Assignment: Personal Taxation

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BOHAN ZHANG BSBA12005 Assignment 1. Personal Taxation Personal taxation is a direct tax levied on income of a person. A person includes an individual, a company, an Association of Persons (AOP) or Body of individuals (BOI), a local authority, a non-juristic body of person and an undivided estate. In general, a person liable to personal taxation has to calculate his tax liability, file tax return and pay tax by the end of the year to the government. Based on the definition of income, we can interpret that income is something we gain or obtain either through regular working or business. In fact, income can be earned through other activities also. Such as income from property, business or profession, gifts, charity, and capital gains. While…show more content…
But they are measured from two different angles. In an individual’s point of view, the personal exemptions is the certain amount can be deducted for each individual taxpayer every year. On the other hand, standard deductions are related to a person’s filing status and the number of dependents he/she has. There are five filing status which one can choose while filing the tax returns: single, married filing separately, married filing jointly, head of household and surviving spouse. In general, the more people in a household will results the lower taxable income. Knowing how to calculate tax liability of different filing status can benefit the taxpayer by paying less tax. In an organization’s point of view, the tax is imposed on company’s net profit, and the corporate tax rate varies by jurisdiction. Similarly, certain amount are exempted from taxable income just like individuals. For example, expenses which occurred for business purposes are usually exempted, according to this rule, many companies played with their machinery depreciations and provisions in order to reduce the taxable…show more content…
The pros are more likely to defeat the cons. Although people may say that it is necessary to support government in order to improve our public infrastructures or contribute to a country’s GDP, it has proved that it has very little effect on the economy. First of all, in a free country, money belongs to the people who earn it. We may agree to give up a portion of the wealth we create in order to support government, but at the same time, we can’t ensure the government will spend it for citizens rather than misuse it. Removal of income tax can increase people’s savings, and they can still contribute to the society without government’s hands. People then could be encouraged to invest carefully and work overtime, thus, it may increases the output to some degree. Besides, there are some countries are free-taxed, such as Canada, Monaco, Bahamas and GCC countries, which indicates that cut-off income tax is applicable and can run
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