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 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 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 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. States and countries impose personal tax on certain income-generating activities carried within the 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. 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. There are those incomes that one is nor required to pat the personal income such as the superannuation income and national payment plans after retirement.
Payment of personal tax should be done on regular basis depending on the rate at which one receives their income. This is usually done online in the sites provided by the body mandated with collection of tax from citizens in the region. 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.