It may also be necessary to have a pay-as-you-go rule for income, although deriving compound amounts is likely less likely than incurring expenses to earn more than one income bracket. One type of composite amount that can be deducted is a compensation receipt. For example, in the case of personal injury, it is possible that a full lump sum may be paid as compensation for several losses, such as . B loss of income, physical impairment and pain. In this example, the amount in which the amount is intended for loss of earnings must be included in gross income. A general rule of division will achieve this result. In the absence of such an explicit provision, courts may be willing to apply such a rule in principle.47 Alternatively, courts may apply a single characterization to the entire amount.48 There are many possibilities between purely gay taxation and pure global taxation. One of these has been called „composite,“ which encompasses a global system of a series of sedular taxes.3 This approach involves combining some or most types of income to impose a progressive surtax in addition to the flat rates commonly applied to sedular income categories, as well as to provide personal tax relief for family expenses. The most sophisticated and, unfortunately, complex anti-transfer regimes are those that use attribution rules for transfers of arm`s length or underlying income-generating assets.
Examples of exceptions include income from property remaining in a bequest and income from property provided to settle a claim for damages for bodily injury. Another approach to dealing with children`s income, used in some jurisdictions, is to aggregate children`s capital gains with the income of the parent who declares the child to be dependent or with the income of both parents in the case of joint taxation.196 Constitutional or other restrictions may prevent the application of this approach in some jurisdictions.197 For the assessment of Employee Benefits. However, as noted above, the derivation of an employee ancillary benefit is not the only circumstance in which a situation must be assessed for tax purposes. It is therefore proposed to include a general valuation rule in the Income Tax Act51 It is important that such a rule be of general application so that it can apply in all circumstances when it is necessary to assess a benefit in kind. In other words, the rule should not be limited to valuing benefits as income. It is also important that the general evaluation rule is subject to one or more specific evaluation rules that may apply in a given context (e.g. B those that may be applicable to the evaluation of benefits). The remuneration system defines four central concepts on which income tax is based. First, it identifies the taxable person, that is to say, any person who has taxable income for the tax period.
Issues related to taxpayer identification are discussed in Section IX below. Second, the collection provision levies income tax on the basis of the tax period. This means that a person`s taxable income must be calculated separately for each tax period. In general, the tax period for income tax is a specific period of 12 months, usually the calendar year or fiscal year of the country concerned. The periodic nature of income tax means that it is necessary to provide accounting rules for the allocation of income and expenditure to specific tax periods for the purpose of calculating a person`s taxable income for the period. These rules are explained in section VIII below and in more detail in chapter 16. In some cases, valuation rules include presumed values lower than market values, where the market value could place an unreasonable burden on a taxpayer. One example is the provision of housing in a remote workplace. If the value of this service were calculated as a reasonable rental value based on the cost of accommodation, the value of accommodation would be very high, for example, in a remote jungle, desert camp or offshore oil drilling rig. But value to the taxpayer is the amount that the taxpayer saves by not paying for accommodation in an ordinary environment where the taxpayer would be if he were not for work. The same applies to the board of directors.
The cost of meals in a remote location could be high, but the savings for the taxpayer are the cost of meals where the taxpayer would live without a job. In this case, the value of accommodation and food is likely to be determined on the basis of the market value of the service if it had been provided in a non-remote location and not on its actual market value.105 Therefore, even in the context of an overall income tax, the inclusion of amounts in gross income is often specified by reference to certain categories of income. For this purpose, income is generally divided into employment, business and property income. Often, there are additional definitions for each income category and, in the case of property income, definitions of the amounts included in property income (for example. B, dividends, interest, rents and royalties). The benefits tax, which is imposed on employers as a policy tool to address benefits, has been criticized.89 It is particularly vulnerable to criticism that it undermines the measurement of workers` income. While employer-based benefit tax could ensure that benefits are subject to income tax, not including them in the employee`s gross (and therefore taxable) income can result in benefits that escape other taxes and contributions based on taxable income, especially social security taxes. In addition, employees` taxable income is understated to measure eligibility for various need-based benefits, such as health and education benefits. Undervaluation can also affect obligations based on taxable income, such as .B. Support Payments. The third issue to be clarified is the value to be attributed to taxable ancillary services.
Theoretically, the preferred value for taxing a margin is the value of the benefit to the employee, as this is the money or economic equivalent for the taxpayer. However, it is impossible to levy a tax on the basis of a taxpayer`s subjective assessment and, therefore, a substitute tax must be used. The most appropriate value in this case is the market value of the benefit. It is logical to assume that for most taxpayers, the value of derivative benefits is equal to the amount that other people would pay for those benefits in a market transaction. Market value-based valuation best achieves the objectives of fairness and efficiency in the taxation of benefits. In recent decades, several OECD members that used spousal units have switched to mandatory or optional taxation of separate units for married persons. This change was made largely in recognition of social and legal changes that grant equal rights to husbands and wives. In some jurisdictions, the optional reporting of individual shares is only possible for „earned“ income, while capital gains continue to be aggregated and taxed in the hands of the spouse with higher income.153 In others, such as .
B Germany, the spouse`s income may be based on the individual unit154 or the joint declaration,155 with the tax scale for joint declarants, which entails a tax burden, which is similar to what would result from an equal sharing of income for the purposes of the application. individual fee schedules. The United Kingdom has an individual registration unit with a limited deduction that provides relief to married couples.156 To some extent, income tax systems that recognize spousal units (with the exception of schemes that simply combine and tax spouses` income as if it came from a single person)172 actually use income transfers as a means of providing tax support to relatives. Only the France extends this system of relief to support children through its proportional family system.173 This system offers relief in reverse, as tax savings increase with the income of the main breadwinner through the transfer of income through the family quotient system. That is, the greater the main support of the person making money, the greater the tax relief. .