1) A man with an income of $7500 and allowance of $1800, paid $1824 in tax. What is the rate of taxation?
2) Mr Green earns $95 per week and has allowances of $ 2450. Mrs Patel earns $19400 per annum and has allowances of $3680. They both pay all their tax at basic rate. How much does each person save per year when the basic rate of tax is reduced from 29% to 25%?
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1) 32%
2) 29%
1. Taxable income = (7500 - 1800) = 5700
So the rate of taxation = 1824/5700 *100 = 32%
Answer: The rate of taxation is 32%
Sure! I can help you with your questions.
Question 1: To find the rate of taxation, you need to divide the amount of tax paid by the total income.
In this case, the man's income is $7500 and the tax paid is $1824. So, you can calculate the rate of taxation using the following formula:
Rate of taxation = (tax paid / income) * 100
Plug in the values we have:
Rate of taxation = (1824 / 7500) * 100
Solving this equation, we get:
Rate of taxation = 24.32%
Therefore, the rate of taxation for the man is 24.32%.
Question 2: To calculate how much each person saves per year when the basic rate of tax is reduced, we need to compare the tax amounts paid before and after the tax reduction.
Mr. Green earns $95 per week, so his annual income is calculated as follows:
Annual income = weekly income * 52
Annual income = $95 * 52 = $4940
Now, we can calculate the tax paid by Mr. Green at the basic rate of 29%:
Tax paid before reduction = (annual income - allowances) * tax rate
Tax paid before reduction = ($4940 - $2450) * 0.29
Tax paid before reduction = $771.70
Similarly, we can calculate the tax paid by Mrs. Patel:
Tax paid before reduction = (annual income - allowances) * tax rate
Tax paid before reduction = ($19400 - $3680) * 0.29
Tax paid before reduction = $4588.80
Now, we can calculate the tax paid after the reduction at the 25% basic rate:
Tax paid after reduction = (annual income - allowances) * new tax rate
Tax paid after reduction = ($4940 - $2450) * 0.25
Tax paid after reduction = $622.50
Similarly, for Mrs. Patel:
Tax paid after reduction = (annual income - allowances) * new tax rate
Tax paid after reduction = ($19400 - $3680) * 0.25
Tax paid after reduction = $4425.00
Now, to calculate the savings per year, subtract the tax paid after reduction from the tax paid before reduction for both individuals:
Mr. Green's savings per year = Tax paid before reduction - Tax paid after reduction
Mr. Green's savings per year = $771.70 - $622.50
Mr. Green's savings per year = $149.20
Mrs. Patel's savings per year = Tax paid before reduction - Tax paid after reduction
Mrs. Patel's savings per year = $4588.80 - $4425.00
Mrs. Patel's savings per year = $163.80
Therefore, Mr. Green saves $149.20 per year when the basic rate of tax is reduced, and Mrs. Patel saves $163.80 per year.
I hope this helps! Let me know if you have any other questions.