Income Tax Income Tax ConceptsConcepts

chapter (2)chapter (2)

ArticleArticle (15), (16), (17) (15), (16), (17)

(18), (19), (20), (38) (18), (19), (20), (38)

Case (12): Case (12): ( with Individual Self Assessment ( with Individual Self Assessment Form)Form)

The following information have been taken from the tax self The following information have been taken from the tax self assessment for taxpayer: Mr. Omarassessment for taxpayer: Mr. Omar..RevenuesRevenues::

- -Monthly salary from part time job: 2,300 NISMonthly salary from part time job: 2,300 NIS - -Annual revenue for his trading shop : 33,000 NISAnnual revenue for his trading shop : 33,000 NIS

- -Annual revenue from legal consulting office: 58,000 NISAnnual revenue from legal consulting office: 58,000 NIS - -Gift from non governmental organization 7,000 NISGift from non governmental organization 7,000 NIS

ExpensesExpenses:: - -Cost of good sold:15,000 NISCost of good sold:15,000 NIS

- - -Salaries for the trading shop:12,000 NISSalaries for the trading shop:12,000 NIS - -Depreciation for car and furniture (shop ): 4,000 NISDepreciation for car and furniture (shop ): 4,000 NIS

- -Salaries for the legal consulting office :10,000 NISSalaries for the legal consulting office :10,000 NIS - -Expenses related to legal consulting office: 19,000NISExpenses related to legal consulting office: 19,000NIS

- -Personal living cost :8,000 NISPersonal living cost :8,000 NIS

Additional informationAdditional information::

- -The main activity of Mr. Omar is his shopThe main activity of Mr. Omar is his shop..

- -The taxpayer live in GazaThe taxpayer live in Gaza

- -Gift is nontaxable incomeGift is nontaxable income

- -The tax officer accepted 60% of legal office expensesThe tax officer accepted 60% of legal office expenses

- -The tax officer accepted 20% of depreciationThe tax officer accepted 20% of depreciation

- -The taxpayer is married and has two sons, one of them The taxpayer is married and has two sons, one of them university student, his parent and grandmother university student, his parent and grandmother depending on himdepending on him..

- -He paid tax prepayments during the year: 1700 NISHe paid tax prepayments during the year: 1700 NIS

- -The exchange price for dollar = 4 NISThe exchange price for dollar = 4 NIS

* *RequiredRequired::

11 - -Calculate the annual income tax for 2009Calculate the annual income tax for 2009..

And determine the tax to paid , or to refundAnd determine the tax to paid , or to refund..

AnswerAnswer: : - -Annual salary from part time job = 2300*12Annual salary from part time job = 2300*12

= =2760027600 NISNIS - -Profit for his trading shop = 33,000 NISProfit for his trading shop = 33,000 NIS

- -Revenue from legal consulting office= 58,000 NISRevenue from legal consulting office= 58,000 NIS - -Gift from non governmental organization= 7,000 NISGift from non governmental organization= 7,000 NIS

- -Total income =125600 NISTotal income =125600 NIS - -Nontaxable income =7,000 NISNontaxable income =7,000 NIS

Gross income 118600 NIS / 4 =29650$Gross income 118600 NIS / 4 =29650$DeductionsDeductions::

- -Cost of good sold =15,000 NISCost of good sold =15,000 NIS - -Salaries for the trading shop = 12,000 NISSalaries for the trading shop = 12,000 NIS

- -Salaries for the legal office = 10,000 NISSalaries for the legal office = 10,000 NIS - -Expenses related to legal office =11,400 NIS Expenses related to legal office =11,400 NIS

(19000*60%)(19000*60%) - -Depreciation for car and furniture = 800 NIS (4000*20%)Depreciation for car and furniture = 800 NIS (4000*20%)

Total of deductions = 49,200 NIS / 4 = 12,300$Total of deductions = 49,200 NIS / 4 = 12,300$

ExemptionExemption::

- -Resident = 3000$Resident = 3000$

- -Wife = 500$Wife = 500$

- -Son = 500$Son = 500$

- -University student = 2500$University student = 2500$

- -Parent 500*2 = 1000$Parent 500*2 = 1000$

- -Grandmother = 0$Grandmother = 0$? ?

Total of exemption = 7500$Total of exemption = 7500$

Taxable income 9,850$Taxable income 9,850$

Income tax = 9800*8% = 788$Income tax = 9800*8% = 788$

Tax prepayment 425$ ( 1700 NIS/4 )Tax prepayment 425$ ( 1700 NIS/4 )

Tax due (to be paid) = 788 Tax due (to be paid) = 788 –– 425 = 425 = 363$363$