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.

BUDGET 2013 UPDATE

All resident individual taxpayers will be given a personal income tax rebate for the tax payable for Year of Assessment (YA) 2013. The amount of rebate granted depends on the age of the resident individual as at 31 Dec 2012, subject to a cap of $1,500:

• 30% for resident individuals aged below 60; and
• 50% for resident individuals aged 60 and above.

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.

Singaporeans whose overseas employment is for a period of at least six months in any calendar year can choose to be treated as a non-resident for the year of assessment following the year of overseas employment. Foreign income received in Singapore is not subject to tax under certain conditions.

TAX RATES FOR RESIDENT INDIVIDUALS

Year of Assessment 2013 onwards
	Chargeable Income	Rate (%)	Gross Tax Payable ($)
On the first On the next	20,000 10,000	0 2	0 200
On the first On the next	30,000 10,000	- 3.5	200 350
On the first On the next	40,000 40,000	- 7	550 2,800
On the first On the next On the next	80,000 40,000 40,000	- 11.5 15	3,350 4,600 6,000
On the first On the next On the next	160,000 40,000 120,000	- 17 18	13,950 6,800 21,600
On the first In excess of	320,000 320,000	- 20	42,350

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.This exemption does not apply to non-resident company directors, public entertainers, professionals including foreign experts, speakers, queen’s counsels, consultants, trainers, coaches etc.
• 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 THE DIFFERENCE IN THE TAX TREATMENTS OF A RESIDENT AND NON-RESIDENT?

Resident individuals	Non-resident individuals
Taxed progressively	Taxed at 15% or respective progressive residential rate of up to 20%.
Double tax reliefs available	No double tax reliefs
Reliefs available for various taxes such as dependents, child, etc.	Generally no reliefs available.
Exempted from interest income	Interest income from deposits with approved banks is not taxable.
Employment income is taxable.	Employment income from local employment of less than 60 days is exempt from taxation
Tax rebates are available.	No tax rebates available.

To learn more on personal tax for non-residents, Not Ordinarily Resident (NOR) Scheme and  Area Representative Scheme, click here.

INCOME SUBJECT TO TAX

Employment income – Taxable employment income includes cash remuneration, wages, salary, leave pay, directors’ fees, commissions, bonuses, gratuities, perquisites, gains received from employee share plans and allowances received as compensation for services. Benefits-in-kind derived from employment, including home-leave passage, employer-provided housing, employer-provided automobiles and children’s school fees, are also taxable. Certain of these benefits receive special tax treatment.

What is Chargeable Income?

Chargeable income (Taxable Income) is the net income after deduction of expenses, donations and personal reliefs. Personal tax reliefs, 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?

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.

Tax reliefs	Qualifying categories or criteria	YA 2012 (SGD)	YA 2013 (SGD)
Earned income reliefs	Under age 55 55 to age 59 Age 60 and above	1,000 3,000 4,000	1,000 6,000 8,000
Handicapped earned income relief	Under age 55 55 to age 59 Age 60 and above	2,000 5,000 6,000	4,000 10,000 12,000
Spouse relief	To qualify, working spouse must not earn more than $4,000 in 2011/2012	2,000	2,000
Parenthood Tax Rebate	For married tax residents. 1st child 2nd child 3rd 4th 5th & beyond	5,000 10,000 20,000 20,000 20,000 per child	5,000 10,000 20,000 20,000 20,000 per child
Qualifying/handicapped child relief (QCR/ HCR)	For parents supporting children or caring for handicapped children.	QCR – 4,000 per child HCR – 5,500 per child	QCR – 4,000 per child HCR – 5,500 per child
Working mother’s child relief	Applicable even when claims for HCR and QCR are made.	15% of income 20% of income 25% of income 25% of income 25% of income	15% of income 20% of income 25% of income 25% of income 25% of income
Dependent parents relief	Living with the taxpayer in the same household (each parent) Not living with the taxpayer in the same household (each parent)	7,000 4,500	7,000 4,500
Course fee relief		5,500	5,500
CPF cash top-up relief	By self or employer to self’s account By self to spouse, sibling, parents’ and grandparents’ account	Up to 7,000 Up to 7,000	Up to 7,000 Up to 7,000
Foreign maid levy (applicable only to working mothers)	Without foreign domestic worker concession With foreign domestic worker concession	Up to 6,360 Up to 4,080	Up to 6,360 Up to 4,080
Grandparent caregiver relief		3,000	3,000
NSman (self/wife/parent) relief	Inactive NSman in previous year (non-key appointment holder) Active NSman in previous year (non-key appointment holder) Inactive in NSman in previous year (key appointment holder) Active in NSman in previous year (key appointment holder)	1,500 3,000 3,500 5,000	1,500 3,000 3,500 5,000
CPF relief	Age 50 & below Age 51 to 55 Age 56 to 60 Age 61 to 65 Above 65	Up to 16,200 Up to 14,580 Up to 10,125 Up to 6,075 Up to 4,050	Up to 16,200 Up to 15,525 Up to 10,850 Up to 6,375 Up to 4,250
Supplementary Retirement Scheme (SRS) relief	Singaporean / Singapore Permanent Resident Foreigner	Up to 12,750 Up to 29,750	Up to 12,750 Up to 29,750

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 visit: 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 Gains 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 returns?

• If you are an Resident/Employment pass/PEP/Entrepass holder,
• If your annual income in Singapore in 2012 is above S$22,000,
• If you have received a letter from Inland Revenue Authority of Singapore inviting you to file personal income tax, in spite of the amount 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 your annual personal tax returns to IRAS by 15 April of every year.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 interest-free GIRO Deduction Plan to pay your income tax by installments. 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.

DOUBLE TAX RELIEF AND TAX TREATIES

Relief from double taxation is granted on income derived from professional, consultancy and other services rendered in countries that do not have double tax treaties with Singapore. Double tax relief is also available for foreign taxes levied on income taxed in Singapore if Singapore has a tax treaty with the country concerned and if the individual is resident in Singapore for tax purposes.

Singapore has entered into tax treaties with 72 countries.

Individuals who receive employment income in Singapore and who are tax residents of countries that have concluded double tax treaties with Singapore may be exempt from Singapore income tax if their period of employment in Singapore does not exceed a certain number of days (usually 183) in a calendar year or within a 12-month period and if they satisfy certain additional criteria specified in the treaties.