BONUS COMPUTATION (SHORTCUT) EXAMPLE

Income before bonus and before ta

LEGEND: Bonus
BR = Bonus Rate Income Tax Rate
TR = Tax Rate
AT = After Tax I. Income before and Bonu
NI = Net Income
Bonus =
I. Income before and Bonus before Tax =

Bonus = BR x NI

II. Income after Bonus and before Tax II. Income after Bonus an

BR x NI
Bonus = Bonus =
1 + BR

Bonus =

Bonus =

III. Income after and Bonus after Tax III. Income after and Bon

AT = 1 - TR AT =
=
BR x NIAT
Bonus =
1 + BRAT
Bonus =

Bonus =

Bonus =

Bonus =

IV. Income after tax but before bonus IV. Income after tax but b

AT = 1 - TR AT =
=
BR x NIAT
Bonus =
Bonus =
1 - BRTR
Bonus =

Bonus =

Bonus =

Bonus =
come before bonus and before ta 4,400,000
nus 10%
come Tax Rate 30%

I. Income before and Bonus before Tax

0.10 x 4,400,000
440,000

II. Income after Bonus and before Tax

0.10 x 4,400,000
1 + 0.10

440,000
1.1

400,000

III. Income after and Bonus after Tax

1 - 0.30
0.70

0.10 X (4,400,000 X 0.70)

1 + (0.10 X 0.70)

0.10 X (3,080,00)
1 + (0.07)

308,000
1.07

287,850

IV. Income after tax but before bonus

1 - 0.30
0.70
 0.10 X (4,400,000 X 0.70)
1 - (0.10 X 0.30)

0.10 X (3,080,00)
1 - (0.03)

308,000
0.97

317,526