Income Tax Concepts chapter (2). Article (15), (16), (17) (18), (19), (20), (38) Article (15), (16), (17) (18), (19), (20), (38)

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Individual Income Tax Overview

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Presentation transcript:

Income Tax Concepts chapter (2)

Article (15), (16), (17) (18), (19), (20), (38) Article (15), (16), (17) (18), (19), (20), (38)

Case (12): ( with Individual Self Assessment Form) The following information have been taken from the tax self assessment for taxpayer: Mr. Omar. Revenues: - Monthly salary from part time job: 2,300 NIS - Annual revenue for his trading shop : 33,000 NIS - Annual revenue from legal consulting office: 58,000 NIS - Gift from non governmental organization 7,000 NIS Expenses: - Cost of good sold:15,000 NIS - - Salaries for the trading shop:12,000 NIS - Depreciation for car and furniture (shop ): 4,000 NIS - Salaries for the legal consulting office :10,000 NIS - Expenses related to legal consulting office: 19,000NIS - Personal living cost :8,000 NIS

Additional information: - The main activity of Mr. Omar is his shop. - The taxpayer live in Gaza - Gift is nontaxable income - The tax officer accepted 60% of legal office expenses - The tax officer accepted 20% of depreciation - The taxpayer is married and has two sons, one of them university student, his parent and grandmother depending on him. - He paid tax prepayments during the year: 1700 NIS - The exchange price for dollar = 4 NIS * Required: 1- Calculate the annual income tax for And determine the tax to paid, or to refund. And determine the tax to paid, or to refund.

Answer : - Annual salary from part time job = 2300*12 = NIS - Profit for his trading shop = 33,000 NIS - Revenue from legal consulting office= 58,000 NIS - Gift from non governmental organization= 7,000 NIS - Total income = NIS - Nontaxable income =7,000 NIS Gross income NIS / 4 =29650$ Deductions: - Cost of good sold =15,000 NIS - Salaries for the trading shop = 12,000 NIS - Salaries for the legal office = 10,000 NIS - Expenses related to legal office =11,400 NIS (19000*60%) - Depreciation for car and furniture = 800 NIS (4000*20%) Total of deductions = 49,200 NIS / 4 = 12,300$

Exemption: - Resident = 3000$ - Wife = 500$ - Son = 500$ - University student = 2500$ - Parent 500*2 = 1000$ - Grandmother = 0$ ? Total of exemption = 7500$ Taxable income 9,850$ Income tax = 9800*8% = 788$ Tax prepayment 425$ ( 1700 NIS/4 ) Tax due (to be paid) = 788 – 425 = 363$