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 following subparagraphs:
1. Income derived from sources outside the Republic of China and excluded from gross consolidated income, as well as income which is exempted in accordance with Paragraph 1, Article 28 of the Laws and Regulations Regarding Hong Kong and Macau Affairs. However, if the aggregate of these two sources of income in a tax household is less than NT$1,000,000, it may be exempt from inclusion in the basic income.
2. Insurance payment received by the beneficiary of a life insurance policy or annuity in which the beneficiary and the policyholder are not the same person, and the life insurance policy and annuity take effect after the coming into force of this Act. However, in the case of payment made upon the death of the insured person, the part of which the aggregate payment received by a tax household is equal to or less than NT$30,000,000 may be excluded from the basic income.
3. Income derived from transactions of the following types of securities:
(1)Stocks, certificates of entitlement to new shares, certificates of payment and documents demonstrating title to shares issued by or privately placed by companies not listed on a 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 have been incorporated for less than five years at the time of transaction.
(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 Income Tax Act and other laws.
5. The amount of income or deduction which leads to reduction, exemption, or deduction from the consolidated income tax as may be provided for by laws which may be publicly announced by the MOF after the implementation of this Act.
The calculation of income from securities transactions under Subparagraph 3 of the preceding paragraph shall be governed by mutatis mutandis Subparagraph 1 and Subparagraph 2 of Category 7 of 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. 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 both the year in which the loss is incurred and the year in which the deduction is claimed and only at the amount assessed by the tax authority.
For the purpose of auditing income derived from securities transactions under Subparagraph 3, Paragraph 1, the regulations governing the recognition of the transaction price, costs, and expenses of securities transactions, as well as the assessment of such in the case of a failure to file or a failure to present the actual transaction price or the original cost shall be promulgated by the MOF.
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, Paragraph 1, if a loss occurs, Paragraph 3 may apply mutatis mutandis if so publicly announced by the MOF.
Paragraph 2, Article 3 shall apply mutatis mutandis to the calculation for adjustment and public announcement for the amount prescribed in Subparagraph 2, Paragraph 1.
With regard to the high-risk innovative startups referred to in the proviso of Item 1 of Subparagraph 3 of Paragraph 1, the MOF and the Ministry of Economic Affairs shall together promulgate regulations to stipulate the scope of application, qualifications, the deadline to apply for approval, the application procedure, the documents for review, which authority to give the approval, and other related matters.
Subparagraph 1, Paragraph 1 shall come into force on January 1, 2009. However, if the Executive Yuan deems it necessary in consideration of the needs of economic development, it shall come into force on January 1, 2010.