Clarification on Taxation [1]
Tuesday, September 9, 2008 - 20:23. Updated on Thursday, September 11, 2014 - 16:05.
Editor,
In your article -
Elected members upset that new tax rate hits MPs pockets
08 Sep 2008, 15:36
You wrote:
[quote] "The Prime Minister used the Cabinet Ministers' parliamentary salaries as an example. He said that a minister's Basic Salary was $32,000. The first $7,400 was tax-free, therefore the remaining $24,600 was taxed 10 per cent. He said that even if the allowances of $5,400 were added on it was only going to be the remaining figures above $30,000 that would be taxed 20 per cent." [end of quote]
Unfortunately this is not the correct explanation of the new taxation.
An income of $32,000 would be taxed as follows:
$7,400 are tax free
$22,600 are taxed at 10% - therefore the tax amounts to $2,260
and the $2,000 exceeding $30,000 are taxed at 20% = $400
The total tax on an income of $32,000 therefore would amount to $2,660 - at an effective tax rate of 8.31% - and that's one of the lowest income tax rates in the world.
Individual Tax rates
Chargeable Income Tax on this Income
$1 - $7,400 Nil
$7,401 - $30,000 10 seniti for each $1 over $7,400
$30,001 and over $2,260 plus 20 seniti for each $1 over $30,000
Assume this helps to clarify the situation.
Best regards,
Frank Schaper
CEO Homegas Ltd
homegas [at] kalianet [dot] to