Personal Income Tax Rate Structure of Tax Resident Individual Taxpayers
The current personal income tax rate structure (up to the year of assessment 2016) for tax resident individual taxpayers is shown in the table below:
The new personal income tax rate structure with effect from the year of assessment 2017 for tax resident individual taxpayers is shown in the table below:
Personal Income Tax Rebate for Tax Resident Individual Taxpayers
There is no personal income tax rebate for YA2014.
A personal income tax rebate of 50%, capped at $1,000 per taxpayer, will be granted to all tax resident individual taxpayers for YA 2015. The 50% tax rebate will be calculated based on the tax payable after double taxation relief and other credits but before the set-off of Parenthood Tax Rebate.
Claiming of Specified Amount of Expenses Against Passive Rental Income Derived from Residential Properties in Singapore
An individual who derives passive rental income from a residential property in Singapore can, subject to income tax rules, claim against such income a deduction of the actual deductible expenses incurred in producing the income.
An individual who derives passive rental income in the basis period for YA 2016 or a subsequent YA from the letting of a residential property in Singapore can, in lieu of claiming the actual amount of deductible expenses incurred (excluding interest expenses) against his passive rental income, claim a specified amount of expenses as a proxy for the deductible expenses (determined based on 15% of the gross rental income derived from that residential property). The individual can continue to deduct against his passive rental income, any deductible interest expense.
However, this tax change does not apply to any rental income derived:
(a) by an individual through a partnership in Singapore; and
(b) from a trust property.
The change is also not applicable to individuals who receive rental income from commercial or industrial properties or from carrying on a trade or business of renting out properties. IRAS will release further details of the change by May 2015.
Raising the Annual Contribution Cap for the Supplementary Retirement Scheme ("SRS")
With the increase in the CPF salary ceiling from $5,000 to $6,000 with effect from 1 January 2016, the annual contribution cap for the SRS will also be raised from 1 January 2016 as shown below:
In this regard, the maximum SRS tax relief that can be claimed by a tax resident individual who has made contributions to the SRS will be adjusted by the new annual contribution cap with effect from the year of assessment 2017.
Increasing the CPF Relief Cap for Self-employed Persons
In view of the increase in the CPF monthly salary ceiling from $5,000 to $6,000 from 1 January 2016, the CPF relief cap for self-employed persons will also be raised to $37,740 from the year of assessment 2017.
Tax Exemption for Non-tax Resident Mediators
A payer is required to withhold tax at 15% of the gross income payable to a non-tax-resident professional, or at 20% of the net income payable if the non-tax resident professional elects to be taxed on his net income. This applies to non-tax resident mediators deriving income from work carried out in Singapore.
Income derived by a non-tax resident mediator for mediation work carried out in Singapore from 1 April 2015 to 31 March 2020 will be exempt from tax if the following criteria are met:
(a) The mediator is either a mediator certified under an approved certification scheme or a mediator conducting any mediation administered by a designated mediation service provider; and
(b) The mediation case is undertaken in Singapore or was originally planned to be undertaken in Singapore but was settled before the mediation hearing.
For the purposes of this tax exemption, the Singapore International Mediation Institute (SIMI) and the Singapore International Mediation Center (SIMC) will assist in determining whether a non-resident individual is eligible for the tax exemption. The Ministry of Law will provide more details of this scheme by March 2015.
Tax Exemption for Non-tax Resident Arbitrators
Non-tax resident arbitrators are exempted from tax on income derived on or after 3 May 2002 from arbitration work carried out in Singapore.
A review date of 31 March 2020 will be legislated for the tax exemption for non tax-resident arbitrators, to ensure that the relevance of the scheme is periodically reviewed.
Angel Investors Tax Deduction ("AITD") Scheme
The AITD scheme applies to qualifying investments made in qualifying start-up companies from 1 March 2010 to 31 March 2015.
Under the scheme, an approved angel investor needs to, amongst other conditions, invest a minimum of $100,000 into a start-up company within a year, and hold the qualifying investment for a continuous period of two years, to enjoy a tax deduction of 50% of the cost of the qualifying investment. The amount of expenditure incurred on investments that qualify for the deduction is capped at $500,000 per YA.
Investments that are co-funded by the Government under the SPRING Start-up Enterprise Development Scheme ("SEEDS") or the Business Angel Scheme ("BAS") currently do not qualify for the tax deduction.
The AITD scheme will be extended till 31 March 2020.
In addition, new qualifying investments made from 24 February 2015 to 31 March 2020 that are co-funded by the Government under SEEDS or BAS will also be allowed to qualify for the AITD. All other conditions of the scheme remain the same.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.