Tax filing Singapore is a national responsibility, and everyone eligible for it must participate in it. The taxes help fund the government, which in turn invests the generated revenue on common resources like public transport, infrastructure, etc. The tax eventually gets spent on the public and helps uplift the marginalized population so the whole country can grow together.
Singapore has a significant young population exploring new ways of generating income, and many of them are earning their first salary every year. But the problem is that most of them are not familiar with the taxation system, requirements, eligibility, reliefs, taxability, and most importantly, how to pay income tax in Singapore.
There are many corporate tax services Singapore that can help you with it, but it is best to know your obligations yourself so you can make informed choices.
This blog will cover everything that a beginner needs to know and help seasoned taxpayers who have previously been obtaining corporate tax services Singapore for their tax filing Singapore.
Obligation to Pay Tax in Singapore:
Before we dive into how to, let’s understand if you even need to pay an income tax. According to the law, every individual generating an income in Singapore is obligated to pay taxes. There, of course, are some exemptions, but we will come to that later.
The obligation to pay taxes lies on anybody with an annual income of $22,000 or more. The revenue could be from a job, business, or self-employment regardless of the mode of the job, which means the income from part-time or freelance jobs is also taxable.
Similarly, the taxes are also applicable to somebody who works abroad but has his employment status under Singapore or a foreigner who has been staying and earning in Singapore for over 183 days.
Taxability and Non-Taxability:
Now let’s talk about the exemptions.
The law divides income into two categories, one is taxable, and the other is non-taxable.
For example, it will be taxable if the income is generated from a business, job, or self-employment. It also includes passive income, such as from rentals.
Non-taxable income includes revenue generated from sources like lotteries, pensions, and capital gains from stocks.
Income Tax Calculation:
Singapore has a fair tax system based on equity instead of equality. In simple words, there are different percentages set for different income groups. You will be required to pay more tax if your income is high and less if your income is low.
For general understanding, the tax application starts from an annual income of $20,000. The tax percentages vary from 2% as the least and go up to 22% as the maximum tax.
The complete and updated details of the income tax rate are available on the IRAS website. You should always refer to it for an accurate tax calculation because the information can vary with time.
Tax Reliefs:
Since taxes are for the betterment of the nation, the government of Singapore regularly introduces policies to exempt certain sectors from tax so they can prosper. It also encourages more people to get into that sector and fill the gap.
Besides industrial sectors, individuals can also get tax relief to manage their crucial responsibilities better. The conditions that can get you tax relief in Singapore include having dependent parents or children, course fees, life insurance, Central Provident Fund, Supplementary Retirement Relief, and donations.
Tax Filing Singapore Schedule:
The schedule for filing taxes in Singapore dates to the first quarter of every year. It starts in March when the concerned department starts intimidating you about it and goes till the mid of April, after which you will be penalized for violation.
The tax to be filed is from the previous year. For example, you will pay a tax on your income for 2022 in the first quarter of 2023.
Filing Your Tax in Singapore:
Now that you understand the basic details of tax filing Singapore let’s get towards the actual procedure.
There are two ways to file taxes in Singapore. One is traditional paper filing, and the other is modern electronic filing, recently introduced as a part of the digital revolution in Singapore.
Corporate tax services Singapore recommends using the electronic way as it is much simpler and convenient and also saves valuable resources like paper.
Necessary Resources:
Before you start filing, you need to have the following things in hand so the process is convenient for you:
- SingPass / IRAS Unique Account (IUA)
- Form IR8A (in case your employer is not a participant in the Auto-Inclusion Scheme)
- Dependents details (e.g., child, parent) to claim relief
- Details of rental/other incomes, if any
- Business Registration Number or Partnership Tax Reference Number (only for self-employed and partners)
My Tax Portal:
Once you have all the necessary resources, you are all set to start the tax filing.
The next step would be to log in to myTax Portal using SingPass or IUA and select “Individuals,” followed by “File Income Tax Returns.”
The portal will guide you through further steps, and you can just follow them.
Providing & Verifying Details:
The portal will lead you to a form where you will provide the required details. The details will already be available from your employer if they are a participant in Auto-Inclusion Scheme, and you will only be required to verify them.
Obtaining & Giving Up Reliefs:
The next step would be to avail the reliefs you qualify for and give up the ones that are not applicable to you anymore. An example can be obtaining child relief if you had a newborn in the tax year or giving up a course fee relief if you are no longer eligible for it.
Declaring Sources of Income:
Since the tax is calculated on the gross income, you will need to declare all of them. It could be a new venture that you started in the tax year or one that you shut down.
Acknowledgement:
You would have successfully filed your tax returns if you followed the previous steps correctly and will receive an acknowledgment receipt that you can save and print.
In case you do not want to go for e-filing, you will receive a paper filing form from IRAS between February and March with all the required details of the procedure.
