Salaries Tax
Taxation
What income
needs to be taxed
(Assessable income):
Directors' emoluments, employee salaries, commissions, bonuses, additional rewards, pensions, employee benefits ...
Employee benefits
For example, employer provides the employee a residence (A portion of the salary is given in the form of rental payment)
The Quater value will be included in the assessable income
Quater value = [total salaries minus expenses (but not self-education expenses)] x 10%
Deductions
- There are three main categories of deductions from assessable income:
Expenses deduction, concessionary deductions and eligible allowances
1. Expenses deductions
- Outgoings and expenses that are wholly, exclusively and necessarily incurred in the production of the assessable income.
- Self-education expenses (up to $ 100,000)
2. Concessionary deductions
- Approved Charitable donations
- Mandatory Provident Fund (up to $18,000)
- Home Loan Interest (up to $100,000)
- Domestic Rent (up to $100,000)
- Elderly Residential Care Expenses (up to $100,000)
- Qualifying Premiums Paid under Voluntary Health Insurance Scheme (VHIS) Policy (up to $8,000)
- Qualifying Annuity Premiums and Tax Deductible MPF Voluntary Contributions (up to $60,000)
3. Eligible Allowances (2022/23) | |
Basic | $132,000 |
Married person | $264,000 |
Child | $120,000 |
Child born during the year | $120,000 |
Dependent Brother and Sister | $37,500 |
Additional Dependent Parent/Grandparent (resided with you whole year)over 60 | $50,000 |
Dependent Parent/Grandparent over 60 | $50,000 |
Additional Dependent Parent/Grandparent (resided with you whole year)over 55 | $25,000 |
Dependent Parent/Grandparent over 55 | $25,000 |
Single Parent | $132,000 |
Personal Disablity | $75,000 |
Disabled Dependent | $75,000 |
Salaries Tax Calculation (2020/21) | ||
Tax calculated cannot exceed 15% (Standard Rate) of the Net Chargeable Income | ||
Progressive Rate On the First $50,000 2% On the Next $50,000 6% On the Next $50,000 10% On the Next $50,000 14% Remainder 17% Tax Reduction 100% deduction (maximum $6,000 relief) Net Chargeable Income = Assessable Income - deductions - allowances | Standard Rate 15% of Net Assessable Income Net Assessable Income = Assessable Income - deductions |
Joint assessment
If a spouse earns yearly income less than $132,000 (Basic Allowance), he or she has no tax to pay. In this case, the couple can elect joint assessment where both yearly income will be combined for assessment. The couple enjoy married person allowance $264,000. As a result, the overall tax payment will be reduced.