Notional Income

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Notional Income

Income one may not have received but on which one may still be taxed. The term is often associated with income from rental property. In India, for example, one must pay taxes on the amount of rent one might reasonably expect to earn in a year, whether or not one actually earns it. This fictional money is notional income because one must still pay income tax on it.
References in periodicals archive ?
Pension contributions are 20% of assessed earnings, (4) but these are unrelated to actual earnings and instead correspond to notional income classes which, depending on the fund, increase with years of experience.
If such a switch is not feasible, then the level of notional income bands against which the self-employed make contributions would need to be raised.