Singapore is known to have one of the lowest tax in Asia. Though some individuals may feel that paying taxes is a bitter pill to swallow, it saves you from certain consequences in the future.
Here is your guide on Personal Income Tax
Know how much tax to pay, how to file your income tax returns and if you even have to do it.
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You see, not all individuals living in the island-state are required to pay and file personal income tax returns. You are a Singapore’s taxpayer if you meet one of the following:
- A Singaporean citizen
- A Permanent Resident who have already established a home in the city
- A foreign national who has stayed or worked in Singapore for at least of 183 days during the tax year
Every year taxpayers are required to file their personal income tax. If you are not sure if you need to file yours, here is a simple flowchart:
Personal Income Tax Rates
Singapore uses a progressive income tax rate. This is a system that charges higher tax rates to taxpayers with higher incomes. The city-state increased the maximum tax rate to 22% starting this 2017. Taxpayers with annual income of $160,000 and higher are the ones to get affected by the change in tax rates.
Your tax rate depends on the annual chargeable income. The chargeable income is the amount left when all expenses, donations and personal reliefs have been deducted from your total annual income.
How is Your Tax Calculated?
Let’s say you are earning $2,500 a month with a 13th-month bonus each year. We will consider that you have no other means of income and you have nothing to deduct. Based on the residents tax rates table:
$2,500 x 12 months = $30,000 + $2,500 (13th month bonus)
Total annual income: $32,500
- The first $20,000 earned is non-taxable.
- The additional $10,000 is taxed at 2% = $200
- $2,500 (13th month bonus) is taxed at 5% = $87.50
- Total Tax: $200 + $87.50 = $287.50
This is cashless, electronic and can be scheduled. Manage your GIRO Arrangements through your bank’s online banking. Every month IRAS will send a letter on how much will be deducted on your bank account.
- Internet Banking
Log in to your bank’s banking portal. Find the “Bill Payment” and indicate or choose IRAS as the billing organization. Tax Reference Number must also be indicated. Your payment slip will be issued with your tax bill.
- Cash and NETS and cheques
You can also make payments by cash, and NETS in any bank in the city-state. You’ll need your payment slip and expect to get a receipt once your transaction has been successful.
- Cheque and Cashier’s Order
Do not expect any receipt. For your payment to be credited, you will need to attach the lower portion of your Payment Slip to the cashier or cheque order.
How to File Your Personal Income Taxes
Online tax filing has been introduced in 1992 to make then process more efficient and less at risk for corruption. Currently, you will need to get a SingPass or IRAS Pin to access the online system. Log in to myTax Portal through your desktop or smartphone.
Step 1: Log in to myTax Portal through your desktop or smartphone.
Step 2: Use your SingPass or IRAS PIN (Be ready with SingPass 2-step verification (2FA) before you can file your taxes.)
Step 3: Fill in the required information such as your income, deductions and received reliefs. Then, upload the needed documents such as proof of other income if applicable, documents of your dependents or rental income.
Step 4: An instant acknowledgment will be sent to you after you have e-Filed successfully.
- As much as possible do not keep the tax form page idle for more than 20 minutes. You might have to redo it again. If you are not able to complete your filing at one session, you can just save the tax return as ‘draft.’
- The “draft” is considered not yet submitted. It will be retained in the portal for 14 days.
- To retrieve the draft copy of your Income Tax Return, login to mytax.iras.gov.sg using your SingPass or IRAS PIN. You need to submit your personal tax return on or before 18 April 2017.
- Paper Filing
If your employer is under Auto-Inclusion Scheme, there is no need for you to declare your income. Just indicate “0” on your donations, employment income, Central Provident Fund contributions and insurance premiums taken from your salary.
Step 1: Receive the relevant paper tax return between Feb to Mar each year from IRAS.
This usually contains:
- Form B1 2016
- Appendices 1 and 2
- Guide to Completing Form B1
- Return Envelope
Step 2: Fill up the income tax returns forms.
- For tax resident individuals – Form B1
- For self-employed – Form B
- For non-resident individuals – Form M
Step 3: Sign on Page 1 of the paper tax return.
Step 4: Send back the form using the return envelope provided by 15 Apr 2017.
Paying and filing your taxes may not be the most enjoyable thing to do, but settling it on time saves you a lot of trouble.
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