4. The profit of my sole-proprietorship business was assessed at $460,000. My wife received a monthly rent of $10,000 from a property under mortgage. She paid mortgage interest of $56,000 during the year. How is Personal Assessment applied to a married couple?
(Note: The following calculation is based on the tax rates for the year of assessment 2022/23.)
| Tax payable under Personal Assessment | $ | |
| Your business profits | 460,000 | |
| Your wife's property income: | $ | |
| Net assessable value ($10,000 x 12 x 80%) | 96,000 | |
| Less: Mortgage interest | (56,000) | 40,000 |
| Chargeable income | 500,000 | |
| Less: Married person's allowance | (264,000) | |
| Net chargeable income | 236,000 | |
| Tax thereon (at progressive rate) | 22,120 | |
| Less: 100% tax reduction (capped at $6,000) (Note) | 6,000 | |
| Tax payable | 16,120 | |
| Your share of tax payable | |
| ($16,120 x 460,000 / 500,000) | 14,830 |
| Your wife's share of tax payable | |
| ($16,120 x 40,000 / 500,000) | 1,290 |
(Note) For 2022/23, 100% of the final tax payable under Profits Tax, Salaries Tax and tax under Personal Assessment would be waived, subject to a ceiling of $6,000 per case.
For the year of assessment up to 2017/18, where a taxpayer is married and is not living apart from his/her spouse, and both of them have income assessable to tax, election for Personal Assessment must be made by the couple jointly. Separate taxation for husband and wife is alternatively applicable under Personal Assessment from the year of assessment 2018/19 onwards.
If Joint Personal Assessment is selected, the total income of an individual, as appropriately reduced, will be aggregated with that of his/her spouse to arrive at the joint total income of the couple for assessment purposes. Normally, the tax payable on the Joint Assessment is proportionally allocated to the husband and the wife on the basis of their respective reduced total income, and a notice of assessment and a demand for payment will be issued to each of them.
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