Domain

Explanation

In Come Tax …

• Yap … here comes the tax
• But what’s income tax?

What tax?

• Tax is the amount of liquidity paid to the government for services rendered with respect to the nation
• i.e. Tax is the revenue of the government for its services to the nation
• In other words, tax is the amount of money paid by the citizens & people using the government statutory services
• These services can come in all shapes, forms & most importantly, sizes
• They can range from personal to corporate, from employment to donation, from lives to properties, from money to assets to interests & properties, from birth to deceased
• Here are some tax fundamentals:
• Basics
• Introduction
• Tutorial
• People have also studied tax & their effects on society & policies:
• Economics
• Accounting

What income?

• Income is what is earned by person, organization at the discrete level
• Literally, income is what comes in – revenue, salary, interest
• The more that comes in, the more income, the more liable to taxing
• Income
• Income basics
• Income fundamentals
• Income introduction
• Income tutorial

What’s income tax then?

• By living or associating in a country, citizens & non-citizen people would use national services, hence are liable or have to pay taxes
• The type of tax that is imposed on the income is then Income Tax
• By residing in a country & earning income from activities in that country, & owning that income, the person would take these income as outputs
• Yet the country has to maintain & adapt to the demands of its people, hence it needs to derive sources of revenue to carry these activities
• Income tax is levied on the income portion that is reasonably liable to be taxable according to government policy
• In economics, government intervention is important & one of the most important intervention is through income taxation
• By imposing income tax, the people’s real income is reduced, since the disposable income that they can use at their choice is now reduced by the amount of taxation
• To the people, income tax represents the price they have to pay in order to reside, live & earn a living in the country, besides safeguarding it, maintain social integrity & voting
• The assessment & amount of income tax that people have to pay varies according to:
• Country
• Policy
• Period
• Person or organization type & attributes

Taxation planning

• 2 activities for taxpayer:
• Tax compliance: complete & file tax returns
• Tax planning: to consider one's current & future income & develop strategies to defer or minimise tax payments
• Objectives of tax planning:
• Not tax evasion
• Maximise tax savings
• Minimise tax payments
• Sources of tax laws:
• Income Tax Act, Cap. 134 (1996)
• Singapore Master Tax Guide (CCH Asia Pte Ltd)
• Tax computations:
• Add (all sources of income) Deduct (deductible expenses)
• Deduct (donations)
• Deduct (personal reliefs)
• Compute tax payable under progressive tax rates
• Deduct tax rebates
• Final Tax Bill
• Residence for Tax:
• Qualitative test: definition of reside
• Quantitative test: person in Singapore for >183 days
• When overseas: can elect to be non-resident à all overseas income no tax
• Income:
• No charges on capital gains: appreciation due to rise of stayed-in properties
• Trade business, profession or vocation income
• Employment income
• Investment income: dividend, interest (except POSB)
• Pension, charge & annuity
• Rent, royalties, premiums & property profits
• Other gains or profits of an income nature
• Allowable deductions:
• Deductions: in the course of business, professions, staff & CPF
• Donations
• Reliefs: deducted from individual's assessable income
• Aspects of tax planning:
• Timing: spread across years of assessment
• Residence: declare non-resident
• Remittance of overseas income
• Double taxation agreements
• Capital gains vs. income
• Badges of trade
• Tax planning strategies & techniques:
• Maximise capital allowance: year end review, transaction timing
• Equipment leasing for tax benefit: operating & financial lease
• Structuring tax effective remuneration package: cash payments & in kind
• Incorporate service companies for tax advantage
• Setting up appropriate expansion vehicle for tax minimisation
• Structuring international business enterprises to save global tax: use of tax treaties
• Through double tax treaties
• Use of tax havens for maximum advantage

Singapore income tax

• Singapore has its own income tax regulations that considers internal people capabilities, government policies, long-term investments & external conditions of attracting investments, global competitiveness
• Year of assessment: 15^th April annually
• Major trends:
• More income, younger, fitter, more prosperous at higher salary class levels, fewer dependents, fewer newborns, less active or no NS, less insurance, less relief, more tax
• Less income, older, weaker & sicker, less prosperous at lower salary class levels, more dependents, more newborns, active NS, more insurance, more relief, less tax
• Exact amount varies according to annual budget, social, economic & policy changes, variations in policy focus
• Major themes:
• At 21 years of age: can vote & pay income tax
• Still required to declare & file income tax even if: not taxable (like students), employer is participating in the Auto-Inclusion Scheme for Employment Income
• Major income taxable components:
• Employment:
• Dividends:
• Interest:
• Other incomes:
• Major income tax exemptions or reliefs:
• Earned income relief
• CPF cash top-up
• Supplementary retirement scheme
• NSmen relief
• Donation
• Wife, handicapped spouse & child relief
• Tax rebates
• Delivery & hospitalization expenses
• Parent/handicapped parent, sibling relief
• Provident fund & insurance
• Course fees
• Foreign maid
• Tax filing choices:
• E-filing
• Fill in income tax & mail-in
• Fill in income tax & send personally to:

• Contact Numbers
Please contact us at the following numbers if you have any enquiries.

Inland Revenue Information Service (Iris)

• Email Us

Income Tax

• Employees
• Employers
• Sole Proprietors
• Partners/Partnerships
• Clubs & Associations

Corporate Tax

Goods & Services Tax

Property Tax / TV Licence Fees

Others

Advices

• Appropriate approach:
• Maintain good records
• Take long-term perspective of transactions for tax savings
• Refer to IRAS publications & announcements
• General tax components do not change, hence we can all prepare ourselves properly along the course of a year to conscientiously take note of the following:
• Keep records & properly file all invoices, receipts, balance sheets, transactions, insurances, donations, courses, payments & revenues
• Assets: interests, dividends, rents, property, etc.
• Statutory activities: CPF, NS, rebates, top-ups
• Varying tax components, take note of:
• Current affairs
• New policies
• Modifications of existing policies
• Changes in government, focus, society & economic situations