What does 'self-assessment' mean in tax compliance?

Self-assessment in tax compliance refers to a system in which the taxpayer is responsible for calculating their own tax liability and submitting their tax return based on that calculation. This approach places the onus on individuals or businesses to ensure their tax returns are accurate and submitted on time, reflecting their income and the taxes owed to the government.

Under this system, taxpayers must keep appropriate records and documentation to support their assessments. This responsibility means that taxpayers need to be aware of tax laws and regulations that apply to their financial situations, ensuring they remain compliant with tax obligations. The self-assessment process also includes the calculation of available deductions and credits, allowing individuals and businesses to potentially reduce the amount of tax due.

The other choices do not accurately describe self-assessment. Tax reduction programs relate to incentives from the government, calculating tax liabilities by professionals pertains to their role in providing services to clients rather than the self-assessment process itself, and self-assessment applies to both individual and corporate taxpayers, not just corporations.