In March 2022, the Government passed an amendment to the Income Tax (Salary or Wages Tax) (Rates) Act No. 19 of 2022, temporarily increasing the salary and wages tax (SWT) tax-free threshold from K12,500 to K17,500 per annum.
In the recent 2023 Budget sitting, this tax-free threshold has further been increased to K20,000 per annum.
Treasurer, Ian Ling-Stuckey, has announced that this change is only for a 12-month period and is scheduled to end on 31 December 2023.
“The Government has yet to indicate whether this threshold will be maintained or revert back given it is still being labelled as a temporary relief measure,” states Sam Koim, Commissioner General for the Internal Revenue Commission (IRC).
“The Government has indicated that this measure will benefit approximately 170,000 individuals in formal employment and comes at an estimated cost to revenue of K280M,” adds Koim.
The tax rates administration information can be accessed on the ICR website on https://irc.gov.pg/news/public-notices/temporary-increase-in-employees-tax-free-threshold
IRC states that it is hoped the payroll systems can adequately cater for the temporary change in the tax-free threshold with minimum disruption and costs to businesses and other employers.