Practical and Helpful Tips: Accountants

Compliance to the Personal Tax Systems

An individual or an entity is required to pay tax depending on the amount of income or even profits they receive and this type of tax is commonly referred to as the personal tax. The amount of personal tax one is required to pay is determined by the rates imposed in the given state or country on the incomes and profits. Personal tax usually increases as the incomes and profits of the individual increases hence is usually referred to as progressive nature. The amount of income that the personal tax is charged on individuals who reside in the given state or country is usually their total income less any activity that generates tax and other deductions imposed. Personal tax can also be charged from the net gain obtained after sale of any property such as goods for sale. States and countries impose personal tax on certain income-generating activities carried within the region.

Imposition of personal tax is usually based on certain principles such as the taxpayers and rates, residents and non-residents, defining income, deductions allowed, business profits among others. Imposition of personal tax is done on individuals and entities that have not been legally identified as corporations and the rates depends on the slab where the income falls. The defining income where personal tax is charged may include the money they receive from services compensation, sale of property and goods, dividends, interest, royalties, rents, pensions, annuities among others. Incomes obtained from superannuation and national payment plans after retirement are usually exempted from personal tax.

Payment of personal tax should be done on regular basis depending on the rate at which one receives their income. Payment can be done easily through the online system provided by the bodies mandated with these activities. Penalties are quite common in case of failure of payment of the personal tax and can easily be avoided by complying with the set guidelines. In case there are penalties and interest that one is required to pay to the government, it is important to pay them as soon as possible to avoid more penalties and interests.

One enjoys various benefits for complying with the personal tax systems other than just not being imposed with penalties and interests. An individual who complies with the personal tax systems can easily obtain loans from financial institutions. Another benefit is that it is easy to obtain visas to travel to countries that require one to provide a tax compliance certificate for several years back to show their credibility. It is also a requirement in all states to have the tax compliance certificates so that they can be successful in case one is applying for a tender in a government institution.

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