How to Make Good Tax Planning Since Beginning of the Year.
March of every year is the last month that we can file personal income tax. Many of you might get tax return, but many of you might need to pay more tax. So, how can we manage to prevent additional tax payment. Let’s see.
First of all, we need to know who have duties to pay personal income tax. If you have income during 1 January – 31 December of ever year and have one of the following statuses, you are a taxpayer.
1) Individual.
2) Ordinary partnership or non-juristic body of persons.
3) Individual who dies during a tax year.
4) Undivided estate.
5) Community enterprise according to the community enterprise promotion law, only Partnership or non-juristic body of persons.
All taxpayers who have higher income than the minimum requirement must file tax, even though they do not have to pay additional tax.
(1) Individual and deceased with the assessable income
| Income type | Single | Married |
| Only salary | 120,000 | 200,000 |
| Other income | 60,000 | 120,000 |
(2) Ordinary partnership or non-juristic body of persons with assessable income of over 60,000 Baht.
(3) Undivided estate with assessable income of over 60,000 Baht.
Next, taxable income has 8 types. And expenses are allowed by law for deduction as working cost in order to calculate tax based on net income. Deduction varies based on income type.
| Income Type | Expense Deduction |
1. Salary, wage, bonus, allowance. 2. Income by virtue of jobs, positions or services rendered, rights fee, broker fee, etc. | 50% but not exceeding 100,000 Baht; in case of having the assessable income items 1 and 2, both incomes must be combined, but maximum deduction is 100,000 Baht. |
| 3. Income from goodwill, copyright, franchise, other rights. | 50% but not exceeding 100,000 Baht or based on actual mount. |
| 4. Interest, dividend, shares of profits, etc. | Expense deduction is not allowed. |
| 5. Income from letting of property and from breaches of contracts, installment sales. - House, school, building, raft. - Agriculture land. - Non-agriculture land. - Vehicle. - Other assets. | Based on actual amount or flat rate 30% 20% 15% 30% 10% |
| 6. Liberal professions. - Medical profession. - Law, engineering, architecture, accounting, fine artwork. | Based on actual amount or flat rate 60% 30% |
| 7. Contractor. | Based on actual amount or flat rate 60% |
| 8. Other income besides the items 1 – 7*. | Based on actual amount or flat rate 40% and 60% |
*According to the Royal Decree (No. 629) B.E. 2560
After deducting expenses from assessable income in each year, we are allowed to deduct allowances which are important for us to pay lesser tax or get higher tax return. The allowances depend of our status, not income, such as single, married, number of children, parents, savings, investments, life insurance, health insurance, etc.
Allowance types are as follows.
If you are finding a tool to deduct tax during year end, we recommend you to plan since the beginning of the year as to enjoy year end freely such as if you plan to have investment and insurance allowances, you should plan to buy life and health insurance since the beginning of the year. Besides having tax deduction from insurance premium, you will get life or health coverage quicker. For RMF, SSF, TESG, you can plan investment early as well by applying DCA (Dollar-Cost Averaging) to gradually invest. This method is popular among many investors because you do not need to invest big lump sum amount during year end. These are just examples for you to make planning since the beginning of the year and you can choose a tool that matches your lifestyle.
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