The annual tax-deductible allowance for basic living expenses could be raised to NT$220,000 per person for tax filers next year, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday in a presentation of a household income and expenditure survey.
Median disposable income per capita was NT$366,841 last year, up 3.16 percent from the previous reporting year, the DGBAS said.
Based on that figure, the tax-deductible allowance for basic living expenses per person should be about NT$220,000 for income earned this year, a NT$7,000 increase from NT$213,000 last year, it said.
Photo: CNA
The Taxpayer Rights Protection Act (納稅者權利保護法) stipulates that the government must not tax the amount individuals need to cover basic living expenses, which is calculated at 60 percent of median per capita disposable income from the preceding year.
The Ministry of Finance said the exact figure for the adjusted tax-deductible allowance for basic living expenses would be announced at the end of this year.
Under Taiwan’s tax system, if the basic living expenses allowance exceeds the sum of the personal exemption, standard deduction and special deductions given to all taxpayers in Taiwan, the difference can be deducted from a taxpayer’s gross income.
The allowance is generally used by households with children filing taxes, because for single taxpayers and couples without dependents, the combined total of the basic exemption, and standard and special deductions is usually more favorable.
Lee Nan-han (李南漢), a PwC Taiwan family business and wealth succession services accountant, said that assuming the basic living expense deduction is increased by NT$7,000, the total deduction for a four-member family of two parents and two children would increase by NT$28,000.
If the family is subject to a 5 percent income tax rate, it would be expected to save NT$1,400 in taxes, Lee said, adding that if the applicable tax rate is 12 percent, the family would save NT$3,360, while at a 20 percent tax rate, it would pay NT$5,600 less.
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