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Filing income tax for the first time is a necessary rite of passage that indicates you’ve finally come of age and are now a grown up Singaporean with a full-time income.
But let’s face it, having to deal with unfamiliar income tax terms and processes is more than a little intimidating. They definitely didn’t teach you how to file your tax return in school!
As tax filing season is from 1 March to 18 April each year, if you started working last year you might have already received your first notification to file your tax form. Never fear, here’s our beginner’s guide to income tax filing.
Income Tax Filing – Terms you need to know
Year of Assessment (YA) – The year in which your income tax is calculated and charged (not the year in which you earned it). Therefore, Year of Assessment 2019 refers to the period of income earned from January to December 2018.
Notice of Assessment – This basically refers to your tax bill, which will be available in myTax Portal/sent to you by post between end April and September each year. The great part is that IRAS is now going digital with electronic tax bills for selected taxpayers. If you wish to go green as well, you can easily opt in to receive an e-copy of your tax bill as well at myTax Portal. Find out more about that here.
Auto-Inclusion Scheme (AIS) for Employment Income – Employers under this scheme submit the employment income information of their employees to IRAS electronically. If your employer is under this scheme, your income information will be pre-filled when you file your tax return online.
No-Filing Scheme (NFS)–If you receive a notification telling you that you are on the NFS, it means that you are not required to file a tax return. Simply log in to myTax Portal to preview your tax bill and request for an early assessment, or you can take no action and your tax bill will be sent to you along with everyone else’s.
What is taxable and non-taxable income?
Not all the money you have at your disposal will be taxed.
Taxable income includes:
- Gains or profits from any employment, trade, business or vocation. So your salary from your job and any money you’ve earned giving tuition, freelancing or driving Grab are all taxable.
- Income from investments such as dividends, interest and rental, unless exempt by law from being taxed.
- Royalties, premiums and any other profits from property.
- Other gains that are revenue in nature.
Non-taxable income includes:
- Capital gains from sale of fixed assets like property, and gains on forex on capital transactions.
How to reduce the amount of tax you pay
For most young Singaporeans who’ll be filing a tax return for the first time this year, the main thing to focus on is your salary or money earned through business, freelancing or other gigs. This, and other types of taxable income (if applicable), will form your taxable income.
If you want to lower the amount of tax you pay, you’ll need to lower your taxable income. Short of going back in time and simply making sure you earn less, there is one way to do it—by making use of tax reliefs and deductions.
Tax reliefs and deductions
There are lots of types of tax reliefs and deductions, some for businesses and some for individuals. Tax reliefs and deductions are deducted from your total taxable income.
Here are some of the types of tax relief you might qualify for:
- Earned income relief
- Parent/handicapped parent relief
- Handicapped brother/sister relief
- CPF relief
- Life insurance relief
- Supplementary Retirement Scheme (SRS) relief
- CPF cash top-up relief
- Course fees relief
- NSman (self/wife/parent) relief
- Spouse/handicapped spouse relief
- Qualifying/handicapped child relief
- Working mother’s child relief (female taxpayers only)
- Grandparent caregiver relief (female taxpayers only)
- Foreign maid levy relief (female taxpayers only)
Here are the available types of tax deductions:
- Employment expenses
- Business expenses
- Rental expenses
- Donations
Some of the tax reliefs for which you qualify will be automatically calculated for you in your Notice of Assessment, but others will not as the government doesn’t know you’re eligible, so you’ll have to input them yourself.
Personal income tax rebate
If you listened to the Budget 2019 announcement, you’d know that there is a 50% personal income tax rebate, capped at $200, for YA 2019, as part of the Bicentennial Bonus.
This tax rebate should not be confused with tax reliefs. Unlike tax reliefs, which are deducted from your taxable income, tax rebates are deducted from the amount of tax payable.
How much tax must you pay on your chargeable income?
Once you’ve deducted the amount of tax relief from your taxable income, you’re left with your chargeable income.
Here are the rates you will pay:
| Chargeable Income | Income Tax Rate (%) | Gross Tax Payable ($) |
| First $20,000 Next $10,000 |
0 2 |
0 200 |
| 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 6,000 |
| 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 In excess of $320,000 |
– 22 |
44,550 |
Source: https://www.iras.gov.sg/irashome/Individuals/Locals/Working-Out-Your-Taxes/Income-Tax-Rates/
Now, take that income tax figure you got, and deduct the tax rebates you’re receiving for the year (e.g. the 50% personal income tax rebate mentioned earlier). You’ll be left with the amount of income tax you need to pay.
Here’s how to read your tax bill:
Figuring out if you need to file your taxes this year
Usually, you will know that you need to file your taxes when you receive a form/letter/SMS (filing notification) from IRAS. But you might not receive it if the government does not know you’ve started working (e.g. you are a freelancer and have not made voluntary CPF contributions) or if you did not earn enough to fall into the lowest tax bracket.
Whether or not you receive a filing notification, you are required by law to file and pay your taxes if your income is high enough. Not knowing is no excuse. (The only case where you do not need to file your tax return for the year is when you receive the NFS notification.)
To file your taxes, log in to mytax.iras.gov.sg using your SingPass.
Once you’ve logged into the system, check your Income, Deduction and Relief Statement. Remember, if your employer is under the AIS (you can check so here), avoid including your salary details from this employer to prevent double counting. You may also be eligible for certain reliefs, some of which may have been pre-filled for you.
If you find that you are eligible for other reliefs this year, make your claim in the tax return too. Finally, once you’ve submitted your tax return, you should be led to an acknowledgement page which indicates that you have successfully filed your taxes.
The next step will be to wait for your tax bill and, when it has arrived, pay your taxes.
The easiest way to do so is by GIRO. You can also pay your taxes via internet banking. Payment for taxes by cheque will no longer be accepted at SingPost branches from 1 March 2019.
IRAS’ myTax Portal is actually very straightforward and easy to use. Once you master filing and paying your taxes in your first year, you’ll find that it’s actually very easy to simply rinse and repeat in subsequent years.
Just a final reminder that if you need to file taxes, be sure to do it early so as to avoid any late filing penalties. If you do have additional income that needs to be declared, which is essentially income you are earning outside of your regular job, you must remember to declare that as well. Not sure what counts as additional income? You can check out our simple summary here.
Do you have any questions about income tax filing? Leave them in the comments!