A man has a wife and six children(the oldest of whom is 13 years).He claims 32000 naira for a dependent relative .How much tax does he pay in a year in which he earns 670 000 naira?
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To calculate the tax the man has to pay, we need to consider the tax brackets and rates in Nigeria. Currently, Nigeria has a progressive tax system with different tax rates for different income brackets. The tax rates for the year 2021 are as follows:
- 7% for the first 300,000 naira
- 11% for the next 300,000 naira
- 15% for the next 500,000 naira
- 19% for the next 500,000 naira
- 21% for any amount above 1,600,000 naira
Now, let's calculate the tax:
1. First, we need to consider the man's total income of 670,000 naira. However, since he is claiming 32,000 naira for a dependent relative, we need to subtract this amount from his income. This gives us an adjusted income of 670,000 - 32,000 = 638,000 naira.
2. Now, we can calculate the tax for each income bracket:
- The first 300,000 naira is taxed at 7%. So the tax for this bracket is 300,000 * 0.07 = 21,000 naira.
- The next 300,000 naira is taxed at 11%. So the tax for this bracket is 300,000 * 0.11 = 33,000 naira.
- The remaining 38,000 naira (638,000 - 300,000 - 300,000) falls into the 15% bracket. So the tax for this bracket is 38,000 * 0.15 = 5,700 naira.
3. Finally, we add up the taxes from each bracket to get the total tax owed. In this case, it will be 21,000 + 33,000 + 5,700 = 59,700 naira.
Therefore, the man will have to pay 59,700 naira in taxes for a year in which he earns 670,000 naira and claims 32,000 naira for a dependent relative.