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JORDANS INTERNATIONAL BUSINESS SERVICES PTE. LTD.
Generally, there are 4 types of individuals that report their taxes in Singapore
1.Tax resident salaried employee
2.Passive investment holder
3.Businessmen(sole-proprietors or partners in partnerships)
4.Non-tax residents(without personal reliefs)
1.Tax resident salaried employee
A tax resident is determined by the:
- Physical presence or exercise of an employment in Singapore for more than 183 days in a calendar year
- stay in Singapore which covers at least three consecutive years of assessment
- usual place of residence or the maintenance of a place of residence in Singapore
- intention to settle in Singapore(in the case of locals seconded overseas)
Individual tax rates for tax residents are on a progressive scale from 0% to 20%, with a 20% tax rebate given against the tax liability(up to a maximum of $2,000)for YA 2008 and 2009 respectively.
| Chargeable Income | Rate(%) | Gross Tax Payable($) |
First $20.000
Next$10,000 | 0
3.50 | 0
350 |
First $30.000
Next$10,000 | -
5.50 | 350
550 |
First $40.000
Next$40,000 | -
8.50 | 900
3,400 |
First $80.000
Next$80,000 | -
14 | 4,300
11,200 |
First $160.000
Next$160,000 | -
17 | 15,500
27,200 |
2.Passive investment holder
Types of income include rental income, interest income, dividend income. Such income is taxed at net, after deducting direct and allowable expenses.
For example, net rental income is arrived at after deducting expenses that have been incurred in the production of the rental income such as agency fees, expenses incurred in the renewal of tenancy agreements, property tax, property insurance, repairs to maintain property,cost of advertising, etc.
Dividend income is tax exempt if received from overseas. It is also tax exempt if received from the normal income of a Singapore company under the one-tier system.
3.Businessmen(sole-proprietors or partners in partnerships)
A 4-line statement (comprising Turnover, Gross Profit/Loss, Allowable Business Expenses and Adjusted Profit/Loss) is required to be computed if the business turnover is more than $100,000 whilst those below are to compute only a 2-line statement.
If the business turnover is more than $500,000, a certified copy of the statement of accounts is required to be submitted to IRAS together with the tax return and the Computation of Adjusted Profit/Loss.
If the business turnover is less than $500,000, the statement of accounts will need to be prepared.
Business may claim capital allowances(computed just like a corporation).
The taxation on the business for a sole proprietor is taxable on him solely, in his name;whilst partnerships will have the Computation of Adjusted Loss(same conditions above apply) drawn up and divided in accordance to the ration of the partnership.
4.Tax Raters & Personal Reliefs for Local Residents
Rates applicable to resident individuals
| Chargeable Income | | | Rate | Gross Tax Paypable |
| | $ | | % | $ |
| On the first | 20,000 | @ | 0 | 0 |
| On the next | 10,000 | @ | 3.5 | 350 |
| On the first | 30,000 | | | 350 |
| On the next | 10,000 | @ | 5.5 | 550 |
| On the first | 40,000 | | | 900 |
| On the next | 40,000 | @ | 8.5 | 3,400 |
| On the first | 80,000 | | | 4,300 |
| On the next | 80,000 | @ | 14 | 11,200 |
| On the first | 160,000 | | | 15,500 |
| On the next | 160,000 | @ | 17 | 27,200 |
| On the first | 320,000 | | | 42,700 |
| Above | 320,000 | @ | 20 | |
Checklist of Tax relief and rebates
| Checklist of Personal Tax relief and rebates | Tax Residents |
| Earned income relief | Yes |
| Maid levy | Yes(married women only) |
| Grandparent caregiver relief | Yes(working mothers only) |
| Handicapped brother/sister relief | Yes |
| Life insurance relief | On self / spouse only |
| NS man(Self/Wife/Parent) | On self / spouse / son only |
| Parent/handicapped parent relief | Yes(claim by only 1 child) |
| Qualifying / handicapped child relief | Yes(claim by only 1 parent) |
| Working mother child relied(child is Singapore citizen) | Yes(QCR/HCR+WMCR capped at $50,000) |
| Wife relief | Yes(male taxpayers only) |
| Parenthood Tax Rebate(child is Singapore citizen) | Yes |
| SRS relief | Yes |
| One-off personal tax rebate | 20% on tax liability(capped at $2,000) |
| Parenthood Tax Rebate | |
| Course fees(must be gainfully employed) | Yes(can be deferred if assessable income < $22,000) |
| CPF cash top-up relief - self | $7,000 |
| CPF cash top-up relief - family | $7,000 |
| Compulsory CPF contributions | Yes(Employee) |
| Medisave/CPF contributions | Yes(Sole-proprietor) |
4. Non tax-residents
The non-tax resident can be taxed either as a Not Ordinarily Resident or an Area Representative.
Employment income is taxed at 15% or resident rate, whichever tax is higher; whilst director's fees, consultation fees and all other income are taxed at 20%.
A nonresident individual's Singapore sourced employment income is taxed at the higher of the 15% nonresident flat rate or the tax computed under the residence basis in the absence of a double tax treaty. For consultancy fees for services rendered in Singapore the consultant has the following choices.
- to suffer a final withholding tax of 15% of the gross income, inclusive of expenses borne by the Singapore payer; or
- o to be taxed at 20% on net income, which the Singapore payer would withhold and pay over to the IRAS. There are restrictions on the expenses that can be deducted against the gross income in arriving at the net amount.
The election has to be made within 45 days of the payment and in the absence of the election the Singapore payer must apply the withholding tax at the flat rate of 15% on the gross income.
Nonresident directors' fees or remuneration is subject to withholding tax at 20%, subject to the provisions of an applicable double taxation agreement.
Total exemptions are granted to the following categories of nonresident visiting individuals:
- employees exercising employment in Singapore for less than 60 days.
Where there are applicable Double Tax Treaties, tax exemptions are granted to:
- public entertainers, artists, musicians and athletes whose visit is substantially supported from the public funds of the foreign country's government;
- employment income of crews employed on ships registered in Singapore if their employment is substantially exercised outside Singapore.
Not Ordinarily Resident Scheme (NOR Scheme)
The NOR Scheme extends favourable tax treatment to qualifying individuals for a period of five years of assessment, provided such individuals meet the following criteria:
- the individual must not have been a Singapore resident in the 3 consecutive years of assessment before the year he first qualifies for the NOR scheme; and
- the individual must be a tax resident for the year of assessment in which he wishes to qualify for the NOR scheme.
Foreign - Sourced Income Received in Singapore
Generally, partners of partnerships in Singapore will be taxed on foreign sourced income. However, the recent 2009 Budget allows for tax exemption on all foreign-sourced income that was earned/ accrued on or before 21 Jan 2009 and remitted to Singapore during the period from 22 Jan 2009 to 21 Jan 2010 (both dates inclusive)
5. Our Services:
- Developing tax-efficient employment remuneration packages
- Structuring tax equalisation and tax protection schemes for your employees
- Advising on stock options and share incentive schemes
- CPF and estate planning
- Conducting workshops to provide guidance on the completion of the Form IR8A
- Individual income tax return preparation and review for your local and expatriate employees, including liaising with the IRAS on all income tax assessments
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