Income Tax Reliefs for Tax-residents* in Singapore

Even though the progressive rates for personal income tax ranges from zero to 22 percent in Singapore, the effective payable tax may come out to be much lower if one takes advantages of the various schemes the Singapore Government has initiated.

These Scheme include:

• You can get tax reliefs to offset against your assessable income if you are a tax resident. These include course fess relief, CPF cash top up relief, CPF relief, earned income relief, handicapped brother/sister relief, life insurance relief, NSman relief, parent/handicapped parent relief, and supplementary retirement scheme (SRS) relief.

SRS is a voluntary scheme to encourage individuals to save for retirement, over and above their CPF savings. Contributions to SRS are eligible for tax relief. Investment returns are tax-free before withdrawal and only 50% of the withdrawals from SRS are taxable at retirement.

From the Year of Assessment (YA) 2018, the total amount of personal income tax reliefs which can be allowed is subject to an overall relief cap of $80,000 per YA. You should continue to claim the personal reliefs if you have met the qualifying conditions. If the total amount of reliefs claimed exceeds the relief cap, the tax reliefs will be capped at $80,000.

• You may claim expenses incurred against your employment income.
• Certain types of donations such as cash donations, gift of shares and works of art given to approved Institutions of Public Character (IPCs) may be claimed as tax deductions to reduce the amount of tax you need to pay. These donations are not tax deductible:
  • Donations where the donor is essentially advertising at the IPC facility, event, or programme. Donors displaying their banners, products, or other collaterals at the IPC facility, event, or programme to which it has donated is regarded as advertising or marketing expenses and not a donation; and
  • Donations or gifts that are for a “foreign charitable purpose” (e.g. donations made to some overseas relief funds managed by an approved IPC).
• Under the Not Ordinarily Resident (NOR) Scheme, you can enjoy either Time Apportionment of Singapore employment income or Tax Exemption of Employer’s contributions to Overseas Pension Fund, or both.
• If you work for a foreign employer who operates in Singapore and need to travel overseas in the course of work, you may enjoy time apportionment of employment income under the Area Representative Scheme. If you qualify to be assessed as an Area Representative, you will be taxed on the amount of your remuneration attributable to the number of days spent in Singapore. However, benefits-in-kind (BIK) provided in Singapore are fully taxable. Foreign employers include foreign based companies with representative offices registered with International Enterprise Singapore and entities not registered in Singapore. Foreign employers are considered non-resident employers for tax purposes. To qualify as an Area Representative, you must satisfy these four criteria below:
  • You must be employed by a non-resident employer;
  • You are based in Singapore for geographical convenience;
  • You are required to travel outside of Singapore in the course of your duties; and
  • Your remuneration is paid by your foreign employer and not charged directly or indirectly to the accounts of a permanent establishment in Singapore.
• Under the Avoidance of Double Taxation Treaties (DTA) in Singapore, you may be protected from being taxed twice in Singapore and your country of residence. Depending on the provisions of the DTA, you may claim the benefits of an exemption from the tax on income for personal services, teachers, researchers, artistes, athletes, students, trainees, etc. To enjoy this benefit, you need to submit the Certificate of Residency (COR) to the foreign tax authority to prove that you are a Singapore tax resident.

* can be a local or a foreign tax-resident