top of page
Search
  • Writer's pictureMichael Chan - Bida & Co.

Joint Assessment for Married Couples

Should I choose Separate or Joint Tax Assessment?

What is Separate Taxation?

A married person and his/her spouse are assessed separately. Each of them is required to:

- submit a tax return;

- state his/her income;

- claim any expense and/or deductions;

- pay tax.

What is Joint Tax Assessment?

A married person and his/her spouse are assessed separately. Each of them is required to:

- submit a tax return;

- elect for joint assessment in the tax return;

- state his/her income;

- claim any expense and/or deductions.

The salaries income will be assessed collectively. If the joint assessment results in a reduced amount of tax bill, only one assessment notice will be sent out. Usually, the one with higher income will be required to pay tax.


Conditions for Joint Tax Assessment:

1. The taxpayers must be a married couple and the election for joint tax assessment must be applied every year.

2. They should both have assessable income.


Advantages for Joint Tax Assessment:

Under separate taxation: 

If the income of one spouse is lower than his/her tax allowance, his/her allowance is not utilized fully.


When joint assessment is elected:

Both income and allowances will be assessed collectively. Each person’s allowance will be deducted from the joint total income.

So if it appears that the joint tax bill will be smaller, you and your spouse should elect a joint assessment in the tax returns. If it does not result in less tax, the tax assessor will send you separate bills instead.


Time Limit for electing Joint Assessment:

If you have withdrawn your election, re-election for the same year of assessment will be ignored.


To make a valid joint assessment, both the married person and his/her spouse must sign in at least one of their BIR60.


Case Study 1

The monthly salaries of Mr. and Mrs. Chan were $45,000 and $10,000 in the year of assessment 2021/22. They have a daughter and the couple agreed and nominated Mr Chan to claim the child allowance. How should Salaries Tax be calculated?


When calculated under separate taxation:


When calculated under joint assessment:


*For the year 2021/22, subject to a ceiling of $10,000 per case, 100% of the final tax payable would be waived under salaries tax, tax under personal assessment and profits tax.

In the above example, there will be tax savings of $3,060 (which is $17,900 - $14,840) from joint assessment.


Case Study 2

In this case, Mr Chan’s and Mrs Chan’s monthly salaries were $45,000 and $35,000 respectively in the 2021/22 year of assessment. How to compute the salaries tax?

When calculated under separate taxation:

The total tax payable = $17,900 + $17,900 = $35,800


When calculated under joint assessment:


From this case, joint assessment has no advantages. The assessor will assess Mr and Mrs Chan separately and issue separate notices of assessment.

Generally, it is better for the parent having the higher income to claim the child allowance. However, if either of the parents is being assessed at a standard rate, it will be better for the other parent to claim.

Komentarze


bottom of page