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kev7161
Joined: 06 Feb 2004
Posts: 5880
Location: Suzhou, China
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 Posted: Tue May 02, 2006 1:16 am Post subject: |
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| Actually, the tax liability is 355. You forgot to deduct the 125 standard deduction. |
Where's this 125 coming from? I've not seen this in any of the web pages I've read. |
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Bayden
Joined: 29 Mar 2006
Posts: 988
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| Posted: Wed May 03, 2006 6:17 am Post subject: |
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| I think it's an error. |
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Joe C.
Joined: 08 May 2003
Posts: 993
Location: Witness Protection Program
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| Posted: Wed May 03, 2006 6:57 am Post subject: |
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| kev7161 wrote: |
| Quote: |
| Actually, the tax liability is 355. You forgot to deduct the 125 standard deduction. |
Where's this 125 coming from? I've not seen this in any of the web pages I've read. |
It comes from the tax law. There is a "standard deduction" that excludes the first 800 RMB of otherwise taxable income from being taxed.
Or, as shown in Clark's webpage:
"(Note: The monthly amount of income taxable as the term is used in this Schedule means the remainder after deducting 800 yuan or additional deduction for expenses from the monthly gross income in accordance with the provisions of Article 6 of this Law.)"
This does tend to imply that you cannot have the "standard deduction" while also presenting receipts for allowable expenditures, but in reality I have never had an employer who didn't allow both to go through. |
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Bayden
Joined: 29 Mar 2006
Posts: 988
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| Posted: Wed May 03, 2006 7:01 am Post subject: |
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| Joe C. wrote: |
| kev7161 wrote: |
| Quote: |
| Actually, the tax liability is 355. You forgot to deduct the 125 standard deduction. |
Where's this 125 coming from? I've not seen this in any of the web pages I've read. |
It comes from the tax law. There is a "standard deduction" that excludes the first 800 RMB of otherwise taxable income from being taxed.
Or, as shown in Clark's webpage:
"(Note: The monthly amount of income taxable as the term is used in this Schedule means the remainder after deducting 800 yuan or additional deduction for expenses from the monthly gross income in accordance with the provisions of Article 6 of this Law.)"
This does tend to imply that you cannot have the "standard deduction" while also presenting receipts for allowable expenditures, but in reality I have never had an employer who didn't allow both to go through. |
That's interesting, I'll have to bring that up with the accountant. |
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bendan
Joined: 18 Jun 2004
Posts: 739
Location: North China
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| Posted: Wed May 03, 2006 12:43 pm Post subject: |
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The deductions are just quick calculation aids, not a formal figure decided by the government.
If I earn 8000, then 3200 is taxable. Instead of calculating 5% of the first 500, then 10% of the next 1500, then 15% of the next 1200, I can just calculate all 3200 at 15% and then subtract the quick deduction figure (for someone in the 15% band) of 125. It comes to the same amount. You are having a discussion about nothing.
In case you don't believe me, the difference between taxing the first 500 at 5% and at 15% is 50 yuan. The difference between taxing the next 1500 at 10% and 15% is 75 yuan. Add them together: you have 125 yuan. |
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Joe C.
Joined: 08 May 2003
Posts: 993
Location: Witness Protection Program
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| Posted: Wed May 03, 2006 1:21 pm Post subject: |
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| bendan wrote: |
| The deductions are just quick calculation aids, not a formal figure decided by the government. |
Although your math is correct, the fact remains that these exact amounts are decided by the government. The tax instruction bulletin issued by the Provincial Tax Bureau of Guangdong Province states these amounts as "standard deductions."
In any event, whether you term them "calculation aids" or the Tax Bureau terms them "standard deductions", the result is the same. The only difference is that you are implying a motive for the figures that the tax legislation as written does not support. |
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bendan
Joined: 18 Jun 2004
Posts: 739
Location: North China
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| Posted: Wed May 03, 2006 2:30 pm Post subject: |
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| I don't think the government legislation mentions such deductions at all, because there's no reason to. They just decide the bands and the rates. Leaflets from the tax offices do mention them, but they are actually called "quick calculation deductions" when I've seen them. They are obviously derived from the bands and rates, not independently decided. |
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Bayden
Joined: 29 Mar 2006
Posts: 988
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| Posted: Thu May 04, 2006 2:05 am Post subject: |
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| bendan wrote: |
The deductions are just quick calculation aids, not a formal figure decided by the government.
If I earn 8000, then 3200 is taxable. Instead of calculating 5% of the first 500, then 10% of the next 1500, then 15% of the next 1200, I can just calculate all 3200 at 15% and then subtract the quick deduction figure (for someone in the 15% band) of 125. It comes to the same amount. You are having a discussion about nothing.
In case you don't believe me, the difference between taxing the first 500 at 5% and at 15% is 50 yuan. The difference between taxing the next 1500 at 10% and 15% is 75 yuan. Add them together: you have 125 yuan. |
I really don't believe it's calculated this way.
The band you fall into, (10%, !5%, 20%,) decides the rate your entire taxable income is taxed at. I don't believe it's taxed incrementaly.
If you're earning 8000, then your taxable income is 3,200 which puts you in the 15% bracket. Your taxable 3,200 will be taxed at 15%. Not 5% for the first 500, 10% for the following 1,500 and 15% for the balance.
The entire 3,200 will be taxed at 15%. |
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Joe C.
Joined: 08 May 2003
Posts: 993
Location: Witness Protection Program
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| Posted: Thu May 04, 2006 3:26 am Post subject: |
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| Bayden wrote: |
| bendan wrote: |
The deductions are just quick calculation aids, not a formal figure decided by the government.
If I earn 8000, then 3200 is taxable. Instead of calculating 5% of the first 500, then 10% of the next 1500, then 15% of the next 1200, I can just calculate all 3200 at 15% and then subtract the quick deduction figure (for someone in the 15% band) of 125. It comes to the same amount. You are having a discussion about nothing.
In case you don't believe me, the difference between taxing the first 500 at 5% and at 15% is 50 yuan. The difference between taxing the next 1500 at 10% and 15% is 75 yuan. Add them together: you have 125 yuan. |
I really don't believe it's calculated this way.
The band you fall into, (10%, !5%, 20%,) decides the rate your entire taxable income is taxed at. I don't believe it's taxed incrementaly.
If you're earning 8000, then your taxable income is 3,200 which puts you in the 15% bracket. Your taxable 3,200 will be taxed at 15%. Not 5% for the first 500, 10% for the following 1,500 and 15% for the balance.
The entire 3,200 will be taxed at 15%. |
I agree. But whatever the real intentions are of the Tax Bureau, the final result is that it seems that the same results are obtained no matter which way one calculates. Whether this is coincidence or by design, who knows? |
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Malsol
Joined: 06 Mar 2006
Posts: 1976
Location: Lanzhou
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| Posted: Thu May 04, 2006 3:29 am Post subject: |
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| Whether this is coincidence or by design, who knows? |
You know.
I know.
We know.
After all, this IS China!  |
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bendan
Joined: 18 Jun 2004
Posts: 739
Location: North China
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| Posted: Thu May 04, 2006 6:28 am Post subject: |
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| Bayden wrote: |
I really don't believe it's calculated this way.
The band you fall into, (10%, !5%, 20%,) decides the rate your entire taxable income is taxed at. I don't believe it's taxed incrementaly.
If you're earning 8000, then your taxable income is 3,200 which puts you in the 15% bracket. Your taxable 3,200 will be taxed at 15%. Not 5% for the first 500, 10% for the following 1,500 and 15% for the balance.
The entire 3,200 will be taxed at 15%. |
I earn a variable amount each month, and I pay tax on my income. I've done this for several years now, and it has always been taxed incrementally, according to the scale, just as it is in my home country (though on a monthly, rather than annual basis here in China). If it is not incremental, someone on 6799 takes home about 100 yuan more than someone on 6801. That is not what happens.
Anyway, I guess we have different ideas about how it's calculated. As long as we're happy with our own situation, that's all that matters. |
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