Viewing Family from Tax Perspective

Wednesday, 01 July 2020

Viewing Family from Tax Perspective

Tax is a concept of how a country collects contributions from its citizens. In Indonesia, this concept is then stated in various regulations ranging from the level of laws to the most technical regulations. 

Conceptually, the tax rules in Indonesia bind each individual or in other words, the tax rules are very private rules. Nevertheless, in its implementation the rules for paying taxes are not the same for all individuals. 

There are several factors that distinguish one person's tax obligations with others, such as economic capacity and the burden that must be borne. One that affects the variable is family. The tax obligations of an individual who is married will be different from those of an individual who is not married. Therefore, the tax system in Indonesia recognizes the Non-Taxable Income (Penghasilan Tidak Kena Pajak/PTKP) term. 

Basically, PTKP is a deduction from net income to get Taxable Income (Penghasilan Kena Pajak/PKP) for individual taxpayers. Then, PTKP can also be interpreted as the amount of income that becomes the limit that is not taxable for individual taxpayers. 

The value of PTKP based on current taxation regulations in Indonesia is as follows: 

  1. Amounting to IDR54,000,000 for individual taxpayers; 
  2. Amounting to IDR4,500,000 for additional for married taxpayers; 
  3. IDR54,000,000 additional for a working wife whose income is combined with her husband's income as referred to in Article 8 paragraph (1) of Income Tax Law; and 
  4. IDR4,500,000 additional for each dependent of blood relatives and relatives by marriage in straight lineage, and adopted children, a maximum of 3 people for each family. 

Family Planning  

Based on the previous description, we can see that PTKP has a strategic position in government policy not only in terms of state revenue, but also related to general economic interest through a demographic approach. Why so? 

If we look into it, the concept of PTKP is closely related to one of the popular programs in the 90's era, namely Family Planning (Keluarga Berencana/KB). Nevertheless, this program actually first appeared in the year 1959 which was pioneered by the Indonesian Planned Parenthood Association (Perkumpulan Keluarga Berencana Indonesia/PKBI) which then became a national movement on 29 June 1970, which was later designated as the National Family Day. 

The Family Planning program, which was known at that time, was a government policy that each family had a maximum of 2 children. This is a government effort to control population growth so that Indonesia's demographic structure is within the ideal curve. Meanwhile, according to the tax version, the number of family planning is slightly higher, which is 3 children at maximum. 

The Simulation of Calculation of PTKP on the Tax Version of "Family Planning"
Status Single


    Child 0 1 Child 2 Children 3 Children 4 Children
Individual Taxpayer 54.000.000 54.000.000 54.000.000 54.000.000 54.000.000 54.000.000
Married Taxpayer - 4.500.000 4.500.000 4.500.000 4.500.000 4.500.000
1 Child - - 4.500.000 4.500.000 4.500.000 4.500.000
2 Children - - - 4.500.000 4.500.000 4.500.000
3 Children - - - - 4.500.000 4.500.000
4 Children - - - - 4.500.000 4.500.000
TOTAL 54.000.000 58.500.000 63.000.000 67.500.000 72.000.000 72.000.000

Let us look again at the structure of the PTKP. A taxpayer can take advantage of PTKP if he or she has 3 children at maximum. When the taxpayer has more than 3 children, then based on the tax basis only 3 people are still taken into account in the PTKP.? 

With this rule, it is hoped that a person will maximize the income that becomes the limit of non taxable in calculating his or her income tax. So, for those of you who are single or currently in the program to have children, it is important to plan as early as possible the number of children you want to have, certainly accompanied by the calculation of the economic capacity and the ability to pay taxes. 

Disclaimer! This article is a personal opinion and does not reflect the policies of the institution where the author works.


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