A Guide to Income Tax in Singapore
Income tax is one of those facts of life, essential but not something anyone is particularly happy about, or inclined to talk about. In Singapore however we do have one of the lowest rates of personal income tax in the world, despite having the benefits of a first world economy, infrastructure and lifestyle. Singapore is also rare in that there is no capital gains tax, or inheritance tax levied on its citizens or residents.
There are several important factors that need to be taken into consideration when calculating the amount of tax you need to pay. First of all, you are only liable to pay tax on the income you earn in Singapore. Though you may have to notify the relevant countries authorities about money earned overseas, that is irrelevant when it comes to submitting your Singapore tax returns. Like in many other countries, Singapore uses a sliding scale tax rate, meaning the more you earn, the higher percentage you pay in income tax.
Those earning $20,000 or less do not have to pay income tax (but they still may be required to fill out a tax return if asked to do so). Those earning more will pay progressively more, with those earning in excess of $320,000 a year paying 22%. The scale changes slightly most years and the 2017 rates can be at the link below,
https://www.iras.gov.sg/irashome/Individuals/Locals/Working-Out-Your-Taxes/Income-Tax-Rates/
All income tax is assessed on the preceding year, and everyone classed as a tax resident must file their returns no later than April 15th of each year. Tax residents are defined as being either a Singaporean, a PR, or a foreigner who has stayed and worked in Singapore for 183 days or more within the tax year.
Income tax is calculated on what is called chargeable income. To work out your own chargeable income is simple, and can be done using the following equation:
Total Income – Expenses = Statutory Income
Statutory Income – Donations = Assessable Income
Assessable Income – Personal Reliefs = Chargeable Income
So
Chargeable Income = Total Income – Expenses – Donations – Personal Reliefs
Where:
Expenses are any qualified employment or rental related expenses
Donations are to qualified charitable organizations
Personal Reliefs include earned income relief, parental relief and eligible course fees
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