Personal income tax is a type of tax that governments appoint on income generated by the individuals within their jurisdiction.
In Singapore, those who are considered tax residents are a Singapore Citizen (SC), Singapore Permanent Resident (PR) who resides in the country, except for temporary absence, and foreigners who have stayed or worked in Singapore for 183 days or more in the year preceding the Year of Assessment (YA).
Other than that, you will be treated as a non-resident of Singapore for tax purposes. Hence, in this article, you will find the information about personal income tax in Singapore, as well as personal income for investors, and how to report the income tax in the country. To know more about it, please read the entire article!
Personal Income Tax Rates
There are some key facts about personal taxes, such as, Singapore tax residents are taxed at a progressive rate of 0% to 22%, while the non-tax residents are taxed at a rate that varies between 15% to 22%.
However, there are no taxes on capital gains, dividends, or inheritance. Also, foreign-sourced income is exempt from taxes with a few exceptions.
Individuals resident in Singapore are taxed on a progressive resident tax rate. Filling a personal tax return for tax residents is mandatory if your annual income is S$22.000 or more. However, the residents do not need to pay tax if the annual income is less than S$22.000. Below is the progressive resident tax rate!
Nonetheless, Singapore does not tax any income that can be considered capital gains including the sale of fixed assets, stock or bonds or intangible assets such as goodwill. Also, Singapore does not tax dividends issued by Singapore companies, dividends from Hong Kong and Malaysia based companies are also not taxed.
In addition, Singapore allows to reduce the tax burden on individuals even further. For example, individuals can deduct expenses acquired as a part of their employment as long as the expenses meet the following criteria:
- The expense is incurred while carrying out the requirements of the job.
- The expense is not reimbursed by the employer.
- The expense is not a capital expenditure, such as the purchase of a fixed asset.
- The expense is not for personal use.
Singapore tax residents can also receive tax rebates and relief for the following items:
- Course fee relief → Reimbursement on course fees for individuals who invest in upgrading their skills and improving their employability.
- CPF Cash Top Up → Tax relief for individuals who set money aside for retirement.
- Supplementary Retirement Scheme (SRS) Relief → Tax relief to encourage individuals to save for their retirement beyond their CPF savings.
If you are an investor in a company in Singapore, you might pay attention to this one. The country allows angel investors to deduct their investments in new startups under the following conditions:
- The angel invests at least S$100.000 of qualifying investment in a qualifying startup company within 12 months of the initial investment
- The angel holds the investment for a continuous period of 2 years from the date of the last qualifying investment.
How To Report Personal Income Tax?
It is similar to corporate income taxes, individuals must file taxes every year with the Inland Revenue Authority of Singapore (IRAS). You must file the individual income taxes on 18 April for E-filing, and 15 April for paper filing.
Taxes are assessed based on the income earned from January 1 to December 31 of the previous year. For example, personal taxes filed in 2019 cover the income earned from January 1 to December 31 of 2018).
Individuals who make less than S$22.000 do not have to pay taxes in Singapore, but they still need to file taxes with IRAS.
Step 1 → Get a SingPass or IRAS Unique Account (IUA)
SingPass is a common password that you can use to access all Government e-Services. You can apply for SingPass online and you should receive it within 4 working days. 2-Step Verification (or 2FA) is required when using SingPass.
If you are not eligible for SingPass, you may apply for an IRAS Unique Account (IUA) online.
Step 2 → Prepare The Documents
Have these documents ready, before logging in to myTax Portal.
- SingPass / IRAS Unique Account (IUA)
- Form IR8A (if your employer is not participating in the Auto-Inclusion Scheme)
- Particulars of your dependants for new relief claims
- Details of rental income from your property and other income, if any
- Business Registration Number / Partnership Tax Reference Number (for self-employed and partners only)
Step 3 → Log in to myTax Portal
Log in to myTax Portal with your SingPass / IRAS Unique Account (IUA). Click on “Individuals” > “File Income Tax Return” to start. This electronic tax form may take you 5-10 minutes to complete.
Step 4 → Verify Your Details
IRAS will pre-fill the following information in the online tax form:
- All income, deductions and reliefs from organisations participating in the Auto-Inclusion Scheme.
- Reliefs allowed to you in the previous year.
- Tenanted property information based on your preceding year declaration and/or e-Stamping records.
Verify that all the pre-filled information is accurate and complete. You need to re-submit the information if there are errors in the original submission.
Step 5 → Update Existing Tax Reliefs
If you previously claimed any reliefs but no longer qualify for them, please remove the pre-filled reliefs when you e-File. You can also change the amount of reliefs which are shared with other claimants.
If you qualify for additional or new reliefs, please include the claims when you e-File.
Step 6 → Declare Other Source of Income
If you have received any other sources of income that are not pre-filled, such as rental income in the previous year, you need to declare the income in the tax form.
Step 7 → Receive Acknowledgement Receipt
An acknowledgement page will be shown after you have e-Filed successfully. You are advised to save a copy or print the page for future reference.
In conclusion, you need to pay attention to the detailed information above, as you will know how much your personal income tax rates are, what the required documents are that you need to prepare, the deadline, and lastly the steps to report your personal income tax. However, you need to prepare everything, so you will not face the errors on your submission!