Filling out your personal income taxes can be overwhelming. Before you file your taxes, you must understand which group of income tax you fall under based on your income and according to the Inland Revenue Authority of Singapore (IRAS).
In this post, we will help you understand more about personal income tax and learn how you can file your taxes efficiently and on time. But first, let’s look at what personal income taxes are.
What Are Personal Income Taxes?
Also known as individual income tax, personal income tax is the tax imposed on individuals based on their income or profits. It is a tax levied on salaries, wages, interests, dividends, and other income a person earns throughout the year.
In Singapore, the personal income rates depend on the person’s residency status. Singapore will treat you as a tax resident for a particular Year of Assessment (YA) if you meet all the following requirements:
- If you are a Singapore resident
- If you are a Singapore Permanent Resident who lives in Singapore except on a temporary basis
- If you are a foreigner who has worked and stayed in Singapore for a minimum of 183 days in the previous calendar or three consecutive years continuously
- If you are a foreigner who has worked in Singapore continuously for 2 years and stayed in Singapore for at least 183 days. This includes employees who have to Singapore but excludes public entertainers, company directors, or professionals.
- If you do not meet the above requirements, you will be treated as a non-resident regarding tax.
It is also important to note that Singapore’s income tax is progressive. This means the higher you earn, the higher your tax will be. The highest personal income tax rate currently is 22%. The top marginal personal income tax rate will also be in effect from Year of Assessment (YA) 2024.
The chargeable income above S$500,000 to S$1 million will be taxed at 23%. The excess above S$1 million will be taxed at 24%.
What Are the Rates for Personal Income Taxes?
Singapore has one of the world’s lowest personal income tax rates, making it ideal for high-income earners. It is based on a progressive structure based on your tax residency and the amount of chargeable income. Singapore’s income tax rate starts from 0% ending at 22% above S$320,000.
Individuals are only taxed based on the income they earn in Singapore. This means that the income individuals earn while working overseas is not taxed except for a few exceptions. Singapore does not also charge inheritance tax or capital gains.
Individuals are expected to have filed their taxes by April 15th every year. It is also important to note that tax rules often differ from one tax residency to another. It is mandatory for individuals earning S$20,000 annually to file their taxes.
Residents earning S$20,000 and below do not need to file their returns unless the Singapore tax authority informs them otherwise. Additional earned income relief such as Supplementary Retirement Scheme (SRS) is given to reduce the payable tax depending on the residents’ age.
Here is a look at the personal income rates for residents and non-residents:
Residents Tax Rates
From YA 2017 to YA 2023
|Chargeable Income||Rate (%)||Gross Tax Payable ($)|
On the first 20,000
On the first 30,000
On the first 40,000
On the first 80,000
On the first 120,000
On the first 160,000
On the first 200,000
On the first 240,000
On the first 280,000
On the first 320,000
Singapore residents pay taxes on their Total chargeable income, which is determined as follows:
- Total income| Less Expenses
- Statutory Income| Less Donations
- Assessable Income| Less Personal relief
Total income can be:
Profits or any gains from any business, profession, trade, or vocation where you can either be a sole proprietor or a partner in a partnership.
- Profits of gain from any employment
- Investment income, dividends, or interests
- Royalties, rent, premiums, or other profits from properties
It, however, excludes any income earned overseas
- Qualified rental-related expenses
- Qualified employment-related expenses
Personal relief means:
- Earned income relief
- Parent relief
- Eligible course fees
- Any money contributed towards qualified charitable organizations
PS! Chargeable income is after all the deductions from the total income.
Non-Resident Tax Rates
|Type of Income||Non-resident individual tax rate/withholding tax rate from YA 2017|
|Income derived from activities as a non-resident professional (consultant, trainer, coach, etc.)||15% of gross income or 22% of net income|
|Income derived from activities as a non-resident professional (consultant, trainer, coach, etc.)||10% concessionary rate (No change)|
|Other income, e.g., rental income derived from a Singapore property||22%|
|SRS withdrawal by a non-citizen SRS member||22%|
|Interest, royalty, etc.||
Reduced final withholding tax rate (subject to conditions) as follows:
As mentioned earlier, a non-resident is a foreigner who has lived in Singapore for less than 183 days of a tax year. Here is how non-residents are taxed in Singapore:
Your income is exempted from tax if you are in Singapore for short-term employment for 60 days or less than a year. However, this does not apply to Singapore’s public entertainers, company directors, or working professionals. Here ‘professionals’ refer to foreign speakers, experts, consultants, queen’s counsels, coaches, or trainers.
Any income earned in Singapore will be taxed if you stay in Singapore for 61 to 182 days. You may claim expenses and donations to save on tax but will not be eligible to claim personal relief. Your income tax will be taxed at 15% or the progressive tax rate as stated in the table above.
Director remuneration and consultation fees and other incomes are taxed from 15% to 22%.
How Do I File My Personal Income Tax Returns?
If you are an eligible taxpayer, you should file your returns yearly. You should submit all the completed forms to the Singapore Tax Authority by April 15th.
If you earn S$20,000 annually or less, you will receive an email or SMS stating that you do not need to file your returns. You may, however, need to file your returns if you have been informed to submit your tax form by the tax authorities. You would need to declare zero income in your tax form if you did not have any income in the previous years.
Here are the steps to follow:
Step 1: You must file your returns if you earn S$22,000 and more annually. You can file your returns either by mail or online. The IRAS will send the required tax form upon request. However, the online form is always available from March 1st each year. Here are the different forms available:
- Form B1: For tax residents
- Form B: For Self-employed residents
- Form M: For non-residents
Please note that you will be penalized if you do not file your returns or are late. IRAS take legal action against tax residents for not paying or filing their returns.
Step 2: Once you file your returns, you will receive a tax bill or Notice of Assessment from May to September. The tax bill indicates the amount of tax that you need to pay. If you do not agree with the amount on the bill, you can inform the Singapore Tax Authority in no less than 30 days from the date of your tax bill and state the reasons for your objections.
Step 3: You will also need to pay the full amount stated on the tax bill within 30 days. Please note this is whether or not you have informed the tax authority about your objection. If you do not settle the bill within 30 days, a penalty will be imposed.
1. How Is Income Earned Overseas Taxed?
According to Singapore regulations, overseas income received in Singapore after January 1st, 2004, is not taxable. This means you do not need to declare overseas income paid to your Singapore bank account.
However, there are specific circumstances where overseas income is taxed. They include:
- If the income is received in Singapore through partnerships.
- Your employment is incidental to your Singapore employment. Meaning part of your work in Singapore needs you to travel.
- If you are employed outside of Singapore on behalf of the Singapore Government.
- You are required to declare qualified taxable overseas income under ‘other income ‘or ’employment income in your tax form wherever applicable.
2. What Are the Tax Treatment For Employer Benefits In Singapore?
All gains and profits from employment are taxable unless an administrative concession has exempted them. Some examples of employer benefits include:
- Reimburse dental or medical treatments for dependents other than you, your spouse or children.
- Car provided by the employers
- Overtime payments
- Fixed monthly allowance for transports
- Daily allowances for overseas trips for business purposes
- Monthly meal allowance
It is also important to note that non-residents’ income can either be taxed at a flat rate of 15% or at the progressive resident tax rates depending on whichever is higher.
3. Can I File Taxes Electronically As An Employee?
Yes. You can file your annual returns through either the following options:
- Paper Form through mail
- E-filing at myTax Portal
If you decide to file your tax returns through the mail, IRAS will send you the paper tax forms. On the other hand, the online form is available on March 1st every year.
4. When Is the Deadline for Filing Your Personal Income Tax in Singapore?
The due date for e-filing is April 18th, while the deadline for paper filing is April 15th. Income tax is assessed based on your income in the preceding year. This means these are the dates to file the returns from your previous year.
5. What Are the Penalties for Filing Your Tax Returns Late or Not Filing Them?
IRAS measures individuals who do not file their returns or file late. These measures include:
- A late filing fee can range from S$150 to S$1,000. The penalty depends on your filing and tax payment history. If you are a repeat offender, you will likely be charged higher fees.
- IRAS may issue an Estimated Notice of Assessment.
- If the IRAS does not receive the required tax return and payment for filing later, it can issue summon to attend court.
It is important to note that you are likely to get imprisoned if you do not pay the imposed fee in time.
6. What Are the Common Mistakes People Make While Filing Returns?
Here are some common mistakes that most people make that you can try to avoid:
- Claiming inappropriate deductions
- Incorrect declaration of income
- Claiming the wrong CPF contributions
- Submitting the wrong documents
- Forgetting to click the ‘submit Income Return’ button
7. How Do I Report Income If I Worked for More Than One Company?
The process of filing your returns if you worked for more than one company depends on whether the companies participated in the Auto-Inclusion Scheme of Employment Income. Here are the three possible scenarios on how to go about it.
- Suppose both companies you worked for were part of the Auto-inclusion Scheme for Employment Income. In that case, you will not need to report the details since your information is already submitted by your employers and included as part of your tax assessment.
- If not all companies you worked for are part of the Auto-Inclusion for Employment Incomes, you will need to fill your total employment income from the companies not participating in the scheme.
- If all the companies are not part of the Auto-inclusion scheme, you will have to report the total amount of your income in the Main Tax Form from all your employers.
8. Can I Make Changes to My Tax Returns After I Have Filed It?
You can make changes only after e-filing your returns. After making the changes, you can re-file the returns through myTax Portal. You must, however, re-file your returns within 14 days of submission.
If you filled out your returns through paper form, you can email IRAS and state the changes you need to be done on your returns.
9. Are Self-Employed Individuals Required to File Their Returns?
Yes. Self-employed individuals are required to declare their business income during the accounting period. Typically, the counting period is a 12-month period in which profits or losses of the business are calculated.
You must have comprehensive records and accounts of your business transactions which receipts, invoices, and vouchers must support, among other documents. You will also be required to prepare a statement of accounts comprising your profit and loss account and the balance sheet.
You can engage a Cooperate Services firm to provide bookkeeping services to ensure that all the records are managed properly.
Self-employed individuals can also take advantage of the pre-filing of Self-Employed Income that automates the transfer of income information to the tax system.
10. Who Is a Singapore Tax Resident?
Singapore considers you a tax resident if you meet the following requirements:
- A Singapore resident
- A Singapore PR (Permanent Resident) or have a permanent home in Singapore
- A foreigner who has been in Singapore for 183 days or more during the relevant tax year
11. Who Is Required to File Taxes in Singapore?
Singapore residents and non-residents who have sourced their income in Singapore must file their taxes every year. However, residents who earn less than S22,000 are not required to pay taxes but can file zero returns if IRAS has informed them.
See Also: How To Pay Your Income Tax in 2022
Singapore taxation is based on a progressive structure which means the more you earn, the more tax you pay. Tax liability is determined by the tax residency and the amount of chargeable income. Singapore’s tax rate starts from 0% to 22% but will soon rise to 24%.
- Singapore’s tax rate ranges from 0% to 22% for income earners above S$320,000.
- People are only taxed for income earned in Singapore, except for a few exceptions.
- The deadline for filing your returns is on April 15th every year.
- The taxable income is always assessed from the preceding year.
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