Individual Income Tax

Individual Income Tax | Bestar

Singapore Individual Income Tax Overview

Individual Income Tax in Singapore

Here's a breakdown of individual income tax in Singapore:

1. Tax Residency:

• Resident: Tax residents in Singapore are generally taxed on income earned in Singapore and on foreign-sourced income remitted to Singapore. An individual is typically considered a tax resident if they have stayed or worked in Singapore for 183 days or more in the calendar year.

• Non-Resident: Non-residents are generally taxed only on income earned in Singapore. The tax rates for non-residents differ from those for residents.

2. Taxable Income:

• Taxable income includes:

  • Profits from trade, business, profession, or vocation.

  • Earnings from employment in Singapore.

  • Dividends, interest, and discounts.

  • Pensions, charges, or annuities.

  • Rent, royalties, premiums, and other profits arising from property.

  • Any other gains or profits of an income nature.

3. Non-Taxable Income:

• Generally, the following are not taxed in Singapore:

  • Capital gains.

  • Shipping income (under specific sections of the Income Tax Act).

  • Foreign-sourced dividends, service income, and branch profits received by a resident company (under specific conditions).

  • Interest income from deposits in approved banks in Singapore (for non-residents).

4. Tax Rates:

• Resident Individuals: Singapore uses a progressive tax rate system for resident individuals. This means that higher income earners pay a higher percentage of their income in taxes.

  • The tax rates for the Year of Assessment (YA) 2024 onwards range from 0% for the first S$20,000 of chargeable income to 24% for income exceeding S$1,000,000.

  • There are various income bands with increasing tax rates.

• Non-Resident Individuals: Non-residents are generally taxed at a flat rate or the progressive resident rates, whichever results in a higher tax amount.

  • For employment income, the flat rate is typically 15%.

  • Other income, such as director's fees, consultation fees, and rental income, is often taxed at a flat rate of 24% (from YA 2024).

  • There are specific withholding tax rates for different types of income paid to non-residents.

5. Year of Assessment (YA):

• The Year of Assessment refers to the year in which income earned in the preceding calendar year is assessed for tax. For example, income earned in 2024 will be assessed in YA 2025.

6. Personal Reliefs and Deductions (for Residents):

• Resident individuals may be eligible for various personal reliefs and deductions to reduce their taxable income. These can include:

  • Earned income relief

  • Spouse/Handicapped spouse relief

  • Qualifying/Handicapped child relief

  • Working mother's child relief

  • Parent/Handicapped parent relief

  • Grandparent caregiver relief

  • Handicapped sibling relief   

  • CPF/Provident fund relief   

  • CPF cash top-up relief

  • Supplementary Retirement Scheme (SRS) relief

  • NSman relief

7. Tax Rebates:

• The government may occasionally grant tax rebates to resident individuals. For YA 2024, there was a personal income tax rebate of 50% of the tax payable, capped at S$200.

8. Filing Tax Returns:

• Tax residents with an annual income of S$20,000 or more are required to file an income tax return.

• The filing deadline is typically April 15th for paper submissions and April 18th for e-filing.

9. Important Notes:

• The top marginal personal income tax rate for residents increased to 24% from YA 2024 for income exceeding S$1,000,000.

• The income tax rate for non-resident taxpayers (except on employment income and certain income taxable at reduced withholding rates) increased to 24% from YA 2024.   

• Singapore has a territorial tax system, meaning only income earned in or received in Singapore is generally taxable.

It's important to refer to the official website of the Inland Revenue Authority of Singapore (IRAS) for the most up-to-date information and specific details regarding individual income tax regulations, rates, reliefs, and filing procedures.

How Bestar can Help

Bestar can significantly help individuals navigate the complexities of income tax in Singapore. Here's how:   

1. Expert Knowledge and Up-to-Date Information:

• Understanding Tax Laws: Bestar possesses a deep understanding of Singapore's income tax laws, regulations, and the latest changes implemented by the Inland Revenue Authority of Singapore (IRAS).   

• Ensuring Compliance: We can ensure that your tax filings are accurate and comply with all the current requirements, minimizing the risk of errors, penalties, and audits.   

2. Maximizing Tax Efficiency:

• Identifying Eligible Reliefs and Deductions: Bestar is well-versed in the various personal reliefs, deductions, and rebates available to Singapore tax residents. We can help you identify all the applicable ones based on your individual circumstances, potentially reducing your taxable income and tax payable. This includes things like earned income relief, spouse/child relief, parent relief, CPF contributions relief, course fee relief, and more.

• Tax Planning Strategies: We can provide advice on legitimate tax planning strategies to optimize your tax position in the long term.   

3. Saving Time and Reducing Stress:

• Handling Paperwork and Filing: Bestar can take the burden of preparing and filing your tax returns off your shoulders. This saves you valuable time and effort, especially during the busy tax season.   

• Avoiding Mistakes: Our expertise reduces the likelihood of errors in your tax return, which can lead to delays, penalties, or even audits by IRAS.

4. Dealing with Complex Situations:

• Non-Resident Tax Issues: If you are a non-resident working in Singapore, Bestar can help you understand your tax obligations, the applicable tax rates, and any potential exemptions or reliefs.

• Foreign Income: For tax residents with foreign-sourced income, Bestar can advise on the taxability of this income and the conditions for potential exemptions.   

• Specific Income Types: We can provide guidance on the tax treatment of various income types, such as rental income, investment income, or income from self-employment.

• Tax Audits and Disputes: In the event of a tax audit or dispute with IRAS, Bestar can represent you and help navigate the process.

5. Personalized Advice:

• Tailored Solutions: Bestar offers personalized advice based on your unique financial situation, income sources, and family circumstances.   

• Answering Your Questions: We can clarify any doubts you may have about the tax system and your specific obligations.

In summary, engaging Bestar for your individual income tax in Singapore can provide you with accuracy, compliance, potential tax savings, time efficiency, and peace of mind, especially when dealing with complex tax matters.   

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