Reduction in income during the year for which provisional tax is charged
2.	Q:	I earned $600,000 during the year 2008/09. The Human Resource Director has just advised me that there would be a pay cut of $4,000 per month as from 1 June 2009. Can I make an application for holding-over part of my 2009/10 Provisional Salaries Tax?
	A:	From what you have said, you may anticipate a drop of income to $560,000 for 2009/10. The criterion for holding over is that your net chargeable income for the provisional tax year is less than 90% of that of the preceding year. Hence, it is necessary to ascertain your estimated net chargeable income for 2009/10 in order to consider whether you can apply for holding-over of part of your Provisional Salaries Tax. The net chargeable income is arrived at by deducting allowable deductions and allowances you are entitled to claim from your income. The situation will therefore be different depending on whether you are single or married (assuming spouse having no income - you are entitled to claim Married Person's Allowance). To demonstrate arithmetically:   Situation 1 - You are single             2008/09 2009/10     $      $        Income 600,000 560,000   Less: Allowance 108,000 108,000   Net Chargeable Income 492,000 452,000   90% Thereof 442,800       As the estimated net chargeable income for 2009/10 is more than 90% of that of 2008/09 ( that is, $452,000 > $442,800 ), no part of your provisional salaries tax for 2009/10 can be heldover.   Situation 2 - You are married and your spouse has no income (you are entitled to Married Person's Allowance)             2008/09 2009/10     $      $        Income 600,000 560,000   Less: Allowance 216,000 216,000   Net Chargeable Income 384,000 344,000   90% Thereof 345,600       As the estimated net chargeable income for 2009/10 is less than 90% of that of 2008/09 ( that is, $344,000 < $345,600), you can apply for part of your provisional salaries tax for 2009/10 to be heldover.     Situation 3 - Same as Situation 2 but with one child               2008/09   2009/10     $        $        Income 600,000   560,000   Less: Allowances         Married Person's Allowance 216,000   216,000       Child Allowance 50,000 266,000 50,000 266,000   Net Chargeable Income 334,000 294,000   90% Thereof 300,600           As the estimated net chargeable income for 2009/10 is less than 90% of that of 2008/09 ( that is, $294,000 < $300,600), you can apply for part of your provisional salaries tax for 2009/10 to be heldover.     For any taxpayer fall within Situation 2 and 3 above, the Assessor will allow holdover of part of the provisional salaries tax provided a written application for holding over is lodged within the prescribed time limit, and the reason for the salary reduction and the estimated income for the period from 1 April 2009 to 31 March 2010 are provided. Please refer to A5 and A6 below for time limit on lodgment of application.
3.	Q:	Due to personal circumstances, I have to take no pay leave from 1 April to 31 May 2009. I shall earn less than 90% of what I have earned for the year to 31 March 2009. Can I pay less Provisional Salaries Tax? Can I make a holdover request on my 2008/09 tax return or write to lodge a formal application now?
	A:	If your net chargeable income (net total income minus total allowances) for the year to 31 March 2010 will be less than 90% of your net chargeable income for the year to 31 March 2009 you can apply to pay less provisional tax. Application should be lodged 28 days before due date or within 14 days after the issue of the demand for provisional tax. Application for holdover of provisional tax must be made in writing, lodged with this Department within the prescribed time limit. Where an application is lodged on the ground of fallen income for 2009/10, you should furnish a computation to demonstrate a drop of the net chargeable income by more than 10%, when compared with that for 2008/09. As most taxpayers would have their 1st instalment of tax due in January 2010, the most appropriate time to lodge holdovers will be in November and December 2009. By that time, you should know the actual income figures for the 7 months to 31 October 2009, and you should be in a better position to estimate your income for the remaining 5 months to 31 March 2010. In summary, you should not furnish details of “no pay leave” for April and May 2009 in your 2008/09 tax return. To lodge an application for holdover now would be pre-mature and you should apply after you have received your demand note for provisional tax and when you are in a better position to make a projection for the full year's income.

Increase in concessionary deductions and as a result there is reduction in net chargeable income during the year for which provisional tax is charged
4.	Q:	I made donations of $200 in 2008/09. Up to September 2009, I have donated $50,000 to charitable organizations. Can I make an application for holding-over part of my 2009/10 Provisional Salaries Tax?
	A:	If your estimated net chargeable income (net total income minus allowances) for the year to 31.3.2010 will be less than 90% of your net chargeable income for the year to 31.3.2009, you can apply for hold over of provisional tax. The following example illustrates how the estimated net chargeable income for 2009/10 is computed. Example - You are single and your employment income for the year to 31.3.2009 is $600,000.     2008/09 2009/10     $      $      Income 600,000 600,000 Less: Approved Charitable Donations 200 50,000   Allowance 108,000 108,000 Net Chargeable Income 491,800 442,000 90% Thereof 442,620     As the estimated net chargeable income for 2009/10 is less than 90% of that of 2008/09 (that is, $442,000 < $442,620), you can apply for part of your provisional salaries tax for 2009/10 to be heldover. Your written application for holding over should be lodged within the time limit prescribed in Answers 5 and 6 by stating the ground for holdover.

Time limit for applying for Holdover
5.	Q:	I received a tax demand note on 4 August 2009. The 1st and 2nd instalments of my Provisional Salaries Tax will fall due on 4 January 2010 and 1 April 2010 respectively. What is the deadline for making a holdover application?
	A:	Usually the time limit for holdover is 28 days before the due date. Hence, in respect of all or a part of the 1st instalment of tax, you should lodge an application for holdover on or before 7 December 2009. Any holdover application in connection with the 2nd instalment of tax should be lodged on or before 4 March 2010.

6.	Q:	If I receive a demand note which was issued on 5 January 2010 with the 1st instalment of provisional tax payable on 17 February 2010, what is the deadline for making a hold-over application?
	A:	Actually the law provides for a two-tier time limit. You must lodge an application not later than 28 days before the due date for payment of the provisional tax or 14 days after the date of issue of the notice for payment of the provisional tax, whichever is the later. The 28th day prior to due date is 20 January 2010. The 14th day after the date of issue of the demand note is 19 January 2010. Hence, insofar as the holdover of the 1st instalment of tax due on 17 February 2010 is concerned, your application should be lodged on or before 20 January 2010.