1) A man with an income of $7500 and allowance of $1800, paid $1824 in tax. What is the rate of taxation?

Question

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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Answer 1

1) 32%
2) 29%

Answer 2

1. Taxable income = (7500 - 1800) = 5700
So the rate of taxation = 1824/5700 *100 = 32%
Answer: The rate of taxation is 32%