Tags: Non Taxable Income, Pension, Rental Income, Social Security Benefits, Taxable Income
Individuals Liable for Income Taxation
It is worth to note that income tax is a tax paid on income. Income tax is paid by both the employee and a self-employed individual. Many individuals try to avoid public jobs and run for private ones thinking that they will avoid tax but this is not the case because the tax system has been designed to tax everybody regardless of where he or she is working from, provided there is an income at the end of the month. A non-working individual is liable to an income tax since he or she may have income either from pension or personal savings. Nobody is supposed to be excluded from the income tax since it leads to the building and development of a country through government expenditure.
Non Taxable Income
According to the tax system in many countries, not all incomes are taxed since it depends on the category where your income lies. A point worth to note is that there is no minimum age at which a person becomes liable to pay tax because what matters here is the amount of the taxable income of an individual. If for instance your taxable income is below the set level by the tax system, then you are not supposed to pay any tax.
Taxable Income from Employment
There are various earnings on which income tax is liable. Earning from an employment means that you have a substantial amount of income that deserve to be taxed and a reasonable percentage of a tax rate is administered to your salary as long as your income is taxable. It should be noted that earnings from self-employment are also taxed and this will entail the corporate tax whereby the net profit that you get from your business will be liable to a particular tax that will actually benefit in the execution of government expenditure. People who are not working at the moment are still liable to income tax simply because they may be earning some income from pensions or from personal savings. This is known as the pensions income which is actually not very high and thus the tax levied on the same is not very high.
Taxable Social Security Benefits
Some social security benefits are also liable to income tax and earn the nation a substantial amount of income to execute public expenditure which benefits every citizen of a country. Apart from the savings themselves, income taxation is also posed on interests on most savings. If the savings have a higher interest rate, then the tax will be high and vice-verse. There are also those individuals who own shares and dividends. We find that shares do appreciate and depreciate in value according to the situation of the economy. When the value of the share appreciates, a particular tax is attached to it which is actually higher than when the share depreciates in value. This is caused by the economic fluctuation and that is why the amount of tax to be levied on dividends or shares cannot be constant. Income tax is also levied on rental income.