XN000022-1977-03-21 — Page 5

MONDAY, MARCH 21, 1977

WORKINGS OF PERSONAL ALLOWANCES FOR SALARIES TAX EXPLAINED

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THE INLAND REVENUE DEPARTMENT TODAY EXPLAINED HOW A SALARIES TAX ASSESSMENT (AND PERSONAL ASSESSMENT) IS ARRIVED AT AFTER TAKING INTO CONSIDERATION THE PROPOSED NEW SUPPLEMENTARY PERSONAL ALLOWANCE,

IN HIS BUDGET SPEECH ON MARCH 2, THE FINANCIAL SECRETARY PROPOSED, AMONG OTHER TAX CONCESSIONS, A SUPPLEMENTARY PERSONAL ALLOWANCE OF $2,500 FOR A SINGLE PERSON AND $5,000 FOR A MARRIED PERSON WHICH WILL BE REDUCED AS THEIR INCOME RISES.

THIS MEANS THAT A SINGLE PERSON EARNING UP TO $12,500 OR A MARRIED PERSON EARNING UP TO $25,000 A YEAR WILL NO LONGER PAY SALARIES TAX.

HOWEVER, FOR EVERY DOLLAR OF INCOME IN EXCESS OF THE $12,500 IN THE CASE OF A SINGLE PERSON AND $25,000 IN THE CASE OF A MARRIED PERSON, THE SUPPLEMENTARY PERSONAL ALLOWANCE WILL BE REDUCED BY 20 CENTS UNTIL THE ALLOWANCE IS ELIMINATED AND THE TAXPAYER SIMPLY RECEIVES THE BASIC PERSONAL ALLOWANCE OF $10,000 OR $20,000 AS THE CASE MAY BE.

THE SUPPLEMENTARY ALLOWANCE WILL BECOME NIL WHEN A SINGLE PERSON'S YEARLY INCOME REACHES $25,000 AND WHEN A MARRIED PERSON'S YEARLY INCOME REACHES $50,000.

TO HELP THE PUBLIC UNDERSTAND BETTER THE ARITHMETIC OF THE ASSESSMENT, THE INLAND REVENUE DEPARTMENT GAVE THE FOLLOWING EXAMPLES I

EXAMPLES OF THE CALCULATION OF SALARIES TAX

WITH THE INCREASED ALLOWANCES

EXAMPLE 1.

SINGLE PERSON EARNING $22,000 A YEAR

SALARY:

$22,000

LESS SINGLE ALLOWANCE

12,500

(BASIC SUPPLEMENTARY ALLOWANCES)

$ 9,500

ADD: REDUCTION (20 PER CENT OF $9,500)

$ 1,900

NET CHARGEABLE INCOME

$11,400

TAX THEREON

$

640

NOTE: (ACTUAL SUPPLEMENTARY PERSONAL ALLOWANCE

IS THEREFORE $2,500 - $1,900

$600)

EXAMPLE 2 .****