Essential Guide: How to Calculate Tax in Singapore
Are you unsure how much income tax you need to pay in Singapore? Understanding how to calculate your personal income tax can save you both time and money. Navigating the complexities of personal income taxation in Singapore can be a daunting task, but with the right guidance, you can maximise your tax efficiency and ensure compliance with the Inland Revenue Authority of Singapore (IRAS) regulations.
In this comprehensive guide, we will delve into the intricacies of tax residency, taxable income sources, tax rates, personal reliefs, and the step-by-step process of calculating your personal income tax liability. Whether you’re a Singaporean citizen, permanent resident, or foreign worker, this guide will equip you with everything you need to understand tax calculations and obligations in Singapore.
✅ Tax Resident or Not? – Stay in Singapore for 183 days or more, and you qualify for progressive tax rates (0%–22%). Otherwise, a flat 15% or 22% applies.
💰 What’s Taxable? – Your salary, bonuses, rental income, and freelance earnings. But CPF contributions, capital gains, and offshore income? Tax-free!
📅 Key Deadlines: File by 15 April (e-filing) or 18 April (paper filing). Pay taxes by 30 April to avoid penalties.
⚖️ How to Reduce Your Tax Bill? – Claim reliefs (CPF, Parent Relief, Course Fees), donate to charities (250% deduction), and contribute to SRS for extra savings.
🚨 Missed the Deadline? – Expect 5% late penalties, extra fines, and possible travel bans if unpaid!
💳 Pay Smartly! – Set up a GIRO plan for monthly instalments or use PayNow, AXS, and internet banking.
🔍 Final Takeaway: Know your tax rates, deductions, and deadlines to avoid overpaying and keep more money in your pocket! 💡💵
Need tax help? Get in touch with Grof to stay compliant and maximise savings! 🚀
The first step in calculating your personal income tax in Singapore is to determine your tax residency status. This distinction is crucial, as it dictates the applicable tax rates and the treatment of your income sources.
You are considered a tax resident in Singapore if you meet any of the following criteria:
If you meet any of these criteria, you will be classified as a tax resident, and your income earned both within and outside of Singapore will be subject to taxation, with certain exceptions for foreign-sourced income.
If you do not meet these conditions, you are classified as a non-resident and will be subject to different tax rates.
Singapore is known for its business-friendly tax system, with one of the lowest personal and corporate tax rates globally. The key types of taxes include:
Understanding how each tax is calculated and when they apply is crucial for individuals and businesses to ensure compliance with Singapore’s tax regulations.
Are you struggling with tax filing, compliance, or GST requirements in Singapore? Navigating the complexities of tax regulations can be overwhelming, but Grof Singapore is here to make it easier for you. Our team of experienced professionals is dedicated to providing comprehensive support for all your company tax-related needs. We offer tailored solutions to ensure you meet all compliance obligations seamlessly. Let us handle the complexities while you focus on what matters most—growing your business. Get in touch with Grof Singapore today, and let us guide you through the intricacies of tax filing and GST compliance with confidence.
Once you’ve established your tax residency status, the next step is to identify the various sources of income that are subject to taxation in Singapore. The key taxable income categories include:
Taxable Income Category | Description |
---|---|
Employment Income | Salaries, bonuses, commissions, and allowances. |
Rental Income | Income from renting out property in Singapore. |
Stock Options & Share Gains | Gains from employer stock options and vested shares. |
Director’s Fees | Fees received for being a director of a company. |
Taxable Benefits-in-Kind | Housing, car benefits, and other non-cash benefits. |
Not all types of income are taxable. Some exemptions include:
Knowing what is taxable vs non-taxable ensures you report your income correctly and claim exemptions where applicable.
To determine your personal income tax liability, you’ll need to calculate your chargeable income, which is the amount of income that is subject to taxation. The formula for calculating chargeable income is as follows:
Chargeable Income = Assessable Income – Deductions
Assessable Income = Total Employment Income – Donations Deductions = Earned Income Relief + Qualifying Child Relief + Employee CPF Contribution Relief + Other Eligible Deductions
The deductions mentioned above are a subset of the various personal reliefs and allowances available to Singapore tax residents. These deductions can help reduce your overall taxable income and, consequently, your tax liability.
Singapore employs a progressive tax system, which means that the higher your chargeable income, the higher the applicable tax rate. The current personal income tax rates in Singapore are as follows:
Chargeable Income | Income Tax Rate (%) | Gross Tax Payable ($) |
First $20,000
Next $10,000 |
0
2 |
0
2 |
First $30,000
Next $10,000 |
–
3.50 |
200
350 |
First $40,000
Next $40,000 |
–
7 |
550
2,800 |
First $80,000
Next $40,000 |
–
11.5 |
3,350
4,600 |
First $120,000
Next $40,000 |
–
15 |
7,950
Next $40,000 |
First $160,000
Next $40,000 |
–
18 |
13,950
7,200 |
First $200,000
Next $40,000 |
–
19 |
21,150
7,600 |
First $240,000
Next $40,000 |
–
19.5 |
28,750
7,800 |
First $280,000
Next $40,000 |
–
20 |
36,550
8,000 |
First $320,000
Next $180,000 |
–
22 |
44,550
39,600 |
First $500,000
Next $500,000 |
–
23 |
84,150
115,000 |
First $1,000,000
In excess of $1,000,000 |
–
24 |
199,150 |
Example Calculation:
If your chargeable income is $85,000, your tax would be calculated as:
Total Tax Payable: $3,925
The tax obligations for non-residents in Singapore differ from those of tax residents. Non-residents are subject to the following tax rates:
Unlike tax residents, non-residents do not qualify for tax reliefs.
As a Singapore tax resident, you may be eligible for various personal reliefs and deductions that can help reduce your overall tax liability. Some of the common reliefs and deductions include:
It’s crucial to carefully review your eligibility for these reliefs and deductions to ensure that you maximize your tax savings.
Once you’ve determined your chargeable income and applied the relevant tax rates, you can calculate your total tax payable. This amount is due for payment within one month from the assessment date, regardless of whether you’ve filed a notice of objection.
Taxpayers in Singapore have the option to apply for a convenient monthly instalment payment plan through the Interbank GIRO system, which allows you to spread your tax payments over a period of time without incurring any interest.
In Singapore, individuals are required to submit an annual income tax return, which includes all necessary details for determining personal reliefs and deductions. The submission deadline for the income tax return is typically the 15th of April, with an extension to the 18th of April for electronic filings.
It’s important to ensure that you provide accurate and complete information in your tax return to avoid any discrepancies or potential penalties from the IRAS.
Filing your personal income tax in Singapore is a straightforward process through the IRAS myTax Portal. Here’s a step-by-step guide:
Once submitted, IRAS will process your return and issue a Notice of Assessment (NOA) detailing the tax amount payable.
Once you receive your Notice of Assessment (NOA), you must settle your tax bill before the 30 April deadline.
Payment Method | Processing Time |
---|---|
GIRO (Instalments) | Monthly deductions |
PayNow QR | Immediate |
AXS Machines | 1-2 working days |
Internet Banking | 1-3 working days |
NETS at IRAS Office | Immediate |
If you prefer monthly instalments, GIRO deductions allow interest-free tax payments over 12 months.
Failing to pay your personal income tax on time can lead to serious consequences:
To avoid penalties, set up a GIRO plan for automated monthly payments.
For non-resident individuals in Singapore, certain types of income are subject to withholding taxes. These include:
Remuneration including director’s fees received by non-resident directors
Income received by non-resident professionals (e.g., consultants, trainers, and coaches) for services performed in Singapore
Income received by non-resident public entertainers for services performed in Singapore
SRS withdrawals received by non-Singapore SRS account holders
Interest, commission, fee, or other payment in connection with any loan or indebtedness
Royalty or other lump sum payments for the use of movable properties
Strategic tax planning can help you legally minimise tax liabilities. Here are some tips:
Navigating the personal income tax landscape in Singapore requires a thorough understanding of tax residency, taxable income sources, deductions, and the applicable tax rates. By familiarising yourself with these key concepts and utilising the available tax reliefs and deductions, you can effectively manage your tax obligations and maximise your financial well-being. Remember, staying informed and seeking professional assistance when needed can go a long way in ensuring a smooth and stress-free tax filing process.
Need help with your Singapore tax filing? Contact a qualified tax professional like Grof for expert guidance.
FREE CORPORATE TAX GUIDE
Singapore corporate tax: Learn about rates, exemptions, and incentives to save your business money!