SPM Mathematics Glossary
Consumer Mathematics: Taxation, terms
Frequently asked questions
What's the difference between taxable income and income tax?
Taxable income is the amount left after deducting reliefs and exemptions from your total income, it's the figure the tax rate is applied to. Income tax is the actual amount you owe, calculated from that taxable income using the tax rate or schedule.
Mixing up the two is a common source of wrong answers.
Where does "tax relief" fit into the calculation, and why do students often place it wrongly?
Tax relief is deducted before you reach taxable income, not after tax has been calculated. A common mistake is subtracting relief from the income tax amount instead of from total income.
Always work in order: total income minus reliefs gives taxable income, then apply the tax rate to find income tax.
Which of these tax terms should I master first before attempting exam questions?
Start with taxable income, since every other calculation depends on getting it right first. Once you're confident listing reliefs and subtracting them correctly from total income, income tax follows naturally by applying the given rate or schedule.
Getting the taxable income step wrong carries through the entire question.