LS 3 PIT - Material Tax Liability

Question 1

The performance indicator of personal income tax is….

Answer 1

… income

Question 2

Based on the ability to pay principle, the personal income tax depends on….

1.
2.

The income is taxed depending on….

3.
4.

Answer 2

…. the amount of income generated.

1. the higher the income the higher the ability to pay.
2. the higher the ability to pay, the higher the personal income tax
3. the objective ability to pay
4. the subjective ability to pay

Question 3

Definition Objective Ability to Pay

1.
2.
3.

Answer 3

• determined by the earned income, minus the expenses to earn this income
• person shall only be taxed on the part of their income that is truly available for their personal use
• e.g. income from gainful activity is 50; expenditure on gainful activity is 5; so net income is 45

Question 4

Definition Gainful Activity

(3 Objective; 1 Subjective Characeristics)

Answer 4

• carrying out an activity in order to earn income
• is the case if the activity is suitable to earn income
• not: inheritances, gifts, scholarships
• Subjective: person must have intention of realizing profit -> willing to realize an excess of income over expenses (income-expenses>0)
• one has to look at the ENTIRE duration (total period)

Question 5

What are incomes from activities that are NOT gainful? i.e. NOT considered taxable income (dont have to pay taxes on it)

1.
2.

Answer 5

• income from charitable and voluntary activities
• income from pursuit of a hobby (privately motivated and result of gainful activity is <0; OR not privately motivated but does not give result)

Question 6

Examples for Hobbys?

1. Horse
2. Vacation House
3. Oldtimer Car

Answer 6

1. having 4 horses that cost a lot, sometimes letting someone ride them against payment but costs EXCEED income by far
2. letting friends lend house for money, but doesnt even COVER costs
3. having expensive oldtimer cars, sometimes selling them, but expenses EXCEED income by far

Question 7

What is the Accretion Theory?

Answer 7

• theory according to which the profit for the profit types of income is determined
• > any income is taxed, both recurring income and income from one-off transactions

Question 8

Calculation of Tax Saving

Answer 8

Amount of income related expenses and unavoidable private expenditures * tax rate