Are Self-Employed Persons Given Less Govt Support Than Other Business Owners?

Are Self-Employed Persons Given Less Government Support

From 22 July to 18 August 2021, Singapore will be headed into Phase 2 (Heightened Alert) – for the third time by our counting. This stop-start nature of re-opening and then tightening again has left many businesses on the brink. Even for businesses that are coping better, there is great uncertainty.

To help the most affected businesses tide through this phase, the government announced a $1.1 billion support package – mostly targeted at businesses. 

The sectors most heavily supported are the F&B, gyms and fitness studios and performing arts and education, as well as (to a lesser degree) retail, family entertainment venues, certain mask-off personal care services cinemas, tourism and museums, art galleries and historical sites. These are very likely to be the hardest-hit business sectors.

However, self-employed persons seem to receive far less government support. 

Listen to the DollarsAndSense Team’s podcast on the topic:

The Jobs Support Scheme Protects Certain Types Of Business Owners

One of the main support schemes in the latest $1.1 billion support package is the Jobs Support Scheme (JSS). The JSS payouts pays a percentage (depending on the actual support package) of an employee’s monthly salary, up to the first $4,600.

The current package covers 60% of an employee’s salary from 22 July to 18 August 2021, and 10% of an employee’s salary from 19 August 2021 to 31 August 2021. Thereafter, JSS payouts revert to the existing payout package that ends in September 2021.

Read Also: Here’s What You Need To Know About The Jobs Support Scheme (JSS)

Majority of employees are covered under the JSS – regardless of the business entity they work for. However, it’s slightly different for business owners. For example, business owners who are shareholder-directors of a private limited company will be eligible for the JSS payouts if they paid a wage. While Directors’ fees are not included, the IRAS website states that such individuals can revise their remuneration structure to be eligible for JSS payouts.

However, business owners who are sole proprietors, partners, or employers trading in their own personal capacity who do not have a UEN, are not eligible for the JSS payouts on their own remuneration. Such individuals typically have other forms of support measures though.

Type of business OwnersGovernment Support
Shareholder-DirectorsJobs Support Scheme (JSS)
Taxi and Private Hire Car DriversCOVID-19 Driver Relief Fund (CDRF)
Hawkers and Market StallholdersMarket and Hawker Centre Relief Fund (details to be announced)
Other self-employedCOVID-19 Recovery Grant (CRG) + COVID-19 Recovery Grant-Temporary (CRG-T)

Jobs Support Scheme Was Extended To Provide Additional Payouts, But COVID-19 Recovery Grant-Temporary Only Extended Deadline To Apply

During the latest $1.1 billion support package to help businesses and individuals get through Phase 2 (Heightened Alert) from 22 July to 18 August 2021, the JSS was enhanced – providing 60% payout to the most affected sectors and 40% payout to other sectors that are significantly affected. Both types of business will then receive 10% till 31 August 2021.

On the other hand, it merely extended the payout deadline for self-employed persons to apply for their second payout for the COVID-19 Recovery Grant-Temporary.

How Much Would A Business Owner Get From The Government Based On The Different Business Entity He/She Uses

We take a fictitious scenario of a one or two-man show running a small drinks stall in a mall – one choosing to incorporate a private limited company and the other choosing to run as a self-employed. 

The business owners take home $4,600 a month (figure to show how the JSS can be maximised).

In 2021, the individual paying running as a private limited company would have received JSS payouts on his or her salary, while the individual running as a self-employed would get the CRG.

JSS Payouts from January 2021CRG + CRG-T Payouts from January 2021
January to March 2021: $1,380 (30% JSS)

April 2021: $460 (10 JSS)
1 May 2021 to 15 May 2021: $230 (10% JSS)

16 May 2021 to 30 July 2021: $1,150 (50% JSS)
1 July to 11 July 2021: $843 (50% JSS)

12 July to 21 July 2021: $153 (10% JSS)

22 July to 30 July: $828 (60% JSS)

1 August to 18 August: $1,602 (60% JSS)

19 August to 31 August: $192 (10% JSS)
Anytime between 18 January 2021 to 31 December 2021: CRG payout of up to 3 months x $500 (up to $1,500)

16 May to 30 June 2021: CRG-T payout of up to $500

1 July to 31 August 2021: CRG-T 2ndpayout of up to $500  
Total = $6,838Total = $2,500
Actual figures may differ slightly due to calculation rounding.

This is just an illustration for the F&B sector. This applies to other sectors as well – where a self-employed gym instructor, performing artist or retailer may get less compared to a similar person operating as the shareholder-director of a company.

Read Also: How To Choose The Right Legal Entity To Start A Business In Singapore

JSS Payouts Is An Automatic Scheme, While You Have To Submit Documents To Qualify For COVID-19 Recovery Grant (CRG) Payouts

Business owners do not need to apply for the JSS. It is automatically calculated by IRAS based on salaries paid to employees (including the shareholder-director).

Apart from potentially getting less support, the CRG and CRG-T are not automatically given to self-employed. Such individuals have to apply for it with supporting documents. When applying, self-employed persons must have relevant documents indicating that they are working, with documents such as trade licences, contracts for service, income statements, tax invoices billed to clients, receipts issued or list of client engagements.   

In addition, there are more hoops to jump through:

  • Self-employed person should have declared annual net trade income in either 2019 or 2020
  • Live in a property with Annual Value of not more than $21,000. Applicant should not own more than one property
  • Must be experiencing income loss due to COVID-19 for three consecutive months. (CRG-T only requires self-employed person to be experiencing income loss during the period) 
  • Gross household income of not more than $7,800 or gross per capita household income of not more than $2,600
  • Have no outstanding MediSave contributions
  • Net trade income loss must have taken place after 23 Jan 2020 (when the first case of COVID-19 was detected in Singapore)
  • Must submit support evidence of two attempts to improve their business revenue or reach out to new clients/business opportunities
  • Not be receiving other grants, including i) Seafarers Relief Package; ii) COVID-19 Driver Relief Fund, iii) SGUnited Mid-Career Pathways Programme – Company Training, or iv) SGUnited Skills Programme 
  • Those receiving ComCare Short-to-Medium Term Assistance or Long-Term Assistance may apply for the CRG when receiving their last month of payouts

Furthermore, self-employed individuals may not necessarily be able to get the entire grant amount. They can only receive the CRG-T if they are not concurrently receiving the CRG payout for the month.

None of these constraints apply for shareholder-directors of a company. For example, there’s no need to spend precious time on any documentation, they could be living in a bungalow (with an annual value above $21,000), or own several bungalows, have a salary of tens of thousands (but the JSS will be capped on the first $4,600), their business has no obligation to show that they are suffering from COVID-19 in any way (in fact, they could even be doing better and still get the JSS payouts). These are just some perhaps extreme examples of how the JSS and CRG-T payouts differ.

Read Also: COVID-19 Recovery Grant: Self-Employed Persons Can Receive $500 For 3 Months From January 2021 & $500 One-Off Payout

One example of a government support scheme both groups have equal access to is the Rental Support Scheme

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