FAQTaiwan Individual Income Tax Q&A 11
| Q: |
Does individual income tax apply to dealers selling Taiwan charity lottery? |
| A: |
There are two types of charity lottery dealers: actual and computer-based. Actual lottery dealers sell traditional or instant lottery tickets and are usually people with disabilities, indigenous or families with low-income or single parent. Since it is not considered as a profit-seeking business, the income from the sales of lottery tickets shall be declared for individual income tax. Computer-based dealers sell lottery tickets generated by computer. The business is usually formed by sole proprietorship, partnership or corporate organization and is considered as profit-seeking. Therefore, computer-based dealers shall pay for business tax in accordance with the sales amount and may exempt from filing for corporate income tax. |
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Q: |
Shall Taiwan charity lottery individual dealers file individual income tax for the commissions from lottery sales? How should it be calculated? |
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A: |
The commission from lottery sales is considered as the income from professional practice and shall file for individual income tax in accordance with the Income Tax Act. Any individual engaged in professional practice shall at least keep a journal as his accounting book to provide detailed entries of all the operating revenues and expenses for government review in accordance with the Income Tax Act Article 14 Paragraph 1 Category 2. If the dealer failed to provide the above-mentioned proofs, they shall deduct the income by necessary expense and counted as the actual income which shall declare for individual income tax. The necessary expense refers to 60% of the cost of 2019 Taiwan charity lottery actual lottery dealer, approved by the Ministry of Finance, |
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Q: |
For Taiwan charity lottery computer-based dealers (i.e., profit-making enterprise), if they adopt Taiwan uniform receipt, how should their individual shareholders, partners and sole proprietors declare for income tax? |
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A: |
Computer-based lottery dealers who adopt Taiwan uniform receipt must maintain account books and accounting records which can calculate the income of their profit-making businesses correctly, in accordance with the Income Tax Act Article 21, and in accordance with Article 24 and Article 71 of the same law, the net profit after deducting various costs, expenses, losses and taxes from the total income from the sales commissions, prize redemption commissions and operating other business items obtained by them shall be declared and paid for corporate income tax. |
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Q: |
If the itemized evidence method is adopted when taxpayers in Taiwan declare the necessary losses and expenses of the income from leased houses, what kind of documents should be submitted for the depreciation items? What are the requirements of confirming the items? |
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A: |
There are 3 situations for documents submission for proof of depreciation items: When the purchase contract has separate prices for houses and land, a copy of the purchase contract must be attached. When the purchase contract does not specify the price of the house and land, a copy of the house tax bill, the purchase contract, sales invoice or receipt must be attached. The cost calculation formular is as follows: Purchase price × house evaluation price ÷ (house evaluation price + current land value) If the above documents are not available, please attach a copy of the housing tax bill, and the cost will be determined based on the taxable present value. In the documents to be submitted above, the type of building structure (such as building made with steel-reinforced concrete with elevator or with reinforced brick without elevator) should be indicated and stamped to facilitate identification. As for the requirements of confirming the depreciation items, it depends on the durability of the house. For example, for a steel-reinforced concrete house with an elevator, the annual depreciation rate is 1/51 of the present value of the house; if it is a reinforced brick house without an elevator, the annual depreciation rate is 1/36 of the present value of the house. However, if the taxpayer can prove the actual depreciation amount, it can be stated after verification. Depreciation is not allowed for land. If the actual rental period of that year is less than a year, the depreciation of the house shall be calculated on proportion to the rental period. |
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Q: |
If the itemized evidence method is adopted when taxpayers in Taiwan declare the necessary losses and expenses of the income from leased houses, what kind of documents should be submitted for the repair items? What are the requirements of confirming the items? |
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A: |
The original invoices or receipts of the repair expenses should be submitted as the proof of repair costs, and name of the house owner and house location must be indicated. In addition, the following conditions must be met: The expenses must be paid in the rental income year, depending on the date of invoice or receipt issued. If the repair cost is a capital expenditure, it cannot be stated because it has been marked as depreciation in the cost. |
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