Salaries Tax plays a crucial role in Singapore's tax structure, encompassing income earned by individuals from employment, office, or pension.
The determination of whether income "arises in or is derived from Singapore" hinges on the location of the employment, the source of income.
Components of Taxable Income
Salaries Tax in Singapore covers a broad spectrum of income sources:
- Employment Income: Encompasses all forms of remuneration, including salary, bonuses, commissions, allowances, and other perks.
- Pensions and Annuities: Payments received as retirement income or annuities.
- Housing Benefits: Value of housing benefits provided by employers, subject to specific computation rules.
- Perquisites: Non-cash benefits or perks received as part of employment.
- Share Option Gains: Gains from exercising share options provided by employers.
Tax Calculation
Singapore's Salaries Tax operates on progressive tax rates, with rates ranging from 2% to 22%. The calculation considers the net chargeable income, and the taxpayer is charged based on the lower amount determined through the progressive and standard rate.
Progressive Tax Rates:
|
On the first SGD 20,000 |
0% |
|
On the next SGD 10,000 |
2% |
|
On the next SGD 10,000 |
3.5% |
|
On the next SGD 40,000 |
7% |
|
On the next SGD 40,000 |
11.5% |
|
On the next SGD 40,000 |
15% |
|
On the next SGD 40,000 |
18% |
|
On the next SGD 40,000 |
19% |
|
On the next SGD 40,000 |
19.5% |
|
On any amount above SGD 320,000 |
22% |
Deductions and Allowances
The following amounts are deductible from the assessable income of a resident individual to arrive at the income subject to tax:
- Spouse relief: SGD 2,000 provided the spouse is living with or supported by the resident individual taxpayer and the annual worldwide income of the spouse is not more than SGD 4,000;
- Handicapped spouse relief: SGD 5,500 for the maintenance of a handicapped spouse. There is no income threshold for this relief;
- Earned income relief: Lesser of actual earned income or SGD 1,000 if age is under 55; increased for individuals who are 55 and over or are handicapped;
-
Child reliefs:
- Qualifying child relief: SGD 4,000 for each child under the age of 16 years or in full-time education provided the child’s annual worldwide income is not more than SGD 4,000;
- Handicapped child: SGD 7,500 instead of the qualifying child relief of SGD 4,000. There is no income threshold for this relief.
-
Aged dependant relief:
- Aged parent or grandparent maintained by taxpayer in Singapore: SGD 5,500;
- Aged parent or grandparent maintained and living with taxpayer in Singapore: SGD 9,000;
- Handicapped aged parent or grandparent maintained by taxpayer in Singapore: SGD 10,000;
- Handicapped aged parent or grandparent maintained and living with taxpayer in Singapore: SGD 14,000.
- Life insurance premium;
- CPF relief;
- SRS relief;
- Educational expenses: Course fees (including tuition and examination fees) not exceeding SGD 5,500 relating to approved academic, professional, or vocational qualifications;
- Foreign domestic worker levy;
- CPF cash top-up relief.
Personal income tax reliefs are subject to a cap of SGD 80,000 per year of assessment.
Filing Process
Each taxpayer in Singapore is obligated to make an annual return of income on a yearly basis. The tax return must be submitted by April 15. This can be done online or via mail.
The appropriate form to be filled out depends on the individual’s tax residency status:
- Tax resident individuals need to file Form B1.
- Self-employed individuals need to file Form B.
- Non-resident individuals need to file Form M.
Singapore’s IRAS can take legal action against individuals who do not file their tax returns or for non-payment of taxes.
Deadlines
Tax returns should be filed:
- By April 15 if filing online.
- By April 18 if filing a paper return.
Conclusion
Understanding Salaries Tax in Singapore requires awareness of taxable income, allowances, tax rates, and filing procedures. For personalized assistance with your salary tax calculation and filing, contact us today.