Salaries tax (rates are always given)
A standard method from Further applications: the steps and worked examples.
Steps
- Net chargeable income = income − deductions − allowances.
- Apply the given rates band by band (progressive rates).
- Compare with the standard rate if the question says to; the tax is the lower one.
Worked examples
Example 1: Salaries tax with made-up rates.
The question gives: first $50 000 at 2%, next $50 000 at 6%, next $50 000 at 10%, the rest at 14%. Net chargeable income is $180 000.
50 000 × 2% = 1 000
50 000 × 6% = 3 000
50 000 × 10% = 5 000
30 000 × 14% = 4 200
tax = $13 200For the whole topic, read Further applications: key points, common mistakes and how the DSE tests it.