Filing Income Tax in Singapore
Paying income tax on your income is a legal requirement in Singapore. It is expected that you will pay income tax for a particular year of assessment. You will file tax returns as they show your income. They will be used to determine the amount of income tax that you must pay. The Inland Revenue Authority of Singapore (“IRAS”) uses them to prepare a notice of assessment, which shows the amount of tax that you must pay.
You are required to file tax returns in paper form by 15 April. In case you intend to file returns electronically, you should do so not later than 18 April. In the event where you find that you cannot meet the deadline for filing the tax returns, you should apply for an extension of filing due date before 31 March by sending an email, fax or letter through the post to IRAS ( Inland Revenue Authority of Singapore).
The tax should be filed for a particular year of assessment (YA) which starts on 1 January and ends on 31 December. For instance, the year of assessment 2013 is for the period starting on 1 January 2012 to 31 December 2012. This means that the income tax, which you are supposed to have paid for the whole of 2012, is calculated and charged in YA 2013. You should file your tax returns for that year on the given deadline.
The IRAS should then provide you with a notice of assessment (NOA) showing your income, the income tax that is due and the deductions.
Income tax rates
The rates will depend on whether you are a resident or a non-resident. From the year 2012, for residents, the income tax will depend on your earnings. The first $20,000 is not taxed. The next $10,000 is taxed at 2%, next $10,000 at 3.5%, next $40,000 at 7%, next $40,000 at 11.5%, next $40,000 at 15%, next $40,000 at 17%, next $120,000 at 18%, and finally the amount more than $320,000 at 20%. Note that all amounts are quoted in Singapore dollars.
For non-residents, the tax rate for your employment income is taxed at the higher of 15%, or the tax rate for residents.
Who files tax returns?
If you have an income from employment, income from trade, business and vocation, income from investments and other income, you are supposed to file your tax returns. You should not file returns for income received from overseas because it is not taxable. The only people who may not be required to file their tax returns are those who are employed and their employers are in Auto Inclusion Scheme (AIS). If they do not have additional income from other sources, and they are under the auto-included income with the same relief as the previous year, then most likely, the IRAS will send you a No filing Service letter or SMS.
However, you must file your tax returns if you receive communication in form of a letter, form or SMS from the IRAS. This is regardless of whether your employer is in AIS scheme, or you have the same annual income as the previous year.
After filing tax returns, the IRAS give you a notice of assessment (NOA) by September indicating income tax you have to pay. You must pay the tax within 30 days. In the event you are not in agreement with the assessment, you should inform the tax authority within 30 days.
Failure to file your tax returns
If you fail to file your tax returns or file them late, the IRAS will penalize you. It will issue you with an estimated notice of assessment and you must pay the estimated tax within 30 days. If you fail to pay, the authority will impose penalties on overdue taxes. You may be summoned to court if you do not file the returns and you do not pay the taxes and the penalties. In case you do not appear in court, a warrant of arrest will be issued on you and you can be fined and convicted.
A note from J Accounting Services
J Accounting Services would like to remind the readers that the filing of your individual Singapore income tax is crucial. If you fail to submit the returns to IRAS, this could result in dire consequences and you may land yourself into deep trouble. For those who are looking for help with the filing of your personal income tax with IRAS, do consider us! J Accounting Services aim to ensure everyone in Singapore submits their tax returns on time, and is in compliant with the authorities of Singapore right from the very start.