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 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. Personal tax usually increases as the incomes and profits of the individual increases hence is usually referred to as progressive nature. 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. For non-resident individuals in the country or state, personal tax is only imposed of income sources of certain 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. Personal tax is only charged 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. Incomes obtained from superannuation and national payment plans after retirement are usually exempted from personal tax.
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. 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.
There are several benefits one is likely to enjoy from payment of personal tax other than been exempted from penalties and interests. 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. An individual will also enjoy tenders from the government and other public institutions as long as there are credible which is determined by the payment of their personal tax.