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xjgirl
Joined: 02 Feb 2010
Posts: 242
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 Posted: Tue May 24, 2011 2:10 am Post subject: |
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| It's not very clear, but I think those figures below are the maximum amount that can be exempt from tax per month |
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Silent Shadow
Joined: 18 Oct 2007
Posts: 380
Location: A stones throw past the back of beyond
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| Posted: Tue May 24, 2011 4:52 am Post subject: |
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| xjgirl wrote: |
| It's not very clear, but I think those figures below are the maximum amount that can be exempt from tax per month |
xj, look at the link below. It sets out clearly how foreign employees are taxed in China. We laowai can earn 4800 yuan before tax starts to be taken from our salary. The percentage of tax taken out increases the more that we earn. Unfortunately, it doesn't touch on the issue of airfares, so its use is limited regarding this issue.
http://www.worldwide-tax.com/china/china_tax.asp
I'm putting this out there for anyone interested, or in the know. In my previous post, I asked if cash payments for airfare are taxed in China (not reimbursements for already bought tickets).I've since realized that I will, actually, get my airfare paid into my bank account. I need to know if the school can legally tax such a payment.
I apologize for a little hijacking of your thread,xj. |
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xjgirl
Joined: 02 Feb 2010
Posts: 242
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| Posted: Tue May 24, 2011 5:00 am Post subject: |
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but if you study the data i put up you will see that it is.
Even if it's considered a tax deductable this is negated by the fact that the
maximum amount you can claim is very low per month |
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xjgirl
Joined: 02 Feb 2010
Posts: 242
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| Posted: Tue May 24, 2011 5:13 am Post subject: |
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the 4800 figure is your tax free allowance
but these other(outrageously low) figures are forms of income exempt from tax |
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ymmv
Joined: 14 Jul 2004
Posts: 387
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| Posted: Tue May 24, 2011 5:38 am Post subject: |
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| xjgirl wrote: |
but if you study the data i put up you will see that it is.
Even if it's considered a tax deductable this is negated by the fact that the
maximum amount you can claim is very low per month |
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| but these other(outrageously low) figures are forms of income exempt from tax |
The "tax deductable" (sic) you mention relates to the calculation of the amount of tax using that tax form and has nothing to do with "deductions" and amounts of deductions.
Nor is the number a form of "income exempt from tax."
This has all been explained previously in a thread that should have been made a sticky, but was not. The post is here:
http://forums.eslcafe.com/job/viewtopic.php?t=66479
Go and read it.
The short version for purposes of this particular thread is:
Rates are graduated as your taxable income rises. So, for example, the first 500 is taxed at 5%, the next 1500 (500-2000) is taxed at 10%, etc. and on up.
But rather than having to go calculate the tax each bracket and then add them all up, the China Tax Bureau issued a "Quick Calculation Table". That's the table xjgirl is quoting from. Using the table, you find which bracket your total taxable income for the month falls. Then you apply that bracket's tax rate to the entire amount. Since not all taxable income is taxed at that rate, the table provides a "Quick Calc Deduction" number. It is called a Quick Tax Deduction, but it is not the same as a deduction from taxable income (for example allowable travel expenses, etc.). The Quick Calc Deduction represents the cumulative difference between income taxed at the bracket rate and income taxed at the lower bracket rates. That number is available to all taxpayers regardless. That number is subtracted from your Quick Calc tax to give you the total tax due.
Example:
Your total monthly income amounts to 25,000. You exclude the first 4,800 giving a total taxable income of 20,200.
Now, you look at the table. 20,200 falls in the 20,000-40,000 bracket. The tax rate for that bracket is 25% and the Quick Calc Deduction is 1,375.
The amount of tax due is:
(20,200 x 25%) - 1,375 = 3,675
You can double-check it and find the same result at:
http://chinajobline.com/index.php/tax-calculator.html
And you can go to the tax table, ignore the Quick Tax Deduction and calculate the tax in each bracket and add them all up...to the same result.
This still doesn't answer the original post.
Either the airplane reimbursement is taxable or it is not. If it is taxable, it is added into the taxable income for that month (salary-4800) and the tax is applied against that total taxable amount. If not, it's simply excluded-not taken into consideration in calculating taxable income.
I believe that airfare is only excludable if it's a direct reimbursement of actual air fare tickets purchased, and includable in taxable income if paid in cash in lieu of air tickets, but I can't cite a definitive source for that, so don't rely on that.
But you can rely on the tax calculation advice given above. Again, go to the original thread I cited for complete details, explanations, and citations. |
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xjgirl
Joined: 02 Feb 2010
Posts: 242
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| Posted: Tue May 24, 2011 6:04 am Post subject: |
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OK, GOOD WORK
so these figures are just a form of tool to help people calculate their tax
I was confused.
So where that leaves me is in trying to convince my finance dept
to make this end of year cash bonus income exempt from tax.
Since round-trip international flights are higher now than that actual cash bonus, i fear they'll never consent as that would mean the school would be admitting the bonus falls short of the price of airfare leaving them open to having to pay out more money in exchange for reciepts |
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mat chen
Joined: 01 Nov 2009
Posts: 494
Location: xiangtan hunan
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| Posted: Wed May 25, 2011 8:43 am Post subject: |
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xjgirl, make sure you get receipts with a government chop. China is like Korea twenty years ago. They will nickle and dime you to death in the end. The idea of paying taxes at the end of a contract is just a way of padding their pockets. This airline ticket should be paid at the start of a contract before you arrive.
To reiterate you must convince them to supply you with a reciept for your Chinese accountant. I guarantee you will get full payment. Better yet walk in with a Chinese accountant. It is the funniest thing because they must then make some sort of effort to deface you. |
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tomhume89
Joined: 15 Feb 2011
Posts: 103
Location: Changsha
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| Posted: Tue Oct 18, 2011 4:45 am Post subject: |
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Resurrecting a half-dead thread here, but...
I had the same issue- the school wanted me to pay tax on my 8,000RMB back in June. I said to them I'd never heard of anyone, anywhere in China paying tax (obviously I've just read this thread now).
I usually have a very good relationship with my school (still do) but neither of us were backing down on this. Ended up getting the headmaster involved who sided with me- airfare isn't supposed to be taxed as it's covering a cost. Even if they have to pay tax on it, they should be the ones paying, not you. |
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Silent Shadow
Joined: 18 Oct 2007
Posts: 380
Location: A stones throw past the back of beyond
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| Posted: Tue Oct 18, 2011 5:11 am Post subject: |
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| tomhume89 wrote: |
Resurrecting a half-dead thread here, but...
I had the same issue- the school wanted me to pay tax on my 8,000RMB back in June. I said to them I'd never heard of anyone, anywhere in China paying tax (obviously I've just read this thread now).
I usually have a very good relationship with my school (still do) but neither of us were backing down on this. Ended up getting the headmaster involved who sided with me- airfare isn't supposed to be taxed as it's covering a cost. Even if they have to pay tax on it, they should be the ones paying, not you. |
Well done, Tom.
My school taxed me on my airfare received for last year. It's the first time I've been taxed on airfare since I started teaching in China nine years ago.
Was your payment a refund for an already bought ticket, or was it a payment in advance?
Have you any links to official sources that clearly state that airfare payments in advance should not be taxed? If so, could you post them on this thread? It would be helpful to myself and others like me.
Thanks. |
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Lobster
Joined: 20 Jun 2006
Posts: 2040
Location: Somewhere under the Sea
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| Posted: Wed Oct 19, 2011 8:42 am Post subject: |
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Because some employers will tax your airfare reinbursement or demand that you furnish a chopped receipt, I'd make sure that airfare is paid in a lump sum without receipt required, and that the contract also states the amount after tax. When you're negotiaiting a contract, I'd suggest this approach.
RED |
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tomhume89
Joined: 15 Feb 2011
Posts: 103
Location: Changsha
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| Posted: Thu Oct 20, 2011 12:39 pm Post subject: |
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| Silent Shadow wrote: |
Well done, Tom.
My school taxed me on my airfare received for last year. It's the first time I've been taxed on airfare since I started teaching in China nine years ago.
Was your payment a refund for an already bought ticket, or was it a payment in advance?
Have you any links to official sources that clearly state that airfare payments in advance should not be taxed? If so, could you post them on this thread? It would be helpful to myself and others like me.
Thanks. |
Strange why it seems that taxing airfare seemed to crop up this year- first time in 4 years for me!
Mine was a refund- 8000RMB reimbursement.
I don't have anything official- the head coming down on my side was as official as it got I'm afraid!
The only thing I'd say for anyone else is make sure with the school before what the policy is! |
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Silent Shadow
Joined: 18 Oct 2007
Posts: 380
Location: A stones throw past the back of beyond
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| Posted: Fri Oct 21, 2011 9:15 am Post subject: |
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| tomhume89 wrote: |
| Silent Shadow wrote: |
Well done, Tom.
My school taxed me on my airfare received for last year. It's the first time I've been taxed on airfare since I started teaching in China nine years ago.
Was your payment a refund for an already bought ticket, or was it a payment in advance?
Have you any links to official sources that clearly state that airfare payments in advance should not be taxed? If so, could you post them on this thread? It would be helpful to myself and others like me.
Thanks. |
Strange why it seems that taxing airfare seemed to crop up this year- first time in 4 years for me!
Mine was a refund- 8000RMB reimbursement.
I don't have anything official- the head coming down on my side was as official as it got I'm afraid!
The only thing I'd say for anyone else is make sure with the school before what the policy is! |
Yes, good advice.
I think reimbursements are clear cut, regarding this issue. When it comes to fixed payments, though I want to know for certain that I am right, before I engage in any metaphorical desk thumping, and demand my full payment, from the school.
Thanks for your reply. |
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