The tax relief programs for businesses are in several categories: income, death tax, dividends and capital gains, plus incentives for business growth.
Income Tax
Tax relief on business incomes was granted when the government expanded the list of items falling under the lower tax brackets - 10% and 15% - enabling many businesses to file for lower taxes under the program. Other categories were also reduced, so that the maximum tax imposed is only 35%. Monies intended for the tax can now be used for financing the business, adding capital or purchasing new equipment.
The Death Tax
Similar to the estate tax, the ‘death tax’ is imposed when the business owner relinquishes his management of the business and hold on its assets to another member of the family or someone else. The death tax has been nullified and will not be re-imposed until 2011, if at all.
Dividends and Capital Gains
Double income taxation occurs when the same income is taxed at different levels. When the business generates income, it is taxed as income is tax. However, when the same income is given to the business owners, it is taxed again as capital gains tax. Recent programs, however, have changed this situation and double taxation is minimized.
Additional Incentives
One aspect in which a business incentive program has been applied is on asset depreciation. Business taxes are usually partially based on assets or properties. Nevertheless, it is accepted that business assets decline in value faster than those owned individually, therefore, to equalize the depreciation rates of both may be unfair to business. Thus, recent tax relief programs adjusted the rates, making business asset depreciation rates higher and the time period shorter than before.
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