What is Meant by Tax Point for the New Tax?

The tax point for the residential rental income tax is when landlords receive rent from their tenants, either monthly, quarterly, semi-annually or annually.

Under this new tax regime, tax returns have to be filed monthly. This implies that a landlord has to file his or her tax returns every end of the month. What does this mean to those landlords who receive their rents from their tenants either after four months (quarterly), six months (semi-annually) or after twelve months (annually)? If you are a landlord who receives rent from your tenants every after the periods stipulated above, you have nothing to worry. You will still file your monthly tax returns only that you will be filing nil returns. Let us say you receive your rent after every four months (quarterly), this means that the first three months you will file nil tax returns every end of each month but pay on the fourth month.

When is the effective date of the new simplified tax regime (i.e. Residential Rental Income Tax?

The new rate of 10% tax on gross rent is effective on 1st January 2016. Eligible persons shall be required to file and make correct declaration through a simplified tax return via iTax System and pay tax due on or before the 20th day of month following the rent receipt.

This shows that the new tax regime took effect as from two months ago. But which date are exactly expected to have filed your monthly rental income tax? According to this rule, one is expected to file their taxes every 20th day of the month following the receipt of rent. This shows that if for instance one has to file the tax returns for the rent received for the month of January, the filing is expected on the 20th of February.

Now, what will happen if one fails to file his or her tax returns on that specified date? Failure to adhere to the deadlines attracts punitive penalties as well as interests as specified in the income tax Act.

Article by Juma Fred.