Computing Income Tax
With effect from January 1, 2012 no deduction of Income Tax under the Pay As You Earn (P.A.Y.E) system should be made from the remuneration of employees whose gross income per month is fifty thousand dollars ($50,000) or less. This allowance is apportioned accordingly based on whether remuneration is earned daily, weekly, fortnightly or yearly.
The Threshold (Tax Free Allowance) as Per Pay Period
Set out below are some examples of how to calculate the Income Tax to be paid on remuneration earned.
John earns a daily wage of five thousand dollars Â ($5,000).
Wage - $5,000.00
less Allowance - ($1,644.00)
Chargeable Income $3,356.00
Income Tax due for each day is as follows: $3,356.00 x 33 …“% = $1,119.00 (chargeable income x rate of tax)
Alice earns a weekly wage of fourteen thousand dollars ($12,000).
Wage - $14,000.00
less Allowance - ($ 11,538.00)
Chargeable Income $ 2,462.00
Income Tax due for each week is as follows: $2,462.00 x 33 …“% =$821.00 (chargeable income x rate of tax)
Sue receives remuneration every fortnight of forty thousand dollars ($40,000)
Wage - $40,000.00
less Allowance - ($23,077.00)
Chargeable Income $16,923.00
Income Tax due every fortnight is as follows: $16,923.00 x 33 …“% = $5,640.00 (chargeable income x rate of tax)
Ravi is paid a monthly salary of two hundred thousand dollars ($200,000).
Salary - $200,000.00
less Allowance - ($50,000.00)
Chargeable Income $150,000.00
Income Tax due each month is as follows: $150,000 x 33 …“% = $49,995.00 (chargeable income x rate of tax)
Paul receives yearly income totals two million dollars ($2,000,000).
Income - $2,000,000.00
less Allowance - ($600,000.00)
Chargeable Income $1,400,000.00
Income Tax due for the year is as follows: $1,400,000 x 33 …“% = $466,620.00 (chargeable income x rate of tax)