Tax Planning of Personal Income Tax of College Teachers under New Personal Income Tax Law

Aihui Sheng
2015 Proceedings of the 2015 International Conference on Education, Management and Computing Technology   unpublished
With the continuous improvement of China's economic level and the increase of national investment in education recently, the personal income of college teachers increases rapidly. Under this background, State Administration of Taxation proposes that the college teachers should be listed in the high income industry and be taken as the key object of personal income tax collection and management. In this paper, the principle and method of tax planning of personal income tax are introduced and then
more » ... introduced and then the tax planning of personal income tax scheme of college teachers under the new personal income tax law is discussed based on the analysis of the income composition of college teachers, hoping to reduce the tax burden of teachers by legal and reasonable tax planning means. Tax planning principle and method of personal income tax Tax planning principle of personal income tax The tax planning means that the relevant operating activity of company or personal issues are pre-planned and arranged on the basis of not violating the provisions of current national tax laws so as to reduce the tax burden. The tax planning of personal income tax is one of the important contents of tax planning and is the process that the taxpayer reduces the tax burden by virtue of some methods and means for the purpose of maintaining its interests. In this process, the taxpayer should observe the following principles: first, law-abiding principle. The planning must be conducted within the allowable range of current national laws and regulations and the profit taking beyond the law for any reason is not allowed. Second, planning principle. The planning is the pre-arrangement and planning and the taxpayer is required to reduce the tax burden by planning and design before the generation of tax obligation in the process of tax planning of personal income tax. Third, benefit principle. The implementation of tax planning should fully consider whether the reduced tax burden is more than the expenditure of planning; if yes, the planning is meaningless. Tax planning method of personal income tax In China, the personal income tax, within the scope of classified collection, is divided into eleven types and different income has different collection standard. Therefore, the person income tax planning method is different. At the present stage, the research of tax planning method of personal income tax by most experts and scholars is mainly based on the tax basis and tax rate. Below is the common tax planning methods. Tax preference China's current tax laws specify that the allowance and subsidy not belonging to wage and compensation can be exempted from personal income tax, such as only-child subsidy, nursery fee subsidy, non-staple food subsidy and travel expense subsidy. In addition, the welfare expenses retained by enterprise and public institution, government agencies and social organizations and personal subsistence allowance paid by labor union expenditure can be exempted from personal income tax, so do the four social insurances and one housing fund within a certain limit. The certain limit is the proportional range specified by the state. The national preference policies can be fully used and it is allowed to seek for more interests for the taxpayer permitted by the laws and regulations.
doi:10.2991/icemct-15.2015.133 fatcat:wecyo4fbnfhx5jo6nxb4j5amt4