Taxable Income In Singapore: What Is And What Is Not?
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Taxable Income In Singapore: What is And What is Not?

Taxes are an inescapable obligation in most countries – including Singapore. In the meantime, we’ve briefly summarised in this article an overview of taxable and non-taxable income in Singapore to provide a little background.

What is Taxable Income?

Income that is subject to tax in Singapore includes profits from a trade or business, from investments, royalties, premiums and profit from property, and other sources of profit. Income is taxable when income is accrued in or derived from Singapore or received in Singapore from abroad. Income received from outside Singapore is taxable when it is remitted to, transmitted or brought into Singapore.

  • Income from employment - Income derived from employment are taxable; however there are exceptions under the Income Tax Act. Employment income includes salaries, bonuses, director’s fees, and commissions to name a few.
  • Income from Trade, Business, Profession, or Vocation - Gains and profits from self-employment such as commission agents, freelancers, taxi drivers, and private tuition teachers, from partnerships, income overseas, and even virtual currencies are subject to tax.
  • Income from Property or Investments - Profits received from a share of ownership in a company, gains from trading in properties and from the sale of property, as well as any rent payments received from renting out property are subject to income tax. In addition, interest may be taxable such as deposits with non-approved banks, pawnshops, and debt securities that are from a partnership in Singapore.

What is a Non-taxable Income?

Income that are not considered taxable include capital gains such as profits from the sale of a property or sale of fixed assets; however, gains may be considered taxable if the individual buys and sells a property with a profit seeking motive. As well as this, income that are exempted from tax under the Income Tax Act such as specific shipping income by a shipping company and foreign-sourced dividends, branch profits and service income received by a resident company under certain circumstances.

In addition, interest received from deposits with approved banks or licensed finance companies, income received under a deed or court order in Singapore such as an alimony and maintenance payments are exempt from tax. Lastly, the National Services Recognition Award or NSRA which is a total of between $9,000 and $10,500 given by the Ministry of Defence to recognise the contributions of Singapore citizens who serve National services is tax exempt.

The process involving taxes might be too complex to some people or businesses, especially large companies. To better understand what constitutes as taxable income and what is not, companies that offer accounting and tax services can offer provide an in-depth knowledge on income tax.

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