Gross income minus reliefs gives chargeable income. Tax is calculated on chargeable income, and any rebate is taken off the tax afterwards.
This lesson is part of SPM Mathematics taxation. It uses the band-by-band method from calculating a tax amount from supplied data, with the same fictional table. All figures are invented for practice.
What is the order of steps?
The order is fixed: gross income, then subtract reliefs to get chargeable income, then use the table to get the tax, then subtract any rebate to get tax payable. Write the four labels down before you calculate anything.
The table from the previous lesson gives 0% on the first RM10 000, 4% on the next RM20 000, 9% on the next RM20 000 and 15% above RM50 000. Tax on the first RM30 000 is RM800.
Worked example: RM58 000 gross income
Here is an original situation. Hafiz has an annual employment income of RM58 000. The question gives personal relief RM8 000, medical relief RM1 500 and education relief RM2 000, and a tax rebate of RM100.
Step 1, total relief. 8 000 + 1 500 + 2 000 = RM11 500.
Step 2, chargeable income. 58 000 − 11 500 = RM46 500.
Step 3, tax. The first RM30 000 gives RM800. The remaining 46 500 − 30 000 = RM16 500 at 9% gives RM1 485. Tax = 800 + 1 485 = RM2 285.
Step 4, rebate. 2 285 − 100 = RM2 185 payable.
The mistake that costs marks
The first common slip is using gross income in the table. Charging RM58 000 gives 2 600 + 8 000 × 15% = 2 600 + 1 200 = RM3 800, which overstates the tax by RM1 515.
The second slip is subtracting relief from the tax. Writing 2 285 − 11 500 gives a negative tax, which should alert you straight away.
| Step | Wrong | Right |
|---|---|---|
| Income used in the table | RM58 000 | RM46 500 |
| Tax before rebate | RM3 800 | RM2 285 |
| Where relief acts | On the tax | On the income |
A relief and a rebate are not equal
Suppose a person is in the 9% band. A relief of RM1 000 lowers chargeable income by RM1 000, which saves 1 000 × 9% = RM90 in tax.
A rebate of RM1 000 lowers the tax bill by the whole RM1 000. So the same number can be worth very different amounts, depending on which word the question uses.
Check yourself
Mei Ling earns RM36 000 a year. Reliefs given are RM6 000 and RM2 500, and a rebate of RM50 is given. Using the same table, find her tax payable.
Answer
Total relief = 6 000 + 2 500 = RM8 500. Chargeable income = 36 000 − 8 500 = RM27 500.
The first RM10 000 is 0%. The next 27 500 − 10 000 = RM17 500 is taxed at 4%: 17 500 × 0.04 = RM700.
Rebate: 700 − 50 = RM650 payable.
What to study next
Try the taxation mathematics practice set, where chargeable income is hidden inside each question. For property and sales examples, see checking numerical property and consumption tax examples.
If you want a teacher to watch you work through these layers, see online one-to-one Mathematics tuition.