It’s the time of the year again.
Nah… to pay our Personal Income Tax.
What Exactly is Income Tax?
I get that the word sounds pretty cheem but we’ve simplified it in this cheat sheet as well as listed ways which you can reduce your income tax!
(Legally, of course.)
Basically, you can think of Income Tax as your ‘subscription fee’ for living in Singapore.
The tax that you pay allows you to enjoy common public amenities — such as roads and buildings — or benefits — like healthcare and education subsidies.
Just like how we pay for our monthly Netflix subscriptions.
Note: the Singapore government collects money through other forms of taxes too, like Corporate Income Tax, Goods & Service Tax (GST), and Property Tax.
Do I Need to Pay Income Tax?
Wondering if you need to pay Income Tax?
Generally, you’ll need to pay taxes if:
- You earn a gross income (includes salaries and rental income) of $22,000 or more in a year
- You receive or derive a net business income in Singapore that is more than $6,000
So if you think about it, being a child is kinda like the free trial before you hit adulthood, start working, and have to pay taxes.
The Ultimate Checklist to Paying Your Income Tax: How to Calculate My Income Tax?
Calculating your Income Tax is probably the most troublesome thing to do.
But it still needs to be done!
So stop procrastinating and let’s calculate our taxes together with this simple checklist!
To make things easier, here’re a couple of free tools which I found on the IRAS website that I kope-d to help us:
For those who are under the No-Filing Service (NFS) or Auto-Inclusion Scheme (AIS) for Employment Income, lucky you!
You don’t need to go through the hassle of calculating and filing your own taxes.
But if you’d like, you can also join in to see how else you can reduce your taxes!
Let’s get started!
1. What Is My Assessable Income?
‘Assessable income’ is your total income after deducting allowable expenses and approved donations.
Your Total Income includes:
a) trade income for the accounting year;
b) employment income; and/or
c) other income.
Otherwise, that’s considered as tax evasion and you’ll be subjected to penalties!
In case you’re wondering, other income includes:
- Dividends paid by co-operatives or foreign-sourced dividends derived through a partnership in Singapore
- Interest from deposits with non-approved banks or finance companies not licensed in Singapore
- Rent from Property
- Royalty, Charge, Estate/Trust Income
- Gains or Profits of an Income Nature
Pro-Tip: By topping up both your parents and/or your CPF accounts, you can reduce your chargeable income and your total taxable amount!
You can also pair this with a couple of CPF hacks and tips to maximise your CPF!
2. Have You Made Any Donations?
Did you know that the more you donate, the more you will be able to reduce your taxable income?
As long as these donations are approved, you can enjoy a tax deduction of 2.5 times the amount you donated.
It’s just like how the Chinese saying goes: “好人有好报 (Chinese: Good karma will always be rewarded)”!
3. Can You Claim Any Personal Reliefs?
We, Singaporeans are notoriously kiam siap (Hokkien: stingy).
So if there’s any way to reduce our tax, we’ll definitely want to do it!
Here’re the types of reliefs which you can (potentially) claim:
|General Reliefs Available to ALL Taxpayers||Amount of Tax Relief Each Year||Additional Reliefs Available to Married/ Divorced/ Widowed Taxpayers|
|Note: Eligibility is dependent on individual meeting the qualifying criteria||Available to Male and Female Taxpayers||Available to Female Taxpayers|
|Course Fees Relief||Up to $5,500||Qualifying/ Handicapped Child Relief|
Spouse/ Handicapped Spouse Relief
|Foreign Domestic Worker Levy Relief
Grandparent Caregiver Relief
Working Mother's Child Relief
|CPF Cash Top Up for Special/Retirement/MediSave accounts (not allowed by CPF Board if the recipient is a self-employed person (SEP) with outstanding MediSave liabilities)|
(You and your family member)
|Up to $16,000
($8,000 for self, $8,000 for family members)
|CPF Relief for Self-Employed||Tax relief for your compulsory Medisave and voluntary CPF contributions will be capped at the lowest of:
-37% of your net trade income assessed for YA 2023
-CPF annual limit of $37,740
-Actual amount contributed by you in 2022
|Earned Income Relief||Below 55: $1,000
55 to 59: $6,000
60 and above: $8,000
|Earn Income Relief|
(for handicapped person)
|Below 55: $4,000
55 to 59: $10,000
60 and above: $12,000
|Handicapped Brother/Sister Relief||$5,500 for each handicapped sibling or sibling-in-law|
|Life Insurance Relief|
(Your total contributions for the following in 2022 was less than $5,000:
a. compulsory employee’s CPF contribution
b. compulsory Medisave/voluntary CPF contribution as a self-employed individual)
|The lower of the:
Difference between $5,000 and your CPF contribution
Up to 7% of the insured value of your own/your wife's life or the amount of insurance premiums paid
|NSman Relief||Self: $1,500 - $5,000
Parent With NSman child: $750
|Parent Relief||Taxpayer stays with dependant:
$9,000 per dependant
Taxpayer does not stay with dependant:
$5,500 per dependant
|Handicapped Parent Relief||Taxpayer stays with dependant:
$14,000 per dependant
Taxpayer does not stay with dependant:
$10,000 per dependant
|Supplementary Retirement Scheme (SRS) Relief||Singapore Citizens/Permanent Residents: lower of actual contribution or $15,300
Foreigners: lower of actual contribution or $35,700
So check your eligibility and claim as many as you can!
That being said, the Income Tax relief ceiling is capped at $80,000 per year of assessment.
Pro-Tip: Leverage on the Supplementary Retirement Scheme Relief to save for your retirement and claim up to $15,300 worth of tax savings!
4. So… How Much Tax Do I Need to Pay?
Once you’ve deducted any qualifying donations and reliefs.
All you need to do is use this table:
|Chargeable Income||Income Tax Rate (%)||Gross Tax Payable (S$)||Total Income Tax in this income bracket (S$)|
|First $20,000 |
|First $30,000 |
|First $40,000 |
|First $80,000 |
|First $120,000 |
|First $160,000 |
|First $200,000 |
|First $240,000 |
|First $280,000 |
|First $320,000 |
In excess of $320,000
And look for your respective income tax bracket to find out how much you’ll need to pay!
How Do I Pay My Income Tax?
There are a few ways to go about paying your Income Tax:
- Internet Banking
- ATM or AXS or SAM
- NETS (only available over the counter at any Singapore Post branch)
- Credit Card
According to the Seedly Community, the most popular method seems to be via GIRO — which is also the most fuss-free method.
You can choose between 12 months interest-free or a one-time deduction and set it up via myTaxPortal.
However, some community members have also suggested using credit cards to pay to maximise your credit card usage and earn cash back or miles!
Time to Pay Your Income Taxes
The annual Income Tax filing period usually starts at the beginning of March to mid-April.
For 2020, the deadline has been extended from 18 April (Saturday) to 31 May (Sunday)!
PSA: if you fail to file your income taxes within this stipulated period, you’ll have to pay penalties (read: more money that you’ll have to fork out)!
Think of this date as something you can’t miss, like your anniversary date or a loved one’s birthday.
So mai tu liao (Hokkien: don’t delay anymore), start calculating and filing your Income Tax NOW!