The amount of basic income of an individual shall be the sum of the net taxable income as calculated in accordance with the Income Tax Act and the amount which is under the provisions of the following subparagraphs:
1. Income, which is derived from sources outside the Republic of China and is excluded from gross consolidated income, as well as income which is exempted in accordance with Paragraph 1, Article 28 of the Act Governing Relations with Hong Kong and Macau. However, if the aggregate of the two mentioned sources of income in a filing unit is less than NT$1,000,000, it may be excluded from the basic income.
2. Insurance payment received by the beneficiary of a life insurance policy or annuity in which the beneficiary and the proposer are not the same person and the life insurance policy and annuities are contracted after this Act coming into force. However, in the case of payment made upon the death of the insured person, the part of which aggregate of payment made in a filing unit is equal to or less than NT$30,000,000 may be excluded from the basic income.
3. Income derived from transactions of the securities on the following items:
(1)Stocks, certificates of entitlement to new shares, certificates of payment and documents of title to shares issued or privately placed by companies not listed on the stock exchange or traded on over-the-counter markets, except for those companies that have been approved by the central authority in charge of relevant enterprises as high-risk innovative startups and incorporated for less than five years.
(2)Beneficiary certificates of privately-placed securities investment trust funds.
4. The amount of non-cash donations or contributions which is deducted from the gross consolidated income in accordance with the provisions of the Income Tax Act and other laws.
5. The amount of income or deduction which is entitled to reduction, exemption or deduction from the consolidated income tax as may be provided by laws which may be promulgated after the implementation of this Act and thereafter announced by the Ministry of Finance.
The calculation of income on securities transactions under the provision of Subparagraph 3 of the preceding paragraph shall apply mutatis mutandis to Subparagraph 1 and Subparagraph 2, Item 7, Paragraph 1 of Article 14 of the Income Tax Act. The loss incurred from the mentioned securities transactions may be deducted from income derived from securities transactions performed in the same year. However, if no income or no sufficient income derived from security transactions in the same year is available for deduction, the loss may be carried forward for the next three years following the year of the loss. However, the claim of deduction of loss shall apply only to such income and loss as are calculated based on the actual transaction price and the original cost in the years in which the loss incurred and the deduction claimed and only to the amount which has been assessed and recognized by the collection authority.
For the purpose of auditing income derived from securities transactions under the provision of Subparagraph 3 of Paragraph 1, regulations governing the recognition of the price, costs and expenses of securities transactions, as well as the assessment of such in the case of failing to file or present the actual transaction price or the original cost shall be issued by the Ministry of Finance.
In the case of an amount of reduction, exemption or deduction which shall be added back to the base of the basic tax in accordance with Subparagraph 5 of Paragraph 1, and with the incurrence of a loss may apply mutatis mutandis to Paragraph 3 if publicly announced by the Ministry of Finance.
The calculation for adjustment and public announcement of the amount prescribed in Subparagraph 2, Paragraph 1 shall apply mutatis mutandis to Paragraph 2 of Article 3.
The scope and qualifications of the high-risk innovative startups, the application approval deadline, the application procedure, the authorities giving the approval, and other related matters under the exception of Item 1 Subparagraph 3, Paragraph 1 shall be stipulated collaboratively by the Ministry of Finance and the Ministry of Economic Affairs.
The provision under Subparagraph 1 of Paragraph 1 shall come into force on January 1, 2009. However, if the Executive Yuan deems it is necessary to postpone the implementation of the provision in consideration of the needs of economic development, the provision may come into force on January 1, 2010.