Singapore taxauthorities divide all income which is generated within its country into two groups; these are taxable and non-taxable income. Any income that is derived or generated from Singapore will be placed into either category. Taxable incomecan come in the form of any of the following: income derived from employment which may include salaries, commissions, and bonuses; income generated from trade, other business activities, or personal professional services; or income originating from properties, investments, trust income, or royalties, among others. All of the above sources of income when generated in Singapore are subject to taxation as imposed by the tax authorities of Singapore.
Forms of income which are not taxable include lottery winnings, most types of annuities, and, in most cases, income received in Singapore with an overseas source. However, even if income is received in Singapore from overseas, it is taxable if it is received through partnerships in Singapore, the person receiving the income is working abroad as part of the person’s Singapore employment, the person involved works for the Singaporean government, the person receiving the income is carrying on a trade or business overseas which is incidental to the person’s Singapore trade, or the person received service income from overseas which is not taxable.
There are also certain people who receive an amount of income despite not being employed on a full-time basis. Such people may include dependents, part–time workers, national service people, pensioners, those who make withdrawals through the use of the Supplementary Retirement Scheme (SRS), and those who earn estate or trust income, among others. Such people are often not taxed at all or taxed at low rates if their income is taxable. Those whose income comes from one or a combination of any of the aforementioned sources of income will be taxed if their gross income is more than S$22,000 per year. If their annual income is less than S$22,000, they will not be legally required to file tax returns. However, should the Inland Revenue Authority of Singapore (IRAS) request to view the person’s tax returns, the person will be required to do so. Those who received no income over the course of the preceding year are expected to file a return specifying that they received S$0. There are also certain deductions which the taxation authorities of Singapore will consider before determining the actual amount of taxable income.
In Singapore, different rules apply to tax residents from other nations depending on their residency status. A non-resident who works in Singapore for 60 days or less during a calendar year is exempted from paying taxes in the country. A non-resident who works in Singapore for between 61 and 182 days of a calendar year will be taxed at a 15% flat taxation rate regardless of the amount of income received. However, if the amount of income received is below the amount which is the minimum taxable amount, such a taxpayer will not have to pay any tax to the Singaporean tax authorities.
There are several forms of income which are exempted from taxation in Singapore. They include the following: income which is received when one sells personal property, certain forms of dividend and interest, and government pensions if they are received by a resident of Singapore. There may be some additional tax-exempt forms of income which change from year to year depending on the annual update provided by IRAS. Therefore, it is always important to inquire if the income which one receives is taxable according to the requirements specified by IRAS.
Although one’s SRS withdrawals are taxed during the time of withdrawal, the tax which is charged does not have to be declared to IRAS. This is relevant because the information recorded about the transaction will automatically be transferred electronically from the SRS operators to IRAS. The information will be included in the taxpayer’s tax assessment.