Section 5 of the Income Tax Act 1967 describes the ascertainment of chargeable income. Describe the...

Section 5 of the Income Tax Act 1967 describes the ascertainment of chargeable income. Describe the steps that are used to ascertain the chargeable income of a taxpayer. (Please show the format of computing the chargeable income as well)

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Expert Solution

Manner in which chargeble income is to be ascertained

Section 5. (1) Subject to this Act,the chargeable income of a person upon which tax is chargeable for a year of assessment shall be ascertained in the following manner:

Firstly,the basis period for each of his sources for that year shall be ascertained in accordance with Chapter 2 of part III;
Next,his gross income from each source for the basis period for that year shall be ascertained in accordance with Chapter 3 of that part;
Next,his adjusted income from each source (or,in the case of a source consisting of a business,his adjusted income or adjusted loss from that source)for the basis period for that year shall be ascertained in accordance with Chapter 4 of that part;
Next,his statutory income from each source for that year shall be ascertained in accordance with Chapter 5 of that part;
Next,his aggregate income for that year and his total income for that year shall be ascertained in accordance with Chapter 6 of that Part;and
Next,his chargeable income for that year shall be ascertained in accordance with Chapter 7 of that Part:

Provided that in ascertaining the chargeable income of an individual resident there shall be excluded the income consisting of interest accruing in or derived from the country and received from a person referred to in subsection 109C(4) in respect of interest paid or credited to that individual.

(2)For the purposes of this Act,any income of a person from any sources,and any adjusted loss of a person from any source or sources consisting of a business,may be ascertained for any period (including a year of assessment) notwithstanding that---

The person in question may have ceased to possess that source or any of those sources prior to that period;or
In that period that source or any of those sources may have ceased to produce gross income or may not have produced any gross income.

ekkarill92 answered 8 months ago

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