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 rates imposed in the given state or country on the incomes and profits usually determines the amount of personal tax an individual is required to pay to the government. 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 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. Personal tax is imposed on certain income sources non-residents obtain from activities carried out within the state or 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. 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. 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. Payment can be done easily through the online system provided by the bodies mandated with these activities. Payment on time of the personal tax is usually done to avoid penalties one is likely to be slapped with by the regulating body. 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.