PAP asked the finance ministry for clarifications on the Polish governance and accounting for middle class relief.
You have to stay within the limits
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“The relief is applied by the employer for the months in which the employee earned income from full-time employment in the amount of PLN 5,701 to PLN 11,141. The employer “watches” the annual limit of PLN 133,692. After exceeding this limit, the employer does not apply the relief, even if the income in the following months would be between PLN 5,701 and PLN 11,141 “- the ministry explained.
The ministry informed that in order to properly apply the tax relief in a given month, all taxable revenues for that month should be added up.
“If at the first payment – due to the income below the threshold entitling to the allowance – the employer did not apply the allowance, and then made the payment that allows it to be applied, then at this payment, he calculates the allowance on the total income” – added.
To illustrate the situation, the Ministry of Finance gave an example in which the first payment in a month is PLN 5,000 – without any relief, and the second payment in the same month – PLN 2,000. “The discount is calculated on the basis of total revenues, which in this case is PLN 7,000. The discount is PLN 512.35” – explained.
The Ministry noted that in the opposite situation, where the relief was applied for the first payment, and then a second payment was made, as a result of which the income entitling it to apply was exceeded, the employer adds to the income the amount of the relief applied for the first payment.
For example, the ministry indicated that the first payment in a month is PLN 7,000 with a discount of PLN 512.35, and the second payment in the same month is also PLN 7,000. “Total payment in a given month = PLN 14,000 (the relief is not available). The amount of the relief PLN 512.35 should be added to the basis for calculating the advance payment (income) for the second payment” – underlined.
Settlement of spouses: how to calculate the allowance?
PAP also asked the Ministry of Finance about a case where the spouses settle their accounts jointly, but one of them does not work and does not earn any income, while the other earns an income in excess of PLN 133,692 per year. The agency asked whether, in such a case, by applying the common taxation to taxable income, it would be possible to apply a middle class tax credit.
According to the Ministry of Finance, the spouses have the right to apply a joint settlement relief if half of their total income is within the range of revenues entitling to the relief (from PLN 68,412 to PLN 133,692). “This will be the case, for example, when one of the spouses received income from an employment contract in the amount of PLN 140,000, while the other spouse did not receive any income” – replied the ministry.
The Ministry also referred to the question regarding taxation, in connection with the changes introduced by the Polish Government, of the care allowance received by retirees: whether it is taxable together with the pension, or is it a tax-free benefit.
“The Polish Order has not changed the rules of taxation with personal income tax of the nursing allowance. This benefit, as in previous years, constitutes income within the meaning of the PIT Act, which benefits from tax exemption pursuant to Article 21 (1) (8) of this Act” – informed the Ministry of Finance.