Rental Income Tax
DEFINITION OF KEY TERMS
- Rental Income is the Total amount of rent derived by a person for the year of income from the lease of immovable property (land and or buildings) in Uganda with the deduction of any expenditure incurred in respect of the property.
- Landlord or Landlady This is anyperson who lets out immovable property to another person (the Tenant) for a consideration. A person (landlord or landlady) may take the form of:
- An individual e.g Mathew Etima
- A Company e.g RORA Ltd
- A corporate body e.g. Properties (U) Ltd.
- Government e.g Luwero District Administration
- An institution e.g Makerere University, UWESO
- A listed institution e.g African Development Bank
3. Tenant This is the person who occupies another person’s property on commercial terms and pays a consideration.
For Individuals
Step I:
Determine the total annual gross rental income (R) from all sources of the individual;
Step II:
Deduct the threshold of 2,820,000 UGX Note: No other deductions allowed R- 2, 820, 0000 =Chargeable income
Step III:
Determine rental income tax at 12% Tax payable = 12% x chargeable income
For Partnerships (Assessed on individual partners according to their respective sharing rates)
Step I: Determine the total annual gross rental income(R) of individual partners
Step II: Deduct the threshold of 2,820,000 UGX Note: No other deductions allowed R- 2, 820, 0000 =Chargeable income
Step II: Deduct the threshold of 2,820,000 UGX = 6,000,000 – 2,820,000 Note: No other deductions allowed Chargeable income = 3,180,000
Step III: Calculate rental income tax at 12% = 12/100 x 3,180,000 Rental tax payable = 381,600 UGX
- Partnerships
Using the calculation above, if Amos and Robert were in a partnership and their stake is in a ratio of 2:3, then Partner Amos
= 2/5 x 381,600
= 152,640 UGX Partner
Robert = 3/5 x 381, 600
= 228,960 UGX
Therefore, Partner Amos will pay UGX 152,640 while Robert will pay
UGX 228,960
Companies
Scenario I: If a company earns Ugx. 30 million out of which Ugx. 15 million was from rental property. Expenses include cleaning services (3,000,000), security guard (4,000,000) and repairs (4,000,000), Rental tax is calculated as follows
Step I:
Determine Gross rent from all sources of the company =Shs.15, 000,000
Step II:
Deduct up to 50% of the annual gross rental income as allowance for expenditures and losses.
Total expenses
=3,000,000+4,000,000+4,000,000
=11,000,000
However;
Allowable expenses
= 50% X15, 000,000
=7,500,000
Chargeable rental income
=15,000,000 – 7,500,000
=7,500,000
Step III: Calculate rental income tax
at 30%
= 30/100 x 7,500,000
Rental tax payable
= 2,250,000 UGX
- Dano/Ngat Acel Acel
Labol me acel: Kace cente weng/ducu ma aa i ot/jami apanga obedo, 6,000,000 i mwaka acel. Cente ma kitiyo kwede; gwoko kuc (2,000,000), gwoko lengo (800,000), yubu kama obale (500,000) ki magoba i kom mortgage tye 800,000, nong wel mucoro ma omyero ki cul.
Citep I:Â Nong wel ma aa ki ikom jami/ot apanga weng/ducu = ciling 6,000,000.
Citep II:Â Kwany ciling 2,820,000 ki ikom ciling 6,000,000 = 6,000,000 – 2,820,000
Niang ni: Lakwany mo keken nongo dong pe. Man nyutu ni cente ma ki ngolo mucoro ikome obedo ciling 3,180,000.
Citep III:Â Nong wel mucoro ki ikom pacen 12%.
= 12/100 x 3,180,000
Nyutu ni wel mucoro bedo 381,600.
2. Dano ma guribbe ariba
Ka itiyo ki cura ma malo ni, kace Amos gin ki Robert guribbe I tiyo biacara dok lim ma guketo iye ni tye 2:3, ci,
Amos
=2/5×3,81,600
=152,640
Robert
= 3/5×381,600
=228,960
Ci dong, Amos obiculu mucoro me ciling 152,640 ki Robert obiculu 228,960.
Kampuni ma patpat
Labol me acel:Â Kace Kampuni nongo ciling million 30 dok ikom cente meno ciling million 15 aa ki ot/jami apanga, mukene gitiyo kwede me gwoko lengo (3,000,000), pi gwoko kuc (4,000,000) ki pi yubu jami ma obale (4,000,000),
Mucoro ikom ot/jami apanga ki nongo kit man
Citep I:Â Nong wel cente weng/ducu ma aa I kom pango ot/jami=15,000,000
Citep II: Â Kwany pacen 50% ki ikom cente ma inongo weng/ducu imwaka acel macalo cente ma itiyo kwede ki acara ma ononge.
Wel cente weng/ducu ma itiyo kwede
=3,000,000+4,000,000+4,000,000=11,000,000
Ento Cente ma itiyo kwede = 50%x15,000,000=7,500,000
Mucoro me acula ikom lim ma inongo I kom ot apanga = 15,000,000 – 7,500,000=7,500,000
Citep III:Â Nong mucoro ma aa ki ot/jami apangs i pacen 30%.
= 30/100 x 7,500,000
Mucoro ma omyero icul ikom ot/jami apanga = 2,250,000
Complete a return of Rental Income for a year of income with supporting agreements where available or rental receipts issued to tenant (s) during the year
Declare ALL your sources of rental income in FULL for a given year of income. The year of income is from 1st July to 30th June or a Substituted year
Submit (furnish) the return, ANNUALLY to Uganda Revenue Authority, through your local Revenue Office, within six months after the end of the relevant year of income.
Pay the rental income tax by the appropriate due date
The taxpayer is entitled to a tax credit in respect of any rental tax paid provisionally or in advance during the year of Income. This however can only be offset against rental tax liability since the source is taxed separately.
DISCLAIMER: This Information is strictly for purposes of guidance to our clientele and is subject to change on amendment of tax legislations & any other regulations that govern tax administration.
