In the previous articles, we discussed what tax is and the different tax types. Today, we present you the 4 steps of how your tax gets calculated.
These steps are helpful for those of you who are independent workers or have a business.
Step 1 - Is your income Personal or Corporate?
Before you scroll down to have a peek at the tax equation, you have you know what part of your income is being taxed.
Step 2 - Earn enough to incur tax?
If you earn below the required wage for tax, your pay will be exempt from tax.
During this assessment, it is also a good time to see if you qualify for any exemptions.
Step 3 - Know your tax rate
Know your tax rate to avoid a surprise when your pay is lower than expected.
Types of tax rates include:
Voila! The tax equation
Once you know all the figures, type them in your calculator as:
**(taxable amount - deductions & relief) x tax rate% = payable tax amount **
REMEMBER stay on top of your taxes. Keep a calendar or set a reminder on you phone for upcoming payments. If you miss the deadline, you will incur late penalitiy fees, or even get into trouble with the law.
If all this tax business is still confusing, head on over to smartfinance.my or watch the video below:
Why should I sign up for SmartFinance.my?
- It’s free to join
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- Free consultation with any finance planner listed
- Short lessons teach you about smart finance with a learn at your own pace layout.