National Taxation Bureau of the Southern Area, Ministry of Finance (MOF), announced that the amount of basic living expense per person for 2020 is NT$182,000, which is an increase of NT$7,000 compared to the NT$175,000 for 2019, and applies to deductions on individual income tax to be filed in May of 2021, according to the MOF.
According to Article 4 of the Taxpayer Rights Protection Act (hereinafter "the Act") and Article 3 of the Enforcement Rules of the Act, the basic living expense per person is calculated at 60% of the median rate of the expenditure per person in the past year as announced by Directorate-General of Budget, Accounting and Statistics, Executive Yuan. The total amount of the basic living expense for a household is calculated in accordance with the aforementioned basic living expense per person multiplied by the number of persons in the household, including the taxpayer, spouse, and dependents. If the total amount of the basic living expense exceeds the sum of exemption and deductions (except for special deduction of loss from property transactions and special deduction of income from salaries and wages), the difference could be used as an additional deduction from the gross consolidated income.
Taking a double income family with two children in junior high school as an example, the exemption for four family members would be NT$352,000 and the standard deduction for parents NT$240,000, providing that this household has no other allowable deductions. Therefore, the total amount of basic living expense (NT$728,000) would be higher than the sum of exemption and deductions, and the difference of NT$136,000 may be deducted from their income. In that case, the basic living expense would mitigate the individual income tax burden for the household by NT$6,800 to NT$54,400 based on their tax rate (5% to 40%). The basic living expense ensures that taxpayers and their dependents have sufficient funds that are not subject to taxation to live with dignity.
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