Freelancer Guide: All You Need To Know About Your Income Taxes

Freelancer Guide: All You Need To Know About Your Income Taxes

Rachel Yeo

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Self-employed persons made up 8 to 10 per cent of the resident workforce in Singapore.

With graduates finding it increasingly hard to find a job in Singapore, many turn to short-term contract roles and freelance jobs to help sustain their lifestyles.

freelancer income tax
Source: giphy

While some may view freelance work as a hobby, there are others who decide to settle into it for the long haul.

If you fall into any of the jobs below, this one’s for you!

  • Tutors
  • Insurance Agents
  • Property Agents
  • Private Hire Drivers
  • Photographers or Videographers
  • Social Media Influencers
  • Designers

(This list is not exhaustive)

TL;DR: Here’s All You Need To Know About Your Income Taxes As A Freelancer

income tax relief option

Wah Shiok! Freelancers Don’t Need To Pay Taxes?!

Before you get too happy, this is not true. For those of you who didn’t know, you are required to pay income tax once your income exceeds $22,000 in a year! 

This means that if you’re getting an average take-home pay of ~$1800/month, you will have to pay income taxes to IRAS.

If you’re not working but receive the following income (that exceeds $22,000/yr), you are also required to pay income taxes:

  • Income from investments
  • NSman income (including all awards and allowance such as IPPT monetary incentives)
  • Part-time income
  • Pension
  • Royalty income
  • Supplementary Retirement Scheme (SRS) withdrawals

How Much Income Tax Do I Have To Pay?

income text money
Source: giphy

Before delving into the details, you have to note that your income tax is tabulated based on your yearly employment income.

For Singapore Residents, your tax rates for 2018/2019 are as follows:

Chargeable IncomeIncome Tax Rate (%)Gross Tax Payable (S$)
First $20,000
Next $10,000
First $30,000
Next $10,000
First $40,000
Next $40,000
First $80,000
Next $40,000
First $120,000
Next $40,000
First $160,000
Next $40,000
First $200,000
Next $40,000
First $240,000
Next $40,000
First $280,000
Next $40,000
First $320,000
In excess of $320,000

*Note: Chargeable income refers to the income you earn in a year 

For example, if I am earning an average of $3,000 a month as a freelancer, this will amount to $36,000 employment income in a year.

Assuming that I do not engage in any activities that will give me tax relief, I will have to pay the following amount in taxes.

income taxes for freelancers
Source: Singapore Company Incorporation

For YA 2019, all tax residents will receive an income tax rebate of up to $200. (See the $200 discount in income tax you’re getting in the picture? I’m talking about that 😉 )

You will be treated as a tax resident for a particular YA if you are:

  • Singaporean citizen or Singapore Permanent Resident residing in Singapore;
  • A foreigner who has stayed/worked in Singapore (excluding director of a company) for 183 days or more in the previous year.

(However, if you are the BiG B0$$- i.e director of a company, you will be taxed differently)

Too complicated? You can use this Personal tax Calculator to calculate the exact amount of taxes you have to pay!

“I don’t want to pay, can siam or not?”

Let’s get real, nobody really likes to pay taxes. For freelancers and self-employed individuals, there is always that temptation to not declare your income. That is however deemed as tax evasion, and you will get fined for it.

Not filing your tax return correctly could get you fined up to 300% of the amount of the taxes you were supposed to pay for. You can also be fined up to $10,000 and/or up to 3 years of imprisonment.

Source: Giphy

How To Declare Your Income As A Self Employed Person?

Here’s the important part:

All self-employed persons must report the income earned from their business operations as business income, and not as salary. The business income is part of the total personal income which is taxed at individual income tax rates. Here’s a step-by-step guide on how to go about doing it:

Step 1Report earnings as business income. The business income is part of the total personal income which is taxed at individual income tax rates.
Step 2Decide on the accounting period Every year, you declare your business income for a specific accounting period. The accounting period is usually a 12-month period of trade for which you calculate your profits or losses.
E.g Accounting Period: 1 Jan 2018 to 31 Dec 2018 (YA 2019)
Step 3 Keep Proper Records And AccountsKeep full and accurate records and accounts of your business transactions from the start. These records and accounts must be supported with invoices, receipts, vouchers, and other documents.
Step 4Prepare Statement of Accounts At the end of every accounting period, you must prepare the statement of accounts comprising:

Profit and Loss Accounts
Balance Sheet
Step 5Prepare 4-Line Statement First line: Revenue
Second line: Gross Profit
Third Line: Allowable Business Expenses
Fourth line: Adjusted Profit
Step 6File Income Tax At the beginning of the year and usually by 15 Mar, IRAS will send you a notification or an individual income tax return (Form B or B1) to report your income.

For more information, you can refer to the IRAS Website.

How Can I Reduce The Amount Of Income Taxes I Have To Pay?

Tax Reliefs

For those who’d want to reduce their taxable income (legally), here’s how you can do it without being sued for tax evasion:

Your Cheat Sheet: Personal Income Tax In Singapore YA 2018/2019

Tax Reliefs Available For All Singapore’s Tax Residents

General Reliefs Available to ALL TaxpayersAdditional Reliefs Available to Married/ Divorced/ Widowed Taxpayers
-Available to Male and Female TaxpayersAvailable to Female Taxpayers
• Course Fees Relief
• CPF Cash Top Up Relief*
• CPF Relief*
- CPF / Provident Fund Relief: For Employees Only,
- CPF/ Provident Fund Relief: For Self-Employed/ Employee who is also Self Employed
- CPF/ Provident Fund Relief: Compulsory and Voluntary Medisave Contribution
• Earned Income Relief
• Handicapped Brother/ Sister Relief
• Life Insurance Relief
• NSman (Self) Relief
• Parent/ Handicapped Parent Relief (For maintenance of parents, grandparents & great-grandparents, including in-laws)
• Supplementary Retirement Scheme (SRS) Relief

*Applicable to Singapore Citizens and Singapore Permanent Residents (PRs) only.
• NSman (Wife/Parent) Relief
• Qualifying/ Handicapped Child Relief
• Spouse/ Handicapped Spouse Relief
• Foreign Maid Levy Relief
• Grandparent Caregiver Relief
• Working Mother's Child Relief

Want to know more? This Cheat Sheet For Personal Income Tax In Singapore (2019) will be useful for both freelancers and employed persons.

How Do I Pay My Income Tax?

  • GIRO
    Online Application (Instant) / GIRO Form (3 weeks processing time)
  • iBanking
  • AXS / SAM station
  • DBS PayLah!

If you are unable to pay your tax in one lump sum, IRAS allows you to stagger your income tax payable over a stretch of 12 months, with no interest.

This applies to everyone as well.

More ways available here.

The community had also shared with us what the best way is to make your income tax payment.

Income Tax For Freelancers

Whether it’s getting covered by insurance, contributing to your CPF, or filing for your income taxes.

There are a lot of things you’d have to figure out yourself if you are a freelancer or self-employed person.

As your own HR manager, you have to always be in the loop!

In case you’ve missed it, here are some essential guides on insurance

freelance insurance singapore

and about CPF contributions for freelancers and self-employed persons

CPF Contribution for self employed freelancers

Keep hustlin’!

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About Rachel Yeo
Breaking down complicated financial pieces into idiot-proof articles.
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