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
