30% Income Tax Rate Applied to Aggregate Income
By: , June 23, 2016The Key Point:
The Facts
- Approximately, 12,000 persons representing 1% of all individuals earning an income would fall in this category.
- Commencing in July the 30% will be applicable to the aggregate income earned in excess of $6 million.
The Full Story
During the FY2016/17 Budget presentation, the Hon. Audley Shaw, Minister of Finance and the Public Service, announced that the Income tax threshold would be increased from $592,800 to $1,000,272.00. This in effect means that all pensioners, P.A.Y.E. self-employed and other individuals would benefit from the increase which takes effect July 1, 2016, with a further
increase to $1,500,096 on April 1, 2017. In addition to the tax break, an additional tax rate is to be applied to persons who earn over six million dollars ($6,000,000.00) resulting in a movement from 25% to 30% come July 1, 2016. Approximately, 12,000 persons representing 1% of all individuals earning an income would fall in this category.
Income tax is computed on an individual’s statutory income aggregated on a month to month basis based on the income tax employment regulations. Aggregate income means the total emoluments paid from January through to December.
Commencing in July the 30% will be applicable to the aggregate income earned in excess of $6 million. For example, if $500,000 is earned in January, $100,000 in February, $2,000,000 in March, $3,000,000 in April, $500,000 in May, and $1,000,000 in June, and $100,000 in July, the aggregate income in July is $7,200,000. The 30% would therefore be applicable to the $1,200,000 and on any additional income earned for the calendar year.
The example below shows the impact of the new tax measures on an individual earning over $6,000,000 when compared to 2015.