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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 2014/15.)

 

Salaries Tax payable

$

Salaries income

400,000

Less: Basic allowance

(120,000)

Net chargeable income

280,000

Tax thereon at progressive rate

35,600

Less: 75% tax reduction (capped at $20,000) (Note)

(20,000)

Tax payable

15,600

 

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

(120,000)

Net chargeable income

180,000

Tax thereon (at progressive rates)

18,600

Less: 75% tax reduction (capped at $20,000) (Note)

(13,950)

Tax payable

4,650

By electing personal assessment, your tax liability reduced by $10,950 (i.e. $15,600  $4,650) because you business loss can be utilised to set off against your other assessable income in the year.

 

(Note) For 2014/15, 75% of the final tax payable under profits tax, salaries tax and tax under personal assessment would be waived, subject to a ceiling of $20,000 per case.

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