The Executive Yuan today passed a draft revision to Article 15 the Income Tax Act to allow married couples to file their income taxes separately.
The revision was made in accordance with Judicial Yuan Interpretation No. 696, which holds that under current laws, taxpayers filing returns jointly face greater taxation than if filing separately. This situation is contrary to the constitutional principle of equality, said Premier Jiang Yi-huah. He directed the Ministry of Finance to work with the Legislative Yuan in fast-tracking the amendment for approval.
The draft revision is summarized as follows:
1. Taxable unit:
a. The taxable unit will still be the household. For the various types of income stipulated in Article 14 incurred by the taxpayer, his/her spouse and dependents, the tax on such income should be computed aggregately and filed by the taxpayer.
b. If a taxpayer and his/her spouse are separated due to irreconcilable differences or domestic violence, they may file tax returns separately.
2. Tax computation:
a. In addition to the two methods of calculating all income taxes jointly, or computing salary income taxes separately, married taxpayers may now choose to calculate all income taxes separately.
b. If a taxpayer chooses to calculate all income taxes separately from his/her spouse, the taxpayer may declare a personal exemption, special deduction for property transaction losses incurred by him/herself, special deduction of income from salaries, special deduction for savings and investment, and special deduction for the disabled or handicapped.
Exemptions, standard deductions and itemized deductions attributed to the spouse or dependents, as well as special deductions for the household, should all be claimed on the spouse's tax return.
The special deduction for savings and investment should not exceed NT$270,000 (US$9,000) per year as prescribed in Article 17, and must be deducted from the spouse's taxable income first. Any such deduction remaining thereafter may then be claimed by the original taxpayer.
According to Judicial Yuan Interpretation No. 696, the provisions of Article 15, Paragraph 1 of the current Income Tax Act should cease to apply on January 19, 2014. The abovementioned amendments are expected to take effect from January 1, 2014.