The tax imposed on an individual or an entity depending on the amount of income or even profits they receive is known 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 is usually imposed in a progressive way where the amount of the personal tax increases as the incomes and profits of the individual increases. The income used for calculation of personal tax for resident individuals in a given state or country is usually their total income less any activity that generates tax and other deductions imposed. Another income source that can be used to determine personal tax is 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.
The taxpayers and rates, residents and non-residents, defining income, deductions allowed, business profits among others are some of the principles that govern the personal tax systems. 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. The only incomes exempted from personal tax includes those from superannuation and national payment plans after retirement.
Payment of personal tax should be done on regular basis depending on the rate at which one receives their income. The body that collects tax provides an online platform where individuals and entities can make payments for their personal tax. Timely payment of personal tax enables one to avoid penalties of default. When one is slapped with these penalties and interest, one should pay them soonest possible to avoid them accruing as time moves on.
There are several benefits one is likely to enjoy from payment of personal tax other than been exempted from penalties and interests. Compliance enables one to obtain loans easily from financial institutions to develop themselves since it is a requirement to show one’s compliance to the tax systems. 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.