Taxable Income

What part of my income is taxable?

Taxable income includes income derived directly or indirectly from all sources except where it’s specifically exempted.

It includes allowances and benefits, capital gains, dividends and bonuses, foreign income, income from partnerships or trusts, interest, lump sum payments, pensions, rental income, salary or wages, and termination payments. The tax law makes a basic distinction between income and capital receipts, and generally only income is assessable. However, capital gains made from the sale of assets acquired after 20th September 1985 are included in your taxable income.

Some income is tax exempt, including defence and United Nations payments, education payments, certain pensions, and social security allowances and payments. Other income that’s exempt from income tax includes family payment, certain scholarships, bursaries and other educational allowances, and the income of certain non-profit organisations.

Most government pensions are subject to tax, although a system of rebates ensures that no tax is paid by a pensioner who earns only a small amount of other income. Special provisions deal with other types of income, including lump-sum payments received on retirement, non-cash benefits, irregular income earned by artists, sportsmen, etc., and the income of farmers.

Those with irregular income are permitted to average their earnings out over five years; the tax payable is calculated according to a complicated formula, taking into account ‘normal’ income and adding this to one-fifth of your ‘abnormal’ income over a five-year period.