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. These tax rates imposed are usually progressive where the amount of personal tax to be paid 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. The net gain obtained after sale of any property such as goods for sale that have been held is taken as part f the income that personal tax is imposed. For non-resident individuals in the country or state, personal tax is only imposed of income sources of certain activities carried within the region.
There are various principles that govern the personal tax systems and how it is imposed on individuals 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. The only incomes exempted from personal tax includes those from superannuation and national payment plans after retirement.
Depending on how one receives income, it is important to make payments of personal tax on regular basis. This is usually done online in the sites provided by the body mandated with collection of tax from citizens in the region. Timely payment of personal tax enables one to avoid penalties of default. 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.
Other than preventing an individual from be slapped with penalties and other interest, there are other benefits that one is likely to enjoy with timely payment of personal tax. 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. Also there are country that requires one to show their tax statement for the past years so that they can be granted visas to visit the country. 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.