Singapore
Personal Income Tax

Singapore Personal Income Tax structure is one of the friendliest and most competitive in the world. The tax year is from 1 January to 31 December in each calendar year and income is assessed on a preceding year basis.

Key points of Singapore income tax for individuals include:

• The amount of income tax that you have to pay depends on your tax residency in Singapore. The taxes for residents are different from non-residents.
• Top marginal resident tax rate of 20% kicks in at S$ 320,000 of taxable income.
• Non-residents are taxed at the flat rate of 15% or the resident rates whichever results in a higher tax amount.
• In general, all remuneration arising from an employment under which duties are performed in Singapore would be fully taxable irrespective of where the funds are made available to you
• Besides salaries and bonuses, perquisites such as housing and stock options will form part of your taxable employment income.

Personal Income Tax Rates

Singapore Tax adopts a progressive personal tax rates, relative to an individual’s amount of income.

Tax rates for resident individuals

Note: A one-off personal income tax reabate of 20%, capped at $2,000, will be granted for the Year of Assessment 2011.

PERSONAL TAX FOR SINGAPORE RESIDENTS

Who is a tax resident?

Different tax rates apply for tax residents and non-residents. You will be treated as a tax resident for a particular Year of Assessment (YA) if you are a:

• Singaporean; or
• Singapore Permanent Resident (SPR) if you have established your permanent home in Singapore; or
• Foreigner who stayed/worked in Singapore for 183 days or more in previous year (excludes director of a company).

For Foreigners working in Singapore, the following conditions are also applicable for the taxability of their income in Singapore:

• If you work in Singapore for 60 days or less in a calendar year, you will be exempt from tax on your earnings here.
• If you stay or work in Singapore for 61 to 182 days in a calendar year, your income will be taxed at 15% or resident rates for individuals, whichever gives the higher tax.
• If you stay or work in Singapore for 183 days or more in a calendar year, your income will be taxed at resident rates for individuals.
• If you stay or work in Singapore for a continuous period of at least 183 days over two years, your income will be taxed at resident rates for individuals.
• If you stay or work in Singapore for three consecutive years, your income for all years will be taxed at resident rates.

What is Chargeable Income?

Chargeable income (Taxable Income) is the net income after deduction of expenses, donations, and personal relief.  Personal tax relief, subject to conditions, includes support of dependents, academic tuition, professional development expense and premiums paid on life insurance policies.

How is Taxable Income Computed?

The Inland Revenue Authority of Singapore [IRAS] provides the formula in determining the Taxable Income of an individual. It is the following:

• Total Income Less Expense = Statutory Income
• Statutory Income Less Donations = Assessable Income
• Assessable Income Less Personal Reliefs = Taxable Income

What is Total Income?

• Profits earned from business, trade, vocation, profession as a partner in a partnership or sole proprietor
• Gains from employment (including Benefits-in-kind)
• Dividends, Investment income, interests
• Rental fees, Royalties, Premiums, and other Profits accumulated from properties

Benefits-in-kind received as part of the employment:

Benefits received in kind are taxable (either fully or partially) and include:

• Residential Accommodation
• Furniture & Furnishings provided
• Food & Clothing, Hotel Accommodation
• Home Leave Passage
• Motor Car, Driver
• Share Options
• Interest Subsidy
• Income Tax paid by Employer
• Insurance Premium paid by Employer if employee is stated beneficiary in the Policy
• Subscription, Entrance Fees, Memberships…

What are Expenses?

• Employment-related
• Rental-related

What are Donations?

Donations made to qualified charity organizations in Singapore.

What are Personal Reliefs?

Qualified course or tuition fees, earned income relief, parent relief and support of dependents, professional development expenses and premiums paid on life insurance policies, and any other special reliefs.

How Are Employer-Provided Fringed Benefits Taxed?

By laws, all profits and gains obtained by an individual, local or foreign, as a consequence of employment are subject to tax, except, if they are categorically exempted from income tax or are included in an existing administrative concession.

Gains and profits cover all benefits derived in money or in another form, paid or granted as part of an employment. Examples of tax benefits bestowed by an employer are:

• Car furnished by an employer
• Accommodation and housing allowance
• Refunds of medical and dental treatments for dependents beside the income earner [You], spouse, and children
• Overtime pay
• Fixed monthly meal allowances
• Fixed monthly allowance for transportation or if mileage on private cars are reimbursed
• Per Diem allowances (such as allowances provided on overseas trips for business purposes), as long as the amount is beyond the acceptable rates.

These fringe-benefits are taxed as soon as they are enjoyed by the employees. Nevertheless, certain non-cash benefits (i.e. accommodations like housing) are taxed using special formulas, known as concessionary basis, leading to lower taxation on these benefits-in-kind. Hence, a separate compensation package has been structured exclusively for executives to help them mitigate on their individual tax liability in Singapore.

For more information, please click on
List of benefits-in-kind granted administrative concession or exempt from income tax.

TAX TREATMENT OF INCOME EARNED OVERSEAS

Generally, overseas income received in Singapore is not taxable. This includes overseas income brought into Singapore. However, there are certain circumstances under which overseas income is taxable:

• It is received in Singapore through partnerships in Singapore.
• Your overseas employment is incidental to your Singapore employment. That is, as part of your work here, you need to travel overseas.
• You are employed outside Singapore on behalf of Government of Singapore.

Tips on ways to save tax

• Tax residents are eligible for tax reliefs that can be offset against the assessable income. You can get reliefs for wife support, child maintenance etc.
• You may claim expenses incurred against your employment income; enjoy tax deductions for approved charitable donations.
• Under the Not Ordinarily Resident (NOR) Scheme, you can enjoy either Time Apportionment of Singapore employment income or Tax Exemption of Employer’s contributions to Overseas Pension Fund, or both.
• If you work for a foreign employer and need to travel overseas in the course of work, you may enjoy time apportionment of employment income under the Area Representative Scheme.
• With the Avoidance of Double Taxation Treaties signed by Singapore, your income may not be taxed twice in Singapore and your home country.  (For more information on countries which have Avoidance of Double Taxation Treaties with Singapore, see List of DTA Treaties)

CAPITAL GAINS TAX, INHERITANCE TAX, ESTATE DUTY

Singapore does not have any taxes on Capital Gain and effective 2008; Singapore has abolished Inheritance tax (commonly known as Estate Duty – tax that you have to pay when you die which comes out of the financial estate that you leave behind.)

Singapore does not impose any capital gains tax on personal investment income that arises in relation to real assets, such as property, financial assets, such as shares or bonds, and intangible assets.

FILING PERSONAL INCOME TAX RETURNS

Who must file personal tax return?

• If you are an Resident/Employment pass/PEP/Entrepass holder,
• If your annual income in Singapore in 2010 is above S$22,000,
• If you have received a letter from Inland Revenue Authority of Singapore inviting you to file personal income tax. This is regardless of the amount of your annual income for the previous year.

Employer Responsibility:

Companies must give completed Forms IR8A to employees, showing remuneration and benefits in- kind for the previous calendar year, by 1 March.

Personal Tax Filing Due Date:

It is mandatory under law to file for the annual personal tax return to IRAS by 15 April 2011. IRAS diligently enforces the requirements relating to the filing of the personal tax. Please comply to avoid paying fines and/or court prosecution.

Income is assessed on a preceding calendar year basis, ending 31 December. You must File Your Annual Tax Form by 15 April of the following year. If tax return is not filed by the 15 April deadline, IRAS may raise estimated assessment. You can usually expect to receive the income tax bills from May to August.

Settlement of Personal tax liability:

Paying your taxes: Sign up for the 12-month interests free GIRO Deduction Plan to pay your income tax by instalments. Otherwise, full payment has to be made within one month from the date of the income tax bill.

If the tax is not paid by the due date, a 5% penalty and 1% additional penalty per month up to 12% (total of 17%) will be imposed. In addition, IRAS may take recovery action.

1. Impose an additional penalty of 1% up to a maximum of 12% on any unpaid tax for each month that the tax remains unpaid;
2. Direct the taxpayer’s employer to deduct any unpaid tax from his salary;
3. Direct the taxpayer’s banks, tenants or any third parties to pay any unpaid tax to IRAS from any money held for the taxpayer or due to him;
4. Restrict the taxpayer from leaving Singapore
5. Take legal actions against the taxpayer.

Objection to the Notice of Assessment (NOA)

If an individual does not agree with the assessment raised, he / she have to lodge an objection in writing within 30 days from the date of issue of notice of assessment; otherwise the assessment will automatically become final.

Need Assistance to meet with your Personal Tax Compilation and Filing?

Rikvin can assist you in your personal income tax filings. Our personal tax filing services include:

• Registration for new tax payers
• Preparation and filing of income tax return based on your income and determination of possible deductions and reliefs that are applicable to you
• Request for extension of deadline, if necessary
• Preparation of Form IR8A/IR21 for employees
• Tax planning and tax advice

Disclaimer:

The information contained in this website is for general reference only. While all reasonable care has been taken in the preparation of this information, Rikvin cannot accept any liability for any action taken as a result of reading its contents without further consulting us with regard to all relevant factors

Appendix A: Tax Treaties:

Avoidance of Double Taxation Agreement between Singapore and another country serves to prevent double taxation of income earned in one country by a resident of the other country. It also makes clear the taxing rights between Singapore and her treaty partner on different types of income arising from cross-border economic activities between the two countries. The following are the list of countries with which Singapore has entered Comprehensive Avoidance of Double Tax Agreements: