.

J. S. S. P. Kariyawasam,

Nugegoda.

Answer: Logically we agree with you that you should be paid the difference in the cost of living paid by your present employer and the cost of living included in your pension (Rs. 2,325).

However you will agree that no Government pensioner is paid a pension which is the same as the salary paid to a Government servant.

Those in service are paid Rs. 5,250 as cost of living allowance while pensioners are paid only Rs. 2,325 as CLA as decided by the Government has also decided that any Government pensioner working for a Government or semi Government organization should not be paid the Cost of Living Allowance, since the CLA has been incorporated with the pension.

Since you are drawing a pension and also a salary for working again in Government or semi Government organization, it is the Government's opinion and decision that CLA should not be duplicated.

It seems to be the opinion of the Government and the pensioner is entitled to only half of CLA after retirement.

Therefore you are not entitled to the difference.

Vehicle emission test certificate

Question: The above is a compulsory requirement to obtain a Revenue Licence.

I understand that vehicles over 15 years from date of manufacture are exempt from this test.

Since there are vehicles operating on petrol, diesel, gas, kerosene and other conversions, I would like to know how the exemption is applied. Vehicles over 15 years do not have the state-of-the-art technology as the latest models. The latest computerized emission test equipment apparently is designed to meet the current environmental standards. Nevertheless old vehicles and the latest vehicles have different performance levels. There are many vehicles even over 25 years that are in perfect condition and do not show signs of emission compared to what we see with most of the latest models and chances are they could still fail the new computerized standards.

I would like to know whether there is any rule exempting old vehicles from this test or whether the emission tests are graded for old vehicles. Also is the same standard applied for the many vehicles that use a variety of fuel.

N. B. Melville Perera,

Kohuwela.

Answer: Vehicles manufactured (built) before 1975 are exempt from vehicle emission test as these vehicles have been built before such environment concerns were raised. That is vehicles manufactured 35 years ago, most of which will be considered as old crocks now or vintage vehicles. Thus your vehicle over 15 years is subject to Emission Test Certificate as long as the vehicle is not more than 35 years. Other except vehicles are military and land vehicles such as tractors. Brand new vehicles are exempt for a period of three years. There are two different standards for testing, one is for Diesel vehicles and the other is for petrol and gas vehicles. In the latter that is petrol and gas the levels are different for two and three-wheel vehicles from the four wheel vehicles. For diesel vehicles they test the smoke density. For petrol and gas vehicles they test the hydrocarbon emission levels. For further details you may contact. 0117207722 or 0117444444, one of the Authorized Emission Testing Companies or the Ministry of Environment on 0115741691.

Error in renewal of identity card No.308251721v

Question: I thank you for taking action on my letter of 13.1.2010 on the above subject, and you, reply to my letter which appeared in the Daily News paper of 25 February 2010 in the column OPA at your service.

I contacted the Divisional Secretary Dehiwela, and on her instructions the Grama Niladhari of Kohuwela, delivered the New Identity Card at my residence on 2.3.10 I'm now faced with a new dilemma as if I have fallen from the frying pan to the fire.

Some incompetent and inefficient person has altered my name in the New Identity card to Leelawathi Ethlyn de Silva Gooneratne, and also altered my address as 53 S de S Jayasinghe Mawatha Dehiwela Nugegoda. Strange to note in this computerized age that officers working in the Registration of Persons Department, can alter the names of people at their whim and fancy. Lilamani becomes Leelawathi and residence becomes Dehiwela Nugegoda, which should be Kohuwela Nugegoda.

The purpose of renewing my identity card has been fruitless as my name is wrong and I'm supposed to be "living in 2 towns. I am a senior citizen after a severe heart attack and advised not to travel about. Could your Organization intervene and request the Department of Registration of Person to issue me a New Identity Card with my correct name and address.

L. E. de S Gooneratne, Kohuwela.

Answer: We are happy that we were able to assist in receiving your NIC but we are also sad about the inconvenience caused to you due to the mistakes with your name and place on your new NIC.

You are very unfortunate as it is more than 2-3 months since our NIC was issued on 28.05.2009. The Department of Registration of Persons does not keep the application and the related papers for more than 2 or 3 months. We are aware that you received your NIC only on 02. 03.10 but it is not due to the fault of the Department, it is the system of delivery and failure on the part of the Grama Niladhari. Since the records are not available the Department cannot verify whether the mistake is theirs or on filling the form, at least this is their defence.

Only way out is to make a fresh application along with the new NIC (please retain a photocopy). The application to be made through the Grama NIladhari. The Commissioner gave us an undertaking that he will issue a new NIC within a couple of days and also that you do not have to forward your birth certificate. Thus newly completed application form, photograph and the new NIC have to be forwarded. Once you apply please let us know the receipt No. for follow up. We are extremely sorry about your plight, given your health condition.