How 16 Years Old Calculates Income Tax


During this period of time, a Singapore website is ranked high in the search engines. Do you know which website? With the deadline for filing tax to be on 15 April, many people are flocking to IRAS to do their last minute e-file.

IRAS-Yahoo

For a 15 - 16 years old teenager, he gets transformed into a tax officer (though a really entry level one) where he learns the basic in calculating the income tax.

Let's use the following question as an example,

Income-Tax

Chargeable income = Gross annual income (inclusive other income streams like rental etc) minus reliefs

Mr Tan income is only from his work, so gross annual income

= 3250 x 12 = 39 000

Total reliefts

=3000 + 2000 + 2000 x 2 + 7800 + 600 + 2/100 x 39 000

=18 180

Chargeable Income = 39 000 - 18 180 = 20 820

We can refer to the table of tax rate to calculate the amount of income tax Mr Tan has to pay.

Income-Tax

We choose the one circled in red:

First 20 000: $0

Next 820 (20 820 - 20 000): 3.5/100 x 820 = $28.70

I hope you find this post useful. Leave me your comment on Income Tax. Have you learnt the concept? Do you know it's under the topic of 'Everyday Math'?

Hi, I'm Ai Ling Ong. I enjoy coaching students who have challenges with understanding and scoring in 'O' Level A-Maths and E-Maths. I develop Math strategies, sometimes ridiculous ideas to help students in understanding abstract concepts the fast and memorable way. I write this blog to share with you the stuff I teach in my class, the common mistakes my students made, the 'way' to think, analyze... If you have found this blog post useful, please share it with your friends. I will really appreciate it! :)

4 Responses to How 16 Years Old Calculates Income Tax

  1. Hi,

    I do note that this topic is under everyday maths. However do remember about the syllabus which is produced by O-level Cambridge.

    This is not really relevant to the topics that they were suppose to know about.

    Next thing is, tax isn't something that a 15/16 year kid will know. Even someone who study Principle of Accounting also would not know much about it.

    As there are alot of claims that could be made by the family. Such as Working Mother Child Relief. Without claiming this, will end up in paying of higher tax each year.

    Please remove this post. It is really irrelevant and this will only misled parents. In future this will only cost the reputation of the company to be reduced.

    Please do take note of every comment made by me and the parents. I only feel that it's a shame that the company did not even know how tax/accounting works in the first place. Especially even after commencing business for quite a long time.

    Next thing is may i know if the company is registered with ACRA? As i did not see any business registration stated on the enrollment forms and on the website.

    Do take note as every move of the company is very important to us consumers.

    Sincerely,
    MJ

    Reply

    Ai Ling Reply:

    MJ,

    Thank you for your comments.

    I do agree with you that most 15/16 years old teenagers aren't familiar with the 'real' taxation matters which is the reason for them to learn some basic concepts on taxation as stated in MOE syllabus for 'O' Level Elementary Mathematics.
    Refer to http://seab.gov.sg/oLevel/2011Syllabus/4016_2011.pdf (Page 7 out of 17)

    You will be pleasantly surprised taxation is part of the syllabus.

    You should check with your child if he/she has learnt this section. Some schools taught them in Secondary 3 or 4, some even introduced it at lower Secondary.

    The question I've provided in this post is in fact adapted from a recent school exam question. I'm sure most parents like you after reading this post are aware the concept students are being tested is a simplification of taxation matters. There are many other parameters for consideration in taxation.

    So this post is definitely relevant for all 'O' Level E-Maths students.

    Thanks for pointing out about our company registration details, I will bring this matter to my management team as this is the first time I receive this feedback as most students and parents know us for a long time through our blogs or are referred by friends, relatives and school teachers for our programmes.

    I belong to Winners Education Group, registered with ACRA since 2008. Our registration number is 53116984K.
    You can verify here: http://www.bizfile.gov.sg by typing WINNERS EDUCATION GROUP , search by name.

    I hope this has clarified any doubts you have.

    Thank you.

    Reply

  2. I only recently got tested on taxation which I was not taught at all, this example really help me a lot, as I had no idea where I could go to find out how to do this questions, and I'm preparing for Is this year. I just have a minor question which is, what is the difference between income tax payable and chargeable income for the year of assessment in a certain year. Keep up the good work :)

    Reply

    Ai Ling Ong Reply:

    The amount of taxes a person has to pay is based on his chargeable income.
    Chargeable income = Total income (eg employment, rental of properties etc) - Total reliefs.

    Income tax payable is the amount of money this taxpayer has to pay to the authority.

    Reply

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