The end-of-year holiday is upon us and that means overseas holiday trips, year-end bonuses and Christmas shopping to look forward to. And less we forget, our income tax to consider as well.
Wait…I thought Income Tax Period Is In April?
Indeed. Individuals are required to file income tax by the month of April for the preceding year. What this means is that the income tax that you would need to file and pay in April 2017 will be based on your income in 2016. So if you want to find (legal) ways to reduce your income tax, you need to execute the required action by 31 December 2016.
Read Also: 5 Ways To Reduce Your Income Tax
How Much Will I Need To Pay?
For those who are first-timers, or have never considered how income taxes are calculated in Singapore, here are the basics of what you need to know.
Year Of Assessment:
Year of Assessment (YA) refers to the year income tax is calculated and charged. In Singapore, we follow the standard calendar year, meaning that income tax for YA2017 will be based on what is earned between 1 Jan 2016 to 31 Dec 2016.
Assessable Income:
Assessable income refers to the total income you earn after the deduction of allowable expenses and approved donations. For the average person, assessable income would comprise mainly of the salary received from your job. It can also include the income received from part-time or freelance jobs, or rental income from properties.
Not all income earned in Singapore are considered assessable income. For example, earnings from lottery are not taxable. Neither are capital gains made from stocks or property investments.
The table below is a non-exhaustive list of what are the taxable and non-taxable items.
| Income That Are Taxable | Income That Are Not Taxable |
| Salary From Employment | Overseas Earnings |
| Bonus | Lottery (e.g. 4D, Toto) |
| Rental Income | Government Pension |
| Part-Time Work/Freelance Work | Capital Gains (e.g. profits from stocks, properties) |
| Annuity | Alimony and Maintenance Payment |
Chargeable Income:
Chargeable income refers to the total amount that you would be taxed after deducting personal relief from your assessable income.
For example, an NS Man with an assessable income of $25,000 will be given a tax relief of $3,000 if he performs NS activities in the preceding year. This means his chargeable income for that year is $22,000.
Do note that people sometimes use the term “Chargeable income” interchangeably with “Assessable income”.
How Much Do I Have To Pay In 2016?
Income tax increases as an individual earns more. Here is a breakdown of the income tax rate in Singapore.
Source: IRAS
Here is another way of knowing how much you can expect to pay in 2017 for your income earned in 2016.
| Chargeable Income | Income Tax | Income Tax As A Percentage Of Income |
| $20,000 | $0 | 0% |
| $30,000 | $200 | 0.7% |
| $40,000 | $550 | 1.4% |
| $50,000 | $1,250 | 2.5% |
| $60,000 | $1,950 | 3.3% |
| $70,000 | $2,650 | 3.8% |
| $100,000 | $5,650 | 5.7% |
| $150,000 | $12,450 | 8.3% |
As your chargeable income increases, you can expect your income tax payable as a percentage of your total income to increase. Remember that any bonus that you received during the year is taxable. So don’t go about spending all your bonus money just yet.
Act Now If You Want To Reduce Your Income Tax
If you are looking at the income tax that you are expected to pay for 2017 and thinking that the amount looks rather high, it’s not too late to act on some ways to claim some personal relief.
The most common way would be to claim tax relief by doing a voluntary CPF top-up. Just remember to do it by 31 December 2016.
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