For 2017 and previous years, the basis of income tax assessment for employment income was on the amount actually earned in the year regardless of whether or not the income was paid to the individual during that year of assessment. This is known as the “earnings basis” of assessment.
From 1 January 2018, the basis of assessment for employment income is, in most cases, the actual amount of income received in the year of assessment. This is known as the “receipts basis” of assessment.
The basis of assessment for Schedule E income is now aligned with the operation of PAYE, which deducts income tax from income at the time it is paid.
Proprietary directors continue to be assessed on an earnings basis.
For any additional information or advice with this or any matter relating to employment tax, contact a member of our tax team.