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The Beginner’s Guide to Income Tax in Singapore

Receiving a letter from Inland Revenue Authority of Singapore (IRAS) for the FIRST TIME? Sorry to say… but you’re drawing sufficient salary to make contributions back to your nation now! You’re probably lost about what you have to do. Fret not, let’s go through some important details together!

If you don’t already know, personal income tax is compulsory in Singapore. For starters, we follow a progressive resident tax rate as seen below, from zero to a maximum of 22%. Yes, this means the more you earn, the more you will be taxed. Regret getting such a high paying job now? (We’re kidding). So let’s get started. 

Who needs to pay income tax?

You’ll have to pay taxes if you’re a tax resident. For non-resident individuals, it depends!

You are considered a tax resident if you are:

  • A Singaporean
  • A Singapore PR and has established your permanent home in Singapore
  • A foreigner who has stayed/worked in Singapore for 183 or more days in the tax year

In the case of non-resident individuals:

  • Employment income is exemptible from tax if the individual is working on a short-term employment for 60 days or less in a year. However, this does not apply to a public entertainer, director of a company or exercising a profession in Singapore. 
  • If you’re here working for 61-182 days in a year, individuals will be taxed on all income earned in Singapore, at a rate of 15% or the progressive resident tax rate (whichever gives rise to a higher tax amount). You will not be eligible to claim personal reliefs but can still claim expenses and donations to save on tax. 
  • Director fees, consultant fees and all other incomes are taxed at a flat fee of 22%

Assuming you’re a tax resident, this is how much income tax you have to pay!

The chargeable income, also known as taxable income, is basically your total annual income minus all the exemptions and eliefs you are entitled to. Here’s a simple way to look at it.

To put this into perspective for you, let’s take a look at John, a fresh graduate with a starting

pay of about S$3,600 per month. This means that he earns S$43,200 per annum. John was feeling charitable and decided to donate $2,000 to Movement for the Intellectually Disabled of Singapore (MINDS). As he needs to support his elderly parents as well, he managed to attain a total personal reliefs of S$5,630.

So, John will not actually be taxed on his $43,200. But instead, his chargeable income will be S$43,200 – S$2,000 – S$5,630 = S$35,570.

With a chargeable income of S$35,570, he falls under the second bracket. For his first S$30,000, he pays S$200. For the remaining S$5,570, he pays $194.95 (S$5,570 × 3.5%). Therefore, John gross tax payable would be S$200 + S$194.95 = S$394.95. Are you lost already? There’s more!

So, now that you know how taxation works, you’re ready to get started!

  1. Filing of Income Tax:

You will receive a form, letter, SMS, basically something from IRAS informing you that it is time to file your income tax. You can do it via online or paper form. The submission due dates for both platforms differ and may be subjected to changes, so do keep a look out! IRAS will send you the appropriate tax form upon request and as for the online platform, read on to find out how it’s done.

Three really simple steps:

  1. You will need to file your income tax return via myTax Portal using your SingPass
  2. Click on the “Individuals” tab and press on “File Form B/B1”
  3. Fill in your details 

If your employer applies for the Auto-Inclusion Scheme (AIS) for Employment Income, you will see some information regarding your salary has been pre-filled. But you still need to fill in the blanks for other information. 

Things to pay special attention to would be: 

  • How much you are earning and tax reliefs that you can claim? 
  • Make sure the numbers are correct before hitting on the SUBMIT button! 

FILING is not the same as PAYING. Filing just simply means informing IRAS how much you have earned last year and what tax reliefs you are eligible for. You only pay when you receive the Notice of Assessment (NOA) or tax bill.

The general rule of thumb is: It is compulsory to file if your annual income is S$22,000 or more. You do not need to pay tax if your annual income is less than S$22,000. However, you may still need to file returns if you have been informed by tax authority to submit your tax form. 

Now, just wait up for your Notice of Assessment (NOA) or tax bill which will indicate how much income tax is payable. If there is any conflict in the total sum, you need to inform Singapore tax authority within 30 days from the date of your Notice of Assessment and state the reasons for your disagreement. You can do so through the “Object to Assessment” options in myTax Portal. Regardless of any disagreement, don’t forget to pay your tax amount within 30 days, or be ready to bear the consequences – penalty fee of a minimum 5% on your outstanding taxes or even worse!

Do note that individuals are taxed only on the income earned in Singapore. The income earned by individuals while working overseas is not subject to taxation unless:

  • It is received in Singapore through partnerships in Singapore
  • You are employed outside of Singapore on behalf of the Singapore Government
  • Your overseas employment is incidental to your Singapore employment (as part of your job requirements, you are required to travel overseas)

I hope this has helped you in one way or another about taxation in Singapore. 

don’t forget to SHARE this with your friends who were once equally as lost as you! 

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