PUBLIC NOTICE
This Notice serves to correct certain misinformation being circulated on social media about the tax changes in the recent 2024 National Budget. The Internal Revenue Commission (IRC) issues this notice to provide clarity on the salary wage tax changes outlined in the 2024 Budget.
Background
In March 2022, the Government passed an amendment to the Income Tax (Salary or Wages Tax) (Rates) Act No. 19 of 2022, temporarily increasing the salary and wages and personal income tax-free threshold from K12,500 to K17,500 per annum.
In the 2023 Budget sitting, this tax-free threshold was further increased to K20,000 per annum.
The Treasurer announced at the time that this relief was only temporary for a 12-month period ending on 31 December 2023. The Government did not indicate whether this threshold would be maintained or revert back as it was labelled as a temporary relief measure.
2024 Budget
In the 2024 Budget, the Government decided to maintain the tax-free threshold at K20,000 per annum or tax-free fortnightly income up to K769 permanently from 1 January 2024 onwards. The only new measure in the budget was repealing the dependent rebate.
The Rates
The tax rates for these changes are set out below in for ease of reference and clarity:-
Prior to 2022
| Taxable Income | Tax Rate |
| The part of the taxable income that: – | |
| Does not exceed K12,500.00 | 0 |
| exceeds K12,501.00 but does not exceed K20,000.00 | 22 |
| exceeds K20,001.00 but does not exceed K33,000.00 | 30 |
| exceeds K33,001.00 but does not exceed K70,000.00 | 35 |
| exceed K70,001.00 but does not exceed K250,000.00 | 40 |
| exceeds K250,001.00. | 42 |
Between March 2022 and 31 December 2022
| Taxable Income | Tax Rate |
| The part of the taxable income that: – | |
| Does not exceed K17,500.00 | 0 |
| exceeds K17,501.00 but does not exceed K20,000.00 | 22 |
| exceed K20,001.00 but does not exceed K33,000.00 | 30 |
| exceeds K33,001.00 but does not exceed K70,000.00 | 35 |
| exceeds K70,001.00 but does not exceed K250,000.00 | 40 |
| exceeds K250,001.00. | 42 |
From 1 January 2023 to 31 December 2023
| Taxable Income | Tax Rate |
| The part of the taxable income that: – | |
| Does not exceed K20,000.00 | 0 |
| exceeds K20,001.00 but does not exceed K33,000.00 | 30 |
| exceeds K33,001.00 but does not exceed K70,000.00 | 35 |
| exceeds K70,001.00 but does not exceed K250,000.00 | 40 |
| exceeds K250,001.00. | 42 |
From 1 January 2024 and onwards.
NO CHANGES
| Taxable Income | Tax Rate |
| The part of the taxable income that: – | |
| Does not exceed K20,000.00 | 0 |
| exceeds K20,001.00 but does not exceed K33,000.00 | 30 |
| exceeds K33,001.00 but does not exceed K70,000.00 | 35 |
| exceeds K70,001.00 but does not exceed K250,000.00 | 40 |
| exceeds K250,001.00. | 42 |
Given that the K20,000 tax-free threshold increase in 2023 was drafted to lapse on 31 December 2023, it was necessary to amend the law in the 2024 Budget to extend its application from 1 January 2024 going forward. Hence you will note there is no change whatsoever in the respective tax brackets and their corresponding tax rates in the 2024 Budget.
Calculation
As explained above, there is no change to the calculation of taxes from 2023 except that there will be no factoring in of the dependent rebates.
| Rate Table 1: Resident tax rates (effective 1st January 2024) | ||
| Annual Income Exceeds | Annual Income (N) Does Not Exceed | Gross tax |
| 0 | 20,000 | N x 0 |
| 20,001 | 33,000 | N x 0.30 – 6,000 |
| 33,001 | 70,000 | N x 0.35 – 7,650 |
| 70,001 | 250,000 | N x 0.40 – 11,150 |
| 250,001 | and over | N x 0.42 – 16,150 |
Payroll systems should be able to adequately cater for the calculations with minimum disruption and costs to businesses and other employers.
The measure does not have any impact on the rates for non-residents.
Administration
The following document will be released to assist employers and taxpayers with their fortnightly calculations: –
“COLLECTION OF SALARY OR WAGES TAX – RATES OF FORTNIGHTLY SALARY OR WAGES TAX DEDUCTIONS” Effective 1 January 2024
This document as well as a copy of the relevant legislative amendment can be found on the IRC website. The IRC further encourages the general public to keep themselves informed of these changes by visiting our website at www.irc.gov.pg which contains all the relevant background information.
Authorised by:
………………….
SAM KOIM, OBE
Commissioner General
