The transfer of 1 million yuan from a father to his son is a gift, and no tax is required on the gift. Let’s first look at which income is subject to tax.

According to Article 2 of the "Personal Income Tax Law": The following personal income must be paid personal income tax:

(1) Wage and salary income;

(2) Income from labor remuneration;

(3) Income from royalties;

(4) Income from royalties;

(5) Income from business operations;

(6) Income from interest, dividends, and bonuses;

(7) Income from property leasing;

(8) Income from property transfer;

For a father to transfer 1 million to his children, many people may understand that this is transfer income, but in fact it is not. The so-called transfer income refers to the income obtained from selling the property in your name to others in some way, such as selling a house or land to others. Only in this case do you need to pay relevant taxes and fees.

In reality, only income generated by “transactional nature” needs to pay personal income tax. For example, wage income is the income we get from exchanging labor services, operating income is the income we get from selling goods or services, royalties are the income we get from exchanging our own works or knowledge, etc.

When parents transfer 1 million to their children, this does not involve any exchange at all. It is more just a transfer of money between different people. If the transfer requires individual tax, then China needs to pay it every year. The personal tax is too much. According to this logic, if I borrow money from others and return the money to others, they should pay personal tax after receiving the money. This obviously does not make sense.

This is also an important reason why some people have a relatively high monthly salary, but need to pay a relatively low personal income tax, because his unit may apply for a relatively low level when declaring personal income tax. Report it to him. For example, a person's monthly salary may reach 10,000 yuan, but the salary paid by the company through the corporate account is only 5,000 yuan, and the remaining 5,000 yuan is transferred through the personal account of the legal person or company executive, which can avoid personal tax of production. In reality, many private enterprises actually do this.

It is actually difficult for the tax department to trace this practice, because it is difficult for you to judge which transaction is real salary income and which transaction is just a transfer between individuals. Therefore, in the end, when the tax department determines the amount of tax payable income, most of the calculations are based on the amount declared by the company, rather than everyone's true salary income.

This approach also leaves many corporate legal persons with loopholes to exploit. For example, some business owners will earn millions next year, but the salary they pay themselves is only a few thousand yuan, and the personal income tax they declare is only a few thousand yuan. However, some of the expenses he usually spends on eating, drinking and having diarrhea are all paid for by the company through reimbursement, which can not only reduce corporate income tax, but also reduce personal income tax.

As we mentioned earlier, if this 1 million yuan is a reasonable and legal source of income for the father, no one will restrict how he spends it, and he will not pay any taxes if he transfers it to his children. But if the 1 million is transferred to the children through a company in the father's name, this is not a simple gift, but no different from ordinary income. At this time, personal income tax needs to be paid. In reality, some people may indeed do this.

For example, some parents have companies under their names. In order to reduce corporate income tax or personal income tax, they may make up some transaction contracts with their children, and then transfer the money to relevant bank cards controlled by their children. This kind of false transaction itself is an act of tax evasion, so not only do you have to pay personal tax, but in serious cases you may be fined.