Singapore personal income tax is determined based on individual’s tax residency status. There are 2 types of individual tax rates, resident and non resident tax rates. In this first instance, let us go through items related to tax resident.
1. Tax Resident
To be considered as a tax resident for a specific Year of Assessment (YA), the following conditions apply:
a. Singapore Citizen or Singapore Permanent Resident residing in Singapore, with temporary absences not affecting residency status.
b. Foreigner:
a. Stayed or worked in Singapore for at least 183 days in the previous calendar year.
b. Stayed or worked in Singapore continuously for 3 consecutive years, even if the duration of stay in Singapore is less than 183 days in the first year and/or third year.
c. Foreigner working in Singapore for a continuous period spanning 2 calendar years:
-The total period of stay must be at least 183 days, including the physical presence immediately before and after employment.
-This applies to employees who entered Singapore, excluding directors of a company, public entertainers, or professionals.
If an individual does not meet any of the above conditions, they will be considered a non-resident of Singapore for tax purposes.
2. Resident tax rates
From YA2024 onwards:
From YA 2017 to YA 2023:
3. Example calculation for tax resident
Ms Judy is 30 years old and single. She earned S$60,000 in 2022. Her chargeable income for the Year of Assessment (YA 2023) is computed as follows:
4. Income exempt from tax
Capital gains
Singapore does not impose taxes on income classified as capital gains. This includes profits from the sale of fixed assets, stocks, bonds, or intangible assets such as goodwill.
Dividend income
Dividends issued by Singaporean companies are not subject to taxation. In certain cases, dividends received from companies based in Hong Kong and Malaysia are also exempt from tax.
Inheritance
In 2008, Singapore abolished inheritance tax, also known as estate duty, on the assets left behind by a deceased individual. Common assets that are no longer subject to taxation include immovable property, bank accounts, publicly listed shares, and items stored in a safe deposit box.
5. Tax Deductions
To provide individuals with further tax relief, Singapore offers various tax deductions in addition to its low tax rates. The following deductions are available:
a. Employment expenses
Individuals can deduct expenses related to their employment, provided they meet certain criteria:
-The expense was incurred while fulfilling job requirements.
-The expense was not reimbursed by the employer.
-The expense does not qualify as a capital expenditure, such as the purchase of a fixed asset.
-The expense was not for personal use.
Examples of deductible employment expenses include:
-Meal expenses
-Transport expenses
-Car services
-Medical reimbursements
-Housing expenses directly related to employment
b. Donations
Individuals are eligible to claim deductions for donations made to qualifying charitable organizations. This includes various types of donations, such as:
-Cash donations
-Donations of shares
-Donations of artifacts
-Donations of land and buildings
Expenses related to rental income: Individuals can also claim deductions for expenses incurred in generating rental income, subject to the following conditions:
-The expense was incurred solely for the purpose of producing rental income.
-The expense was incurred while the property was occupied by a tenant.
c. Tax relief
Singapore tax residents are eligible for tax rebates and relief on the following items:
-Course fee relief
Individuals who invest in upgrading their skills and enhancing their employability can claim reimbursements on course fees as a tax relief.
-CPF Cash Top Up
Tax relief is available for individuals who is topping up money to their Central Provident Fund (CPF) for retirement savings.
-Supplementary Retirement Scheme (SRS) Relief
Tax relief is provided to individuals who participate in the Supplementary Retirement Scheme (SRS), encouraging them to save for retirement beyond their CPF savings.
-Life insurance relief
Life Insurance Relief is a tax benefit provided to individuals who have paid annual insurance premiums for their own life insurance policies in Singapore.
To be eligible for Life Insurance Relief for the Year of Assessment (YA) 2023 in Singapore, you must meet the following conditions:
· Total CPF Contribution
The total CPF contribution made in the year preceding the YA (2022) for compulsory employee's CPF contribution and compulsory Medisave/voluntary CPF contribution as a self-employed individual must be less than $5,000.
· Payment of Insurance Premiums
You must have paid insurance premiums on your own life insurance policy. Additionally, if you are a married man and have paid for your wife's life insurance policy, you may also claim the insurance premiums paid for her policy.
· Insurance Company Presence in Singapore
For policies taken on or after 10 August 1973, the insurance company from which you purchased the policies must have an office or branch in Singapore.
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