NOR Scheme: Tax Exemption of Employers’ Contributions to Non-Mandatory Overseas Pension Fund or Social Security Scheme

The Not-Ordinarily-Resident (NOR) Scheme was introduced to make it attractive for individuals with global or regional business experience to live and work in Singapore.

The scheme grants favourable tax treatment to qualifying individuals for a period of five years of assessment, provided they meet the following criteria:

  1. They must not have been a Singapore tax resident in the three years of assessment  before the year he/she qualifies for the NOR scheme; and
  2. They must be a tax resident for the year of assessment in which they wish to qualify for the scheme.

If an individual is accorded the NOR status, he or she may enjoy the benefit of apportionment of his/her employment income and tax exemption on contributions made by the employer to an overseas pension fund for five consecutive years, subject to qualifying conditions.

Under the apportionment of Singapore employment income concession, the portion of the Singapore employment income that corresponds to the number of days the individual spent outside Singapore for business reasons, as a resident Singapore employee, is exempt from tax.

To enjoy the benefit of time apportionment of their employment income, an NOR taxpayer must:

  1. spend a minimum of 90 days outside of Singapore for business reasons; and
  2. must have a minimum Singapore employment income of $160,000.

The other concession under the NOR Scheme provides for tax exemption on employers’ contributions to a non-mandatory Overseas Pension Fund or Social Security Scheme.

In order to qualify for the tax exemption under this concession, the following conditions must be met:

  1. The NOR taxpayer is not a Singapore Citizen or Permanent Resident; and
  2. The NOR taxpayer’s employment income must be at least $160,000; and
  3. The employer must not claim a deduction made to the NOR taxpayer’s overseas pension or provident funds and social security schemes up to the NOR cap.

On 19 October 2018, the Inland Revenue Authority of Singapore (IRAS) provided further clarification that condition 3 is considered met where:

  1. the contribution is borne by a foreign company and is not charged or recharged to  the Singapore employer, as no deduction on the contribution is taken by the Singapore employer; or
  2. the employer is a tax-exempt body or representative office that is not required to file a tax return, as no deduction on the contribution is taken by the employer.

The above was revised from the previous clarification by IRAS that condition 3 is not satisfied if the contribution is not charged or recharged to any Singapore entity.

For further information, please refer to IRAS’ website.

Source: Inland Revenue Authority of Singapore

 

IRAS publishes seminar materials and tax information for filing of returns for self-employed persons

4 April 2017

On 17 March 2017, the Inland Revenue Authority of Singapore (IRAS) updated its website with seminar slides and tax information for self-employed persons.

The essential tax information serves to assist self-employed persons in the various trades when filing their tax returns, and are categorised by the following segments:

  • Beauty and wellness operators
  • Childcare centre operators
  • Commission agents (e.g. property/insurance agents)
  • Entertainers and entertainment organisers
  • Hawkers
  • Lawyers
  • Maid agencies
  • Medical practitioners
  • New self-employed persons/Sole-proprietors
  • Sharing economy players
  • Small Office Home Office (SOHO) registrants
  • Social media influencers such as bloggers and YouTubers
  • Sportspersons
  • Taxi drivers registered with taxi operators
  • Tuition centre/agency operators

For full details, please refer to the IRAS website.

Source: IRAS

Individual income tax filing enhancements introduced by IRAS

21 March 2016

The Inland Revenue Authority of Singapore (IRAS) has introduced a number of enhancements to facilitate individual income tax filing in 2016:

  • Filing via smartphones – enhanced smartphone filing available from March 2016
  • Personal reliefs eligibility tool – on-the-spot confirmation to determine if taxpayers meet qualifying conditions for reliefs
  • Pre-filled rental expenses for owners of tenanted residential properties – amount of deemed rental expenses based on 15% of gross rent has been prefilled on the online tax form. For those with more than one property, the option chosen, either the pre-filled 15% or actual rental expenses incurred will apply across all their tenanted properties.
  • Pre-filled income information for commission earners (including real estate and insurance agents – applicable to those organisations that submitted their records under the e-Submission of Commission Income Scheme.

Should there be no changes to the pre-filled income and relief claims, taxpayers who are on the No-Filing Service (NFS) scheme can also preview their Notice of Assessment (available within three days upon request) and request for an early assessment from March 2016.

Taxpayers, including sole proprietors and partners, are reminded that their income tax returns need to be filed by 18 April 2016 (online) or 15 April 2016 (for paper returns) unless they have been informed by the IRAS of their eligibility for NFS.

Source: IRAS

IRAS updates website content for individual tax rates from YA 2017

16 June 2015

The Inland Revenue Authority of Singapore (IRAS) has updated its online content for both the resident and non-resident individuals’ tax rates from YA 2017 onwards.

For resident individuals, the tax rates are as follows:

From YA 2017 onwards:

Chargeable Income  Rate (%) Gross Tax Payable ($)
On the first     20,000

On the next    10,000

0

2

0

200

On the first     30,000

On the next    10,000

3.50

200

350

On the first     40,000

On the next    40,000

7

550

2,800

On the first     80,000

On the next    40,000

11.5

3,350

4,600

On the first   120,000

On the next    40,000

15

7,950

6,000

On the first   160,000

On the next    40,000

18

13,950

7,200

On the first   200,000

On the next    40,000

19

21,150

7,600

On the first   240,000

On the next    40,000

19.5

28,750

7,800

On the first   280,000

On the next    40,000

20

36,550

8,000

On the first   320,000

In excess of  320,000

22

44,550

The tax / withholding tax rates for non-resident individuals have been updated as follows:

From YA 2017 onwards:

  • Director’s remuneration: 22%
  • Income derived from activity as a non-resident professional (consultant, trainer, coach, etc): 15% of gross income or 22% of net income
  • Income derived from activity as a non-resident public entertainer (artiste, musician, sportsman, etc): 10% concessionary rate (No change)
  • Other income e.g. property rental income: 22%
  • SRS withdrawal by a non-citizen SRS member: 22%
  • Interest, royalty etc: Reduced final withholding tax rate (subject to conditions) as follows – Interest: 15%; Royalty: 10%; or 22% if reduced final withholding tax rate is not applicable.

The update was made on 12 June 2015.

For further details, please refer to the IRAS website.

Source: IRAS

IRAS issues rewritten e-Tax Guide on “Change to Assess the Income of a Husband and Wife as Separate Individuals”

2 June 2014

On 26 May 2014, the Inland Revenue Authority of Singapore (“IRAS”) issued the rewritten e-Tax Guide on “Change to Assess the Income of a Husband and Wife as Separate Individuals”.

The rewritten e-Tax guide incorporates the Budget 2014 tax changes in relation to the phasing out of the spousal transfer scheme from year of assessment (“YA”) 2016 onwards.

The spousal transfer scheme was introduced in YA 2005 to ensure that married couples would not be made worse off, tax wise, following the removal of combined assessment. Under the scheme, a married couple may transfer the excess of qualifying deductions between each other if there is any remaining qualifying deductions that cannot be completely offset against the income of the respective spouse for a particular YA. Qualifying deductions refer to qualifying capital allowances,  trade losses and donations. As an administrative concession, where both spouses have rental income, they may also transfer the rental deficit to each other.

Following the phasing out of the spousal transfer scheme from YA 2016, any qualifying deductions and rental deficits arising from YA 2016 (basis year 2015) onwards would no longer enjoy spousal transfer. As a transitional concession, qualifying deductions arising in and before YA 2015 by a taxpayer will be allowed for offset against the income of his or her spouse until YA 2017, subject to existing spousal transfer rules. The transitional arrangement for spousal transfer is summarised as follows:

YA in which qualifying deductions arose

Unabsorbed capital allowances, trade losses and donations

Unabsorbed capital allowances, trade losses and donations

YA of spousal transfer

Carry-back to preceding YA

2015-2017

2018 onwards

2014

Spousal transfer allowed

Spousal transfer not allowed

Spousal transfer allowed

2015

Spousal transfer allowed

Spousal transfer not allowed

Spousal transfer allowed

2016

Spousal transfer not allowed

Spousal transfer not allowed

Spousal transfer not allowed

For the full details, please refer the e-Tax Guide on the IRAS website.

Source: Inland Revenue Authority of Singapore