A salaries tax is charged on net income at 2% on the first HK\$50,000, 6% on the next HK\$50,000, 10% on the next HK\$50,000 and 14% on the remainder. How much tax is paid on a net income of HK\$250,000?
Answer and explanation
Correct answer: B. HK\$23,000
- Step 1: Tax on each band: first 50,000 at 2% is HK\3,000. Next 50,000 at 10% is HK\$5,000.
- Step 2: Add the tax from the bands that apply (the top rate only on the part above 150,000): total tax is HK\$23,000.
Answer
HK\$23,000.
Why not the others: HK\$35,000: the top rate is applied to the whole income. HK\$5,000: only the lowest rate is applied.
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