Other income

What it means

Other income is the residual category of the Income Tax Act for individuals: everything that is not employment income, business income or income from capital assets. Typically the sale of an asset, an occasional activity, winnings and prizes.

It differs from business income in that the activity is not carried on systematically and needs no trade authorisation. No social insurance is due on it, yet the health insurer pulls it into the annual reconciliation of contributions.

Rental income from property is often wrongly filed here. The Act places it with income from business and other self-employed activity, with its own exemption and its own rules on expenses, so the wrong category changes both the tax calculation and the line on which the income appears in the return.

How it works in practice

The exemption is applied first: on occasional income only the part above the limit set by the Act is taxed, while on the sale of an asset the holding period decides. What remains goes into a type B tax return, each kind of income on its own line with its own expense against it.

Only an expense demonstrably incurred to earn the income counts, such as the acquisition price against income from the sale of property. Where the expense exceeds the income the difference is ignored, so this category cannot produce a loss.

An employee who had taxable other income cannot ask the employer for the annual reconciliation and files a return personally. We prepare it from the employer’s certificate and the documents behind the purchase and the sale, such as the estate agent’s invoice and the receipt for the land register fee paid on purchase, which count as expenses.

What to watch out for

A one-off sale is taxed once but paid for twice. The tax leaves with the return in spring, and months later the health insurer’s annual reconciliation bills contributions on the same income, by which time the sale proceeds are long spent.

Anyone who cannot show what they paid for an asset, because the contract went missing over the years, has nothing to deduct and is taxed on the whole sale price. Documents on buying and improving an asset deserve the same care as document retention in a company, for as long as the asset is owned.