When you pay tax, it’s calculated based on an amount money. This could be the value of an item you sold, or a service provided, or the salary you earn. Assuming it’s all taxable and you’ve no deductibles then you pay tax on that full amount.
In concrete terms, if you make $100 and it’s taxable at 10% then you owe the government $10… but if you make $100 and I’m doing so you incur $20 in expenses (and assuming all of that expense is deductible) then you only pay tax on the $80, so you only owe the government $8
Latest Answers