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. 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. 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.
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. 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. 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.
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. Imposed penalties and interest that one receives after filling returns should be paid as soon as possible to avoid them from accruing with time.
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. 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.