TNC Reef Week

Client Advisory on Income Tax Calculation

The Income Tax threshold for salaried workers and sole proprietorship is $36,000 per annum or $3,000 per month. This means that the first $3,000 of an employee’s monthly salary is exempt from the calculation of the tax due. Further, there are two rates applicable within salary bands.

Effective 1 January 2017, the rates are as follows:

  • A rate of 10% of tax is applicable on income in excess of $3,000 per month or $36,000 per annum, up to $5,000 per month or $60,000 per annum
  • An amount in excess of $5,000 per month or $60,000 per annum is subject to a 30% tax rate

MONTHLY COMPUTATION

Example 1

Monthly Salary $3,500.00
Monthly Tax Exemption $3,000.00
Total amount subject to tax: ($3,500 – $3,000) $500.00
Amount subject to tax at 10% $500.00
Amount subject to tax 30% $0.00
Monthly Income Tax Payable: ($500.00 x 10%) $50.00

 

Example 2

Monthly Salary $5,500.00
Monthly Tax Exemption *$3,000.00
Total amount subject to tax: ($5,500 – $3,000) $2,500.00
Amount subject to tax 10% **$2,000.00
Amount subject to tax 30%: ($2,500 – $2,000) $500.00
Monthly Income Tax Payable: ($2,000 x 10%) + ($500 x 30%)  $350.00

* $36,000 annual threshold / 12 months per year = $3,000 monthly threshold

** Monthly 10% income bracket: $5,000 ($60,000 / 12) – $3,000 ($36,000 / 12)
As a result, the most assessable income that can be taxed at 10% is $5,000 – $3,000 = $2,000


FORTNIGHTLY COMPUTATION

Example 1

Fortnightly Salary $1,500.00
Fortnightly Tax Exemption *$1,385.00
Total amount subject to tax: (1,500 – $1,385) $115.00
Amount subject to tax 10% $115.00
Amount subject to tax 30% $0.00
Fortnightly Income Tax Payable: ($115 x 10%) $11.50

 

Example 2

Fortnightly Salary $3,000.00
Fortnightly Tax Exemption *$1,385.00
Total amount subject to tax: ($3,000 – $1,385) $1,615.00
Amount subject to tax 10% **$923.00
Amount subject to tax 30%: ($1,615 – $923) $692.00
Fortnightly Income Tax Payable: ($923 x 10%) + ($692 x 30%)  $299.90

* $36,000 annual threshold / 26 fortnights per year = $1,385 fortnightly threshold 

** Fortnightly 10% income bracket: $1,385 ($36,000 / 26) – $2,308 ($60,000 / 26)
As a result, the most assessable income that can be taxed at 10% is $2,308 – $1,385 = $923


WEEKLY COMPUTATION

Example 1

Weekly Salary $800.00
Weekly Tax Exemption *$692.00
Total amount subject to tax: ($800 – $692) $108.00
Amount subject to tax 10% $108.00
Amount subject to tax 30% $0.00
Weekly Income Tax Payable: ($108 x 10%) $10.80

 

Example 2

Weekly Salary $2,000.00
Tax Exemption *$692.00
Total amount subject to tax: ($2,000 – $692) $1,308.00
Amount subject to tax 10% **$462.00
Amount subject to tax 30% ($1,308 – $462) $846.00
Weekly Income Tax Payable: (462 x 10%) + (846 x 30%) $300.00

* $36,000 annual threshold / 52 weeks per year = $692 weekly threshold 

** Weekly 10% income bracket: $692 ($36,000 / 52) – $1,154 ($60,000 / 52)
As a result, the most assessable income that can be taxed at 10% is $1,154 – $692 = $462


Inland Revenue Division
Ministry of Finance

Netherlands Insurance

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