Q: What are rental income and royalty income?
A: Rental income refers to the following earnings, calculated as the amount remaining after deducting necessary depreciation and expenses:
(1) Rent received from property leasing.
(2) Income generated from the utilization of the price paid for property subleasing.
(3) Income obtained from establishing permanent leasehold rights and superficies.
(4) Income calculated based on one-year term deposit interest rates commonly offered by local banks, derived from deposits or similar deposits received for property leasing or from sublease payments.
Royalty income refers to the income earned by granting others the right to use patents, trademarks, copyrights, trade secrets, and various franchise rights, after deducting necessary depreciation and expenses.
Q: What is property transaction income?
A: Property transaction income refers to the income derived from transactions of properties and rights, calculated as follows:
- For properties and rights acquired through purchase, the income equals the selling price minus the original acquisition cost and any expenses incurred for acquisition, improvement, and transfer of the property or rights.
- For properties and rights acquired through inheritance or donation, the income equals the selling price minus the fair market value at the time of inheritance or donation and any related expenses for acquisition, improvement, and transfer.
- Income from the sale of personal household items such as clothing and furniture is exempt from individual income tax.
Q: What are prizes or awards from competitions and sweepstakes?
A: Any prizes or awards obtained from participating and winning in competitions or sweepstakes are considered such income, with necessary costs or expenses deductible.
Examples include: TV and radio competitions, quiz contests, essay or knowledge contests published by organizations or agencies, sports competitions held by sports associations or clubs, skill and intelligence contests, etc.
However, prizes from government-issued lotteries, such as uniform invoices and public welfare lotteries, are subject only to withholding tax and are not included in the total comprehensive income. Such withholding tax cannot be used to offset the payable tax or for tax refund claims.
Q: What is retirement income, and how is it calculated?
A: Retirement income includes pensions, severance pay, retirement allowances, resignation payments, lifelong annuities, and other retirement payments not covered by insurance. Contributions from salary income and their interest are excluded. The calculation is as follows for 2024:
- For lump-sum retirement payments:
If the total amount does not exceed NT$198,000 multiplied by the years of service, the taxable income is zero.
&bull If the amount exceeds NT$198,000 but not NT$398,000 multiplied by the years of service, half of the excess is taxable income.
&bull Any amount exceeding NT$398,000 multiplied by the years of service is fully taxable. - For installment payments, the taxable income equals the total annual payment minus NT$859,000.
- For combined lump-sum and installment payments, the deductible amounts under the first two rules should be proportionally allocated based on the type of payment.
Prizes or Awards from Competitions and Sweepstakes (Image / Reproduced from freepik)
Q: What is other income? How is it declared for individual income tax?
A: Other income refers to any income not classified as business income, salary income, interest income, rental income, royalty income, property transaction income, agricultural, fishery, forestry, and mining income, competition and sweepstakes prizes or awards, or retirement income.
When filing individual income tax, foreign taxpayers should deduct costs and necessary expenses incurred to acquire the income and declare the balance as taxable income.
However, welfare payments issued by employee welfare committees have no deductible costs or expenses.
