Income Tax Act, 2015 Overview

These flashcards cover key concepts from the Income Tax Act, 2015, focusing on its implications, definitions, and procedures.

What is the purpose of the Income Tax Act, 2015?

To provide for the imposition of income tax and related provisions.

What is chargeable income?

The total of the assessable income of a person for the year from each employment, business, or investment, minus total deductions allowed.

What are exempt amounts under the Income Tax Act?

Certain types of income that are not subject to tax, including specific allowances and pensions.

What principle governs deductions for financial costs under the Act?

Limits on deducting financial costs, such as interest, are based on the sum of financial gains and a percentage of income.

How is assessable income defined in the Income Tax Act?

It is the income of a person from any employment, business, or investment.

What is the method of accounting for individuals under the Income Tax Act?

Individuals shall account on a cash basis.

What rules govern tax payment procedures according to the Act?

Tax can be paid through withholding, by instalment, or on assessment.

Who is liable to tax under the Income Tax Act?

Any individual, partnership, or company that derives chargeable income or receives final withholding payments.

What constitutes the tax base calculation according to the Act?

It involves determining years of assessment, method of accounting, and various accounting principles.

What is the significance of clauses regarding foreign source of income?

They determine taxability based on residence and where income is sourced.

What is a capital allowance?

A deduction allowed for depreciation of depreciable assets owned and used in producing income.

What are the provisions for personal reliefs for individuals?

Individuals can claim deductions for certain dependants, disabilities, and educational support as specified in the Act.

What is meant by 'thin capitalisation'?

A restriction on the deductibility of interest for companies with more debt than equity.

What happens if a taxpayer fails to comply with the filing requirements?

Penalties may apply, and the Commissioner-General may adjust tax liabilities.

What types of income are specifically excluded from taxation under the Act?

Income from agriculture, certain charitable income, and certain retirement funds are excluded.

How does the Income Tax Act handle joint investments?

Income from jointly owned investments must be apportioned among joint owners based on their respective interests.

What are the consequences of making false statements regarding taxes?

Penalties equal to double or triple the underpayment of tax may be imposed.

What is the timeframe to file objection against an assessment?

An objection must be lodged within thirty days of receiving the notice of assessment.