Personal Income Tax Filing Guide 2019: Understanding What Is Taxable (And What’s Not)

We’re 17 days (and counting) away from the deadline for filing our personal income taxes. Filing your taxes is the act of declaring all your taxable income for 2018, along with all deductions you’re eligible for.

While you may not be able to change how much you earned last year, knowing what is taxable and not taxable is extremely important.

The last thing you want is to be fined or charged in court for (unwittingly) under-declaring your taxable earnings or pay more in taxes because you were unfamiliar with the tax code.

Read Also: 6 Ways To (Legally) Reduce Your Income Tax For YA 2019

When Do You Need To File Taxes?

For the current Year of Assessment 2019 (YA2019), the deadline for filing are as follows:

15 April 2019 (for paper filing)
18 April 2019 (for e-filing)

Nate or non-filing will carry penalties that range from an increased tax bill to a court summon.

The only exception is if you received a No-Filing Service notice (via letter/SMS). If you did, your tax returns have been filed automatically and you don’t have to file this year, unless you have additional income to declare or wish to claim additional reliefs or deductions.

Everyone else, even those who didn’t receive anything from IRAS, will need to file income tax returns if their  total personal income (including salaries and rental income) from 1 January to 31 December 2018 is more than $22,000 or if your net business income derived from Singapore is more than $6,000.

If you’re new to filing taxes, you can also refer to our step-by-step guide for a guided walkthrough.

Read Also: Step-By-Step Guide To Filing Your Personal Income Tax In 2019

Taxable Income vs Non-Taxable Income

Here is an overview of various forms of income you may receive, and whether they are taxable or not.

Salary: For most of us, our taxable income (also known as assessable income) would consist primarily of the salary receive from our job. If you’re working overseas, that income will not be taxable by IRAS, though local tax laws in the country where you’re working would apply to you. If you have part-time or freelance earnings, such income from teaching tuition over the weekends or freelance gigs, you would need to declare them.

Bonus And Commissions: On top of your salary, any bonuses, including the Annual Wage Supplement (aka 13th month bonus) is taxable, as well as commissions earned.

Dividends: Dividend distributions you receive from shareholding and REITs are not taxable. However, dividends paid by co-operatives and dividends paid if you have a partnership share in a REIT is taxable.

Interest: Interest you earn from fixed deposits and high-interest savings accounts with MAS approved banks are tax-exempt. However, interest you earn by making loans to companies or individuals, from pawnshops, or deposits with non-approved banks or foreign finance companies are subject to tax.

Rental Income: Whether you’re in Singapore or not, rental income you earn is taxable and must be declared, though you can claim for deductions for rental expenses.

Royalties: Any income you derive as a result of licensing your trademark, patents or other forms of intellectual property is taxable.

Alimony and Maintenance Payments: Alimony and maintenance payments, whether paid voluntarily or because of a court order, are not taxable.

Retirement Income: Both CPF LIFE payouts and government pensions are tax-extempt, though money you receive from private annuity plans are considered taxable.

NS Allowance And HOME Award: Allowance you receive as a Full-Time National Serviceman is not taxable, and so is CPF top-ups you receive during various milestones of your reservist life.

Retrenchment Benefits: If you receive a lump-sum payment or other forms of monetary compensation as a result of being laid off, you will need to report that income (Under Employment – Others), but this will NOT be taxed.

Director’s Fees: If the company of which you’re a director of is based in Singapore, you are liable to pay tax on your director fees.

Estate/Trust Income: While inheritance tax has been abolished in Singapore since 2008, you will need to pay tax if you’re the beneficiary of income from a legal Trust or Estate.

In summary, here is a non-exhaustive list of what are the taxable and non-taxable items.

Taxable Income	Non-Taxable Income
Salary From Local Employment	Overseas Earnings
Bonuses And Commissions	Lottery Winnings (e.g. 4D, Toto)
Rental Income	CPF LIFE Payouts, Government Pensions
Part-Time Work/Freelance Work/Royalties	Capital Gains (e.g. profits from stocks, properties) And Stock/REIT Dividends
Annuity	Alimony and Maintenance Payment
Director Fees	Retrenchment Benefits
Trust/Estate Income	NS Allowance/HOME Awards

Read Aso: CPF LIFE Or Private Annuity Plan? Pros And Cons Of Choosing Either Option For Your Retirement

How My Income Tax Calculated?

Now that you have accurately input your taxable income (and omitted non-taxable earnings), this forms your Assessable Income. How much you’ll be charged (i.e. your Chargeable Income), is derived from deducting personal reliefs from your assessable income.

In other words: Assessable Income – Deductions & Reliefs = Chargeable Income

Your chargeable income determines your tax bill, which increases in percentage as you move up the income bracket. Be sure to look through the list of deductions and reliefs carefully so that you do not miss out on any ‘discounts’ on tax you are entitled to. These include NSman reliefs, Working Mother’s Child Relief, reliefs for voluntarily contributing to your CPF or Supplementary Retirement Scheme accounts.

Read Also: 4 Reasons Why It Pays More To Be A Stay-At-Home-Dad (Compared To A Stay-At-Home-Mom)

Some of these deductions depend on actions you take from 1 January to 31 December 2018. We wrote an article previously outlining some of these steps you could take to (legally) reduce your personal tax bill. To ensure you don’t miss important articles, consider joining our DollarsAndSense Telegram Channel, where we bring you daily updates in an interactive, bite-sized format.

Based on your Chargeable Income, look at which tax bracket you fall under to find out what your tax rate will be.

Source: IRAS

 

Just for this year (YA2019), Finance Minister Heng Swee Keat announced that all Singaporeans will enjoy a 50% personal income tax rebate, capped at $200.

Read Also: Singapore Budget 2019: Here Are 4 Of The Most Important Announcements That Affect All Of Us

What’s Next?

Once you’re done with filing your taxes for the Year of Assessment 2019, all that’s left is to await your Notice of Assessment (NOA) from IRAS, which is your tax bill.

You should receive your NOA between April to September 2019. As soon as you receive your NOA, check it carefully and if there are any discrepancies, you should file an objection with IRAS within 30 days from the date on your NOA.

If everything is in order, you can pay your tax bill by a variety of methods, including:

– One-time or 12-month interest-free GIRO deductions
– Credit cards
– Internet banking bill payment/fund transfer
– AXS, SAM, ATM (DBS/POSB or OCBC only) machines
– NETS at any Singapore Post branch

While not all credit cards can be used for income tax payments, those that you can use typically exclude tax payments from earning you card rewards such as cashback, miles or points.

By using a tool like CardUp to make payment, you can get to enjoy cashback, miles or points on every dollar made to the tax authorities. CardUp allows any credit card to be used for your tax payments conveniently online, without the need to do so at AXS machines.

That’s it. If you find this guide useful, do share it with people whom you think will benefit.

Read Also: Here’s What Happens If You Don’t File Your Taxes On Time In Singapore

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