If you are working in Singapore, you probably need to pay tax. It is now being avidly discussed in our community where most people are scrambling to get things together.
Fret not! We designed this to be a really simple and essential guide for you to know what is most important for you.
TL;DR: The basics of personal income tax in Singapore
- Why: As you contribute to the economy, these are the ways to help fund the Government spending on common resources (e.g. Police, Defence, Social security etc)
- Who: This is mandatory for all residents here in Singapore to file (Singaporean, PR or Foreigners) who work in Singapore
- What: You can check in on the rates table below, it’s a tiered system
- How: You can eFile it on myTax Portal or via paper filing
- When: eFiling by 18 April 2018 or via Paper filing by 15 April 2018
- Hacks: You can save on tax legally by various ways like Charity contributions, NSman deductions, CPF Top ups etc.
If you are keen to find out how much tax you will need to pay, you can actually use this Personal tax Calculator here.
Further Reading: Detailed information
In this section, we go deeper into the parts as described above.
Who is subjected to Income Tax
Generally people in Singapore who are residents and who are deriving some form of:
- Employment (Salary or Bonuses)
- Trade, Business, Profession or Vocation
- Property or Investments
- Other Sources (e.g. annuities, royalties, winnings or estate or trust income)
You can refer to the full list of income tax table here.
How to reduce my taxable income (legally)?
Here is the full table of reliefs that one can actually apply for when filing.
Here are the more common ones:
- You are rewarded if you have kids, stay with your parents or serve the country (NS)
- You are also rewarded if you donate to approved charities by the government
- Lastly, and most interestingly you are rewarded if you top up your CPF account (i.e so that you plan for the future for retirement)
- This CPF category also includes the amount that you are forced to contribute monthly (i.e for Citizens and PRs) which should be around 20% of your monthly gross salary
What are the Tax rates:
Here are the rates for Singapore from year 2017 onwards. Correct as of 5th March 2018.
As you can see, as you earn more, the more you get taxed. Which is kind of logical and pragmatic if you think about it… And a thing to note is that Singapore boasts one of the world’s lowest tiered tax rates for a country which is actually pretty high in standard of living. US Californian tax rates fall between 1 and 12.3% for your total taxable sum.
Are my Investment Dividends taxable?
This is a very common question which we always get from our community that we discuss frequently.
Generally, the following dividends are not taxable:
- Dividends paid on or after 1 Jan 2008 by a Singapore resident company under the one-tier corporate tax system except co-operatives;
- Foreign dividends received in Singapore on or after 1 Jan 2004 by resident individuals. If an individual resident in Singapore receives foreign-sourced dividends through a partnership in Singapore, these dividends may be exempt from Singapore tax if certain conditions are met. For details, please refer to Tax Exemption for Foreign-Sourced Income;
- Income distribution from Real Estate Investment Trusts (REITs), except distributions derived by individuals through a partnership in Singapore, or from the carrying on of a trade, business or profession in REITs.
The following dividends are subject to income tax:
- Dividends paid by co-operatives;
- Foreign-sourced dividends derived by individuals through a partnership in Singapore. Conditions may apply. For more details, please refer to Tax Exemption for Foreign-Sourced Income;
- Income distribution from Real Estate Investment Trusts (REITs) derived by individuals through a partnership in Singapore, or from the carrying on of a trade, business or profession in REITs.