Write a 3,000 word paper explaining the key sources of information and data requ

Question

Write a 3,000 word paper explaining the key sources of information and data required to calculate taxable income when preparing tax documentation for individuals and outline the key accounting principles and practices relevant to the preparation of taxation documentation. In the paper consider and describe: consultation with clients use of expert or specialist advice when necessary the rules and principles of Australian tax law the legislation, regulations and organisational policies and procedures that must be adhered to ethical issues relevant to the preparation of tax documentation for individual taxpayers concepts and acceptability requirements relating to income, assets, deductions, tax rebates and offsets -that is, what should be included different forms of taxation procedures and timeframes for completing

Explanation / Answer

In order to file your income tax return you first need to collect all the information required to file it. The next important step is to compute your total taxable income. After this, final tax payable or refundable is calculated by applying the applicable tax rates in force and then deducting taxes already paid by way of TDS/TCS or Advance tax from the tax due amount arrived at.

Here's a step by step guide on how to calculate one's total taxable income:

As per the income tax laws a person can have a total of 5 sources of income which are: Income from salary, Income from House Property, Income from Business or Profession, Income from Capital Gains, Income from Other sources. All income of a tax-assessee has to be categorized as one of the above.

Income from Salary
You can compute income from your salary using the TDS certificate in Form 16 issued by your employer. This is to be done as follows:
* Collect your salary slips and Form 16 for the financial year. - Now add all your emoluments like (Basic salary, DA, TA, DA on TA, HRA, all other allowances, and reimbursements) which will be mentioned in your salary slips and Form 16 (Part B).
Add the Bonus (TVP- Ex gratia) received in the FY for which income is being computed.

The total will be Termned as your gross salary

Deduct the following from your gross salary :
Exempted portion of HRA, - Transport Allowance (maximum exemption can be upto Rs19200 per annum) - All reimbursements subject to the furnishing of actual bills i.r.o expenditure incurred (Medical reimbursement can be maximum upto Rs 15000)
* The result will be your net income from salary.

Income from House Property ( HP)
Income from house property mainly consists of rental income received by the assessee from the house that he has let out. In case, assessee has only one house and that too is self occupied by him, then also he will be required to compute his income from house property.( which will be nil or a negative value in most cases)

The assessee must consider following points while computing his income from House Property. - Compute the Gross Annual Value (GAV) of your let out HP as follows:
* Compute the Fair Market Value (expected rent from similar property) and Municipal Valuation (valuation as per municipal authorities). Take the higher value of the two. This higher value is termed as Expected rent.
* Compare the Actual rent received/Receivable for the year with the expected rent and the higher value will be the GAV of the House.

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