A handy guide to filing your income tax
So you’ve received your very first Income Tax Notice from the government. Congrats, you’ve officially earned the badge of a dutiful citizen paying his dues to the country. Wondering if you have all the necessary information to file your taxes correctly? Thinking of ways to reduce your taxes? Fret not, here’s a quick guide to help make taxes—well, less taxing.
What is taxable and what isn’t
While your significant other might claim that what is yours is also theirs, you don’t need to have the same relationship with the taxman. Are there ways to (legally) reduce your potential tax burden? Yes, you can tap into various deductions and relief schemes to reduce your Assessable Income, i.e. the nett income liable for tax consideration. See the following examples:
Donations: Here’s where your support for animal rights, or environmental causes, can come in handy. If you made donations to an approved charity during the year, you could possibly claim up to three times the amount donated, provided you kept the receipt.
Parent relief: They’ve taken care of you, and it’s time to give back to them. If you are financially supporting your parents (or grandparents), there are tax reliefs based on certain conditions.
Upgrading yourself: This island we call home loves upgrading everything from roads to flats, and definitely ourselves. As skills upgrading is a key priority for the Singapore government, your course fees of up to $5,500 per year for your studies while working could also be a relief that you can tap into.
NSman relief: You’ve served the nation with pride, and sweat, and the government recognises that effort. If you’re male and have completed your National Service, you should be able to qualify for an NSman Relief of up to $5,000, based on certain criteria.
Supplementary Retirement Scheme (SRS) account: You can park aside some money for investing purposes in your Supplementary Retirement Scheme (SRS) account—up to $15,300 a year as a Singapore citizen or Permanent Resident, or $35,700 as a foreigner. Your SRS contributions are tax-exempt, and once invested in things like Fixed Deposits, Foreign Currency Fixed Deposits, unit trusts, single premium insurance, bonds or equities, can potentially generate higher returns as well.
Do note that if you put your money into an SRS account but leave it dormant, it earns you only 0.05% p.a.. It pays to beef up your investment knowledge, so that you can make your SRS contributions work harder.How SRS works
Filing your income tax
The basic concept to grasp is that the taxes you pay this year are for what you earned last year. To begin e-filing for the current Year of Assessment (YA) at myTax Portal, you’ll need to know:
- How much income you earned during the Basis Period, i.e. previous year from 1 January to 31 December
- Your Personal Reliefs, i.e. the reliefs or deductions that you qualify for
Once you’ve carefully entered the numbers and checked your entries across the different sections, hit submit, print out a copy for your reference, and that’s it.
But what if you notice a mistake after filing? The Inland Revenue Authority of Singapore (IRAS) does allow you to make edits to a filing, but only once, so after triple checking your updated entry, go ahead and submit the edited tax return.
Making your income tax payment
To acknowledge your tax return, IRAS will send you a Notice of Assessment, which is like your tax bill. It contains the types and amounts of income subject to taxation, the assessable income, and the amount of tax due after accounting for the different applicable deductions. If you don’t agree with the tabulation, you can file an Object to Assessment request from the myTax portal within 30 days of receiving your NOA.
However, if all entries are correct, the next step would be to decide how you’d want to make payment. For convenience, you can set up GIRO payments via DBS iBanking, which will automatically deduct a sum from your account every month.
If paying your taxes on time means being a good citizen, knowing your rights to tax-free reliefs will make you an even smarter one. And on days when you wonder why taxes are remotely necessary, remember that your taxes go towards funding various items that you or your family might benefit from, from the greenery that dots our city, to the first responders in the event of an emergency.
Just don’t forget ’em receipts.
Deposit Insurance Scheme
Singapore dollar deposits of non-bank depositors and monies and deposits denominated in Singapore dollars under the Supplementary Retirement Scheme are insured by the Singapore Deposit Insurance Corporation, for up to S$75,000 in aggregate per depositor per Scheme member by law. Monies and deposits denominated in Singapore dollars under the CPF Investment Scheme and CPF Retirement Sum Scheme are aggregated and separately insured up to S$75,000 for each depositor per Scheme member. Foreign currency deposits, dual currency investments, structured deposits and other investment products are not insured.