3. If I suffered a business loss of $100,000 but received salaries income of $400,000 from a separate employment, can I pay less tax under Personal Assessment?
(Note: The following calculation is based on the tax rates for the year of assessment 2014/15.)
Salaries Tax payable |
$ |
|
Salaries income |
400,000 |
|
Less: Basic allowance |
(120,000) |
|
Net chargeable income |
280,000 |
|
Tax thereon at progressive rate |
35,600 |
|
Less: 75% tax reduction (capped at $20,000) (Note) |
(20,000) |
|
Tax payable |
15,600 |
Profits Tax payable |
$ |
Business profits (or losses) |
(100,000) |
Tax payable |
0 |
Tax payable under Personal Assessment |
$ |
|
Salaries income |
400,000 |
|
Business losses |
(100,000) |
|
Chargeable income |
300,000 |
|
Less: Basic allowance |
(120,000) |
|
Net chargeable income |
180,000 |
|
Tax thereon (at progressive rates) |
18,600 |
|
Less: 75% tax reduction (capped at $20,000) (Note) |
(13,950) |
|
Tax payable |
4,650 |
By electing personal assessment, your tax liability reduced by $10,950 (i.e. $15,600 – $4,650) because you business loss can be utilised to set off against your other assessable income in the year.
(Note) For 2014/15, 75% of the final tax payable under profits tax, salaries tax and tax under personal assessment would be waived, subject to a ceiling of $20,000 per case.