Filing your income tax in Singapore

April is the month where we pay our dues. That’s right! It’s time to file our income tax!
For Singapore this year, the deadline is 15th April 2011 for paper filing, and 18th April 2011 for e-filing. Besides people who are not very savvy with computers, everybody should be doing electronic filing via the IRAS website!
As always, there is the tax calculator provided by IRAS. Main thing to note is the 20% one off personal tax rebate this year. Yay!
There’s going to be a change of tax bracket for next year’s income tax. From the table of changes, it benefits all tax payers, but the biggest benefit goes to the middle income earner. (ie, the $40k to 160k per annum chargeable income range). Another new feature this year is the estimated tax payable after you finished your e-filing. Previously, when you filed your taxes, you won’t know how much you gotta pay, until you get the tax bill. Now, they have it displayed so that you won’t get a shock later.
My company is in the auto-inclusion scheme. So basically all the details are already electronically submitted to IRAS. On top of that, I was actually in the no-filing service. This means, I don’t even have to e-file. However, I had to include some new reliefs.
I believe we should not evade taxes. But on the other hand, we should always try to minimise our tax bill legitimately using legal methods provided for in the system. The most common ways is through incorporation of a business, and claiming of reliefs. Incorporation is probably only for the self-employed with high cash flow, else it wouldn’t make sense anyway. For individuals, we should always know what we can claim in reliefs.
Aside from parents/child/sibling/NS relief, the most common 3 for the working employee is course fee relief, donations, and SRS contribution.
I can’t remember for sure, but I think the government just increased course fee relief to $5500 per annum! That means if you attended a course that is relevant to your current work, you can claim course fee relief, and reduce your income by up to $5500. Essentially, that means they are giving you a discount on the courses you attend! If you went for a course that cost $5000, and your top tax bracket at that point of time is 14%, thats a good 14% discount off your course.
Donations to approved charities are given a 250% tax relief. That means if you donate $1000, you get a relief of $2500. Most reputed charities are on this list. Again, no reason not to claim if you do donate regularly.
SRS or Supplementary Retirement Scheme is a form of voluntary retirement savings. This one is quite a bit of an oddball. The maximum contribution into this account is $11475 ($12750 from this year forward). The tax relief would then be the full amount contributed to SRS. If you withdraw the money from SRS after retirement age, only 50% would be subjected to tax at the prevailing rates. If you do an early withdrawal, you would need to pay tax on 100% of the amount, as well as a 5% penalty. Personally, I think this scheme would probably only benefit people earning more than $120k per annum. But then again, the benefits accrued by this scheme just doesn’t seem that enticing. Anybody has any thoughts? Probably will write more about this another day.
So if you have all your documents, receipts and donation slips, you probably can complete your e-filing in less than 15 minutes. I probably did mine in 5 minutes or less!
Just thinking about the amount of tax I pay (Barely $300 last year, and less than $1500 this year), I’m definitely deriving a lot more benefits than I paid! Thank you all you rich people for paying for my NDP fireworks and the various public venues around Singapore! As IRAS likes to say, “Thank you for your contribution to nation building”
How much taxes are you guys paying this year?