Singapore is one country that is offering exceptional favours to its citizens and residents in terms of income tax. It is among the countries that charge the lowest income tax but also offers great business and living facilities to people.
So, if you are a Singapore citizen or resident and want to know income tax service rules and regulations in Singapore, this blog will answer all your questions and doubts. Read on and enlighten yourself.
Who Is Required To Pay Income Tax?
Well, according to IRAS all individuals who are earning $20,000 or more are required to pay income tax unless they are included in the exempted class. Here are circumstances that lead you to pay income tax in Singapore:
- You receive income from a full-time job, working as a freelancer, or as a sole proprietor in Singapore.
- You are working outside of Singapore however your work status is under Singapore.
- You are a foreigner but have resided and worked in Singapore for at least 180 days in the past year.
What Is Taxable?
You are required to pay tax for all incomes derived from sources in Singapore except for some exemptions which we will discuss next.
- Taxable income sources are:
- Salary earned for employment in Singapore.
- Rent, royalties, and property profits earned from sources within Singapore.
- Profits and gains earned through business, trade, profession, or vocation.
- Certain gains from dividends, interests, and discounts.
- Earnings from salary bonus.
- Earnings from director’s fee.
- Earning from special grants from the government like PIC bonuses, special employment credit, wage credit payout, COVID-19 payout, etc are taxable.
What Is Non-Taxable?
Now you must be thinking about what is exempted from taxation in Singapore. Here is what you are looking for:
- Earnings from a foreign source such as property or dividends are not taxable.
- Earnings from the sale of fixed assets are not taxable.
- Overseas earnings wired to Singapore after the 1st of January, 2004 are not taxable.
- Welfare, child support, and certain healthcare payments are not taxable.
- Capital gains from inheritance, gifts, and bequests are not taxable.
- Alimony payments for decrees finalized after 2018 are not taxable.
- Money received through life insurance in case of the death of a loved one is not taxable. However, if you cash the insurance, some portion of it will be taxed if not the whole.
- Qualified scholarship money is also not taxable however if you use it for personal expenses, you are obliged to pay the tax for that amount.
What Are Income Tax Rates In Singapore?
Here are the income tax rates according to per-year income:
| Chargeable Income | Income Tax Rate | Gross Tax Payable |
| First $20,000 Next $10,000 | 0 2% | 0 $200 |
| First $30,000 Next $10,000 | – 3.5% | $200 $350 |
| First $40,000 Next $40,000 | – 7% | $550 $2,800 |
| First $80,000 Next $40,000 | – 11.5% | $3,350 $4,600 |
| First $120,000 Next $40,000 | – 15% | $7,950 $6,000 |
| First $160,000 Next $40,000 | – 18% | $13,950 $7,200 |
| First $200,000 Next $40,000 | – 19% | $21,150 $7,600 |
| First $240,000 Next $40,000 | – 19.5% | $28,750 $7,800 |
| First $280,000 Next $40,000 | – 20% | $36,550 $8,000 |
| First $320,000 In excess of $320,000 | – 22% | $44,550 |
What Is The Process Of Filing Income Tax?
There are two ways of filing income tax returns. The first is the manual method and the other is the online method. Nowadays, people prefer the online method because it is more convenient and easier.
Here are steps to file income tax return online:
Prepare Required Resources
First things first, prepare all the required documents and resources. You will need:
- SignPass of IRAS account
- IR8A form if your employer is not opting for Auto-Inclusion Scheme.
- Particulars of your dependents.
- Details of your rental property and other incomes.
- Business registration number or partnership number if you are self-employed or a partner
Sign In To MyTax Portal
Next, you will sign in to your myTax portal on the IRAS website using SignPass. Once signed in, click on ‘Individuals’ and then on ‘File Income Tac Returns’. After that follow the instructions.
Enter And Verify Your Details
The next step is to enter all the details you are asked for correctly such as income, deductions, and tax reliefs. You will also be asked to verify some pre-filled information.
Update Tax Reliefs
Update your tax reliefs. If you qualify for a certain tax relief, claim for it and if you disqualify for any pre-qualified relief, remove it.
Declare All Other Sources Of Income
In this step, declare all your income sources. This can be income from rental property or any other source.
Receive Receipt
After completing all the above steps, you will receive an acknowledgment receipt from IRAS. Save it or print a copy for future use.
We hope our blog will help answer all your questions. If you are looking for income tax filing services in Singapore, WZ Wu & Partners is the place to be. We are a small accountancy firm providing full-suite professional accountancy and corporate services to our clients and individuals. Feel free to contact us for professional income tax services.
