#4965 - Taxation Of Individuals - Business Law and Practice

Income Tax 1) Total Income Calculation Cumulative total of all included income PS50,000 + PS2000 + PS1000 = PS53,000 Includes 1) Salary PS50,000 2) Bank interest Want it to be gross Bank interest - Gross PS2000 Bank interest - Net (have to convert to gross) PS1600 x 3) Dividends Want them to be gross 100 80 = PS2000 Dividends - Gross PS1000 Dividends - Net (have to convert to gross) PS900 x 100 90 Does not include 1) Gaming and betting prices 2) Income from ISAs 3) Income from a Child Trust Fund 4) Compensation for loss of employment up to PS30,000 5) Periodic compensation payments for PI payouts 6) Redundancy payments = PS1000 2) Net income Calculation Total income (1) MINUS allowable deductions PS53,000 MINUS PS7,000 Includes = PS46,000 1) Pension Scheme contributions Total = PS5000 2) Charges on income * Loans to buy an interest in a partnership * Loans to contribute capital to a partnership * Loans to buy shares in a close company * Loans to buy shares in an employee controlled company or invest in a co-operative Total = PS2000 3) Taxable income Calculation Net income (2) MINUS Personal allowance PS46,000 MINUS PS8,105 = PS37,895 Includes a) For all salaries below PS100,000, the PA is PS8,105 b) For all salaries above PS100,000 and below PS116,210 it is calculated: PS8,105 MINUS (PS110,000 - PS100,000) = PS5,000 2 c) For all salaries above PS116,210 there is no PA