With tax time coming around for most countries, you may wonder what it is and what you have to do. We at SaverAsia want to help you using the quick guide below.
What is tax?
Tax is the money you pay to the government every time you earn income. Tax is collected when you earn money from your job and your business. Other sources of income will also be taxed.
Why do I have to pay tax?
The government of a country uses the money collected from taxes to pay for public services. This includes roads and railways, defence, health, social security, and education. Public services mean that it is available to most of the people living in that country.
How can I pay tax?
Taxes are usually taken out of your wages or salary by your employer and paid to the government whenever you get paid. This means that the income you receive is already taxed or called ‘post-tax income‘.
If you earn income through a business, you may have to pay it directly to the government.
Every year, you will submit a tax return. A tax return allows the government to calculate the correct amount of tax you must pay for the year. You tax return will ask for:
- How much income you earned for the year,
- How much tax you paid from your income so far for the year,
- How much deductions you may have.
If you have not paid enough of the correct tax amount, you will have to pay the remaining to the government.
If you have paid more than the correct tax amount, the government will pay you back the difference. This is called a ‘return’.
What are deductions?
A deduction is something that you have paid for using your own money. This can be included in your tax return and may reduce the amount of tax you need to pay.
For you, this is often work-related expenses such as uniform and laundry expenses or internet if you work from home. Make sure you check the government websites for information on what deductions are acceptable or find a tax agent that can help.
What is a tax agent?
A tax agent is someone that can help you complete your tax return if you do not want to do it yourself. They will ask you for the information the government needs and help you make sure you pay the right tax. Each country has different laws about tax. Sometimes it is hard to understand the different laws from the government relating to tax, so tax agents are experts that you can seek help from. However, most of the time, you must pay them a fee for their services. If you decide to use a tax agent, always check that they have the qualification and registration to help you.
We hope that this quick guide helps make tax time a little less stressful for you. Remember to find help when you need. If you want to learn more about how to handle money, SaverAsia have other financial resources for you to check out here.
Disclaimer: This article is general in nature and therefore should not be taken as specific advice. Please find out help for specific matters about your personal finance.
Written by Malorie Manaois (28 June 2022)