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QuestionMiss Ma's income rises by 6% from \$420000. Calculate the percentage change in her salaries tax payable with fixed allowances.

Studdy Solution

STEP 1

Assumptions1. Miss Ma's annual income last year was \$420,000. Her salaries tax allowance was \$420,0003. This year, her annual income increases by6%
4. Her salaries tax allowance remains unchanged5. The tax rate is as follows% on the first \$40,000,7% on the next \$40,000,12% on the next \$40,000, and17% on the remainder

STEP 2

First, we need to calculate Miss Ma's taxable income for last year. This is done by subtracting her tax allowance from her income.
Taxable incomelast year=Incomelast year−Tax allowanceTaxable\, income_{last\, year} = Income_{last\, year} - Tax\, allowance

STEP 3

Now, plug in the given values for the income and tax allowance to calculate the taxable income for last year.
Taxable incomelast year=$420,000−$420,000Taxable\, income_{last\, year} = \$420,000 - \$420,000

STEP 4

Calculate the taxable income for last year.
Taxable incomelast year=$420,000−$420,000=$0Taxable\, income_{last\, year} = \$420,000 - \$420,000 = \$0

STEP 5

Next, we need to calculate Miss Ma's income for this year. This is done by increasing her last year's income by%.
Incomethis year=Incomelast year×(1+Increase percentage)Income_{this\, year} = Income_{last\, year} \times (1 + Increase\, percentage)

STEP 6

Convert the percentage to a decimal value.
6%=0.066\% =0.06Incomethis year=$420,000×(1+0.06)Income_{this\, year} = \$420,000 \times (1 +0.06)

STEP 7

Calculate the income for this year.
Incomethis year=$420,000×1.06=$445,200Income_{this\, year} = \$420,000 \times1.06 = \$445,200

STEP 8

Now, we need to calculate Miss Ma's taxable income for this year. This is done by subtracting her tax allowance from her income.
Taxable incomethis year=Incomethis year−Tax allowanceTaxable\, income_{this\, year} = Income_{this\, year} - Tax\, allowance

STEP 9

Now, plug in the given values for the income and tax allowance to calculate the taxable income for this year.
Taxable incomethis year=$445,200−$420,000Taxable\, income_{this\, year} = \$445,200 - \$420,000

STEP 10

Calculate the taxable income for this year.
Taxable incomethis year=$445,200−$420,000=$25,200Taxable\, income_{this\, year} = \$445,200 - \$420,000 = \$25,200

STEP 11

Now, we need to calculate the tax payable for this year. The first \$40,000 is taxed at%, the next \$40,000 at7%, the next \$40,000 at%, and the remainder at17%.
Since her taxable income is \$25,200, which is less than \$40,000, only the% rate applies.
Taxthis year=Taxable incomethis year×%Tax_{this\, year} = Taxable\, income_{this\, year} \times\%

STEP 12

Convert the percentage to a decimal value.
2%=0.022\% =0.02Taxthis year=$25,200×0.02Tax_{this\, year} = \$25,200 \times0.02

STEP 13

Calculate the tax for this year.
Taxthis year=$25,200×0.02=$504Tax_{this\, year} = \$25,200 \times0.02 = \$504

STEP 14

Now, we need to calculate the percentage change in her salaries tax payable. This is done by subtracting last year's tax from this year's tax, dividing by last year's tax, and multiplying by100%.
Since her tax last year was \$0, the percentage change is simply the tax this year divided by and multiplied by100%.
Percentage change=Taxthis year−Taxlast yearTaxlast year×100%Percentage\, change = \frac{Tax_{this\, year} - Tax_{last\, year}}{Tax_{last\, year}} \times100\%

STEP 15

Now, plug in the given values for the tax this year and last year to calculate the percentage change.
Percentage change=$504−$0$×100%Percentage\, change = \frac{\$504 - \$0}{\$} \times100\%

STEP 16

Calculate the percentage change.
Percentage change=$504×100%=50400%Percentage\, change = \$504 \times100\% =50400\%The percentage change in Miss Ma's salaries tax payable is50400%.

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