Personal tax refers to the tax that is imposed on an individual or an entity depending on the amount of income or even profits they receive. Personal tax is usually charged depending on the tax 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 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. 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. For non-resident individuals in the country or state, personal tax is only imposed of income sources of certain 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. Individuals and entities that have not been legally identified as corporations are usually imposed on personal tax where the rates depends on the slab where the income falls. Some of the incomes where personal tax is charged includes 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.
Personal tax is to be paid on regular basis depending on how one obtains their income. The body that collects tax provides an online platform where individuals and entities can make payments for their personal tax. 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. When visiting some countries that requires one to show their credibility through payment of personal tax, a person whose compliance is excellent will be granted the travel visa easily. 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.