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Finance6 min read

The basis of personal income tax: where to start, how to use the special deductions

Many have paid unjust taxes, but only because no special deductions have been declared on a case-by-case basis, and legal tax avoidance begins with the filing of a form.

The starting point for the personal income tax of our residents is $5,000 per month, which is partially based on the seven-degree excess progressive tax rate. But what really affects the tax burden is deductions: in addition to special deductions such as five insurance premiums, there are special deductions for children ' s education, continuing education, medical care, interest or rent on housing loans, old-age maintenance, and care for children under three years of age, which can be legally reduced by a declaration.

The most easily omitted deductions.

  • Interest and rent on housing loans can only be divided into one and declared to the highest amount
  • Old-age support: the share of a non-independent child with a brother or sister
  • Medical treatment for major diseases: deduction of over-insured reimbursement within limit
  • Continuing education: Qualifications for academic education and vocational qualifications

Specific deductions are made through a tax APP, which is reported at the time of the annual remittance, and may be added before 30 June of the following year. Reasonable use of the deduction is equivalent to a disguised increase, and the savings can be shifted to [establishment of contingency fund] (/building-emergency-fund) or [initiation of a compound investment] (/compund-interest-investing). The credit-related deduction details are proposed to be planned against the [early-loan-repayment-strategy] (/early-loan-repayment-strategy) because the repayment itself can generate deductible interest.

The end-of-year awards may be taxed separately or combined, and the difference may be as high as thousands of dollars, depending on which one is more provincial.

Cross-income type focus

The combination of wages, labour payments, manuscripts and royalties is a year-on-year tax on the combined proceeds, so that those with multiple sources of income are more concerned with calculating their contributions, avoiding prepayment and even stalling. For exchange rate-related offshore income declarations, reference is made to [currency-exchange notes] (/currency-exchange-tips). The overall planning approach can be found in [how to compare interest rates on mortgages] (/compare-loan-interest-rates).