Question

18. In 2012, Mr Goh earned a gross annual income

of $185 000. Of this $185 000, the amount that
will not be subjected to income tax is shown in the
following table:
Personal relief
Child relief
Parent relief
CPF contributions
$3000
$4000 per child
$5000 per parent
$18 600
Given that he lives with 1 child and 2 parents,
and that for the remaining income that will be taxed,
gross tax payable for the first $120 000 is $7950
and the tax rate for the rest is 15%, find his income
tax payable.

Answer 1

The Mr Goh's income tax payable is $12,960.

Step-by-step explanation:

To find Mr Goh's income tax payable, we need to calculate his taxable income first. Gross tax payable for the first $120,000 is $7,950 and the tax rate for the rest is 15%.

Step 1: Calculate the total amount of income that will not be subjected to income tax: $3,000 (personal relief) + $4,000 (child relief) + $5,000 (parent relief) + $18,600 (CPF contributions) = $30,600.

Step 2: Calculate the taxable income: $185,000 - $30,600 = $154,400.

Step 3: Calculate the income tax payable for the first $120,000: $120,000 x 0.065 (tax rate) = $7,800.

Step 4: Calculate the income tax payable for the remaining income: ($154,400 - $120,000) x 0.15 (tax rate) = $5,160.

Step 5: Add the income tax payable for the first $120,000 and the remaining income: $7,800 + $5,160 = $12,960.

Therefore, Mr Goh's income tax payable is $12,960.