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 2005/06.)
Salaries Tax payable |
$ |
Salaries income |
400,000 |
Less: Basic allowance |
(100,000) |
Net chargeable income |
300,000 |
Tax payable at progressive rate: |
First 90,000 x (2%-14%) |
7,200 |
|
Balance 210,000 x 20% |
42,000 |
|
|
49,200 |
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 |
(100,000) |
Net chargeable income |
200,000 |
Tax payable at progressive rate: |
First 90,000 x (2%-14%) |
7,200 |
|
Balance 110,000 x 20% |
22,000 |
|
|
29,200 |
By choosing Personal Assessment, your tax liability is reduced by $20,000 because your business loss can be set off against your other assessable income for the year.
|