Speak to an advisor: +65 6929 8273

2024 IRAS Tax Bracket: A Roadmap to Potential Tax Savings

2024 IRAS Tax Bracket: A Roadmap to Potential Tax Savings
By
|
|
8 mins read
|
Published:
|
Updated:

As you prepare for the upcoming tax season, knowing where your income falls within the IRAS tax bracket structure can help you make informed decisions and optimize your tax obligations.

Entrepreneurs risk facing unexpected tax burdens due to a lack of clarity around the progressive tax system in Singapore, under which tax rates increase with rising income levels. This misunderstanding can lead to financial challenges, as confusion often leaves people unprepared for the higher taxes incurred as earnings grow.

Every dollar counts; knowing where you stand on this scale could mean significant savings. With some insight into the IRAS tax bracket structure, preparing your corporate tax returns can become a straightforward task rather than an unwelcome surprise.

Understanding the significance of the IRAS tax bracket

Singapore’s tax system is designed to be progressive, meaning the higher your income, the more income tax you pay. But don’t worry, it’s not as complicated as it sounds. To manage your taxes effectively, it’s important to understand the concept of the “basis period,” which refers to the specific time frame that the IRAS uses to assess your taxable income. This period is crucial for accurately calculating what you owe, ensuring you’re not overpaying or underpaying your taxes.

Singapore’s progressive tax system

Singapore’s progressive tax system is actually pretty straightforward. The more you earn, the higher your tax rate. The rates start at 0% and only go up to 24% for the highest earners this 2024.

Calculating your tax liability

To figure out your tax payable, start by calculating your chargeable income. This means taking your total income and subtracting any deductions or reliefs you qualify for.

Then, you apply the progressive income tax rates to your chargeable income. Voila, you have your tax liability.

If math isn’t your strong suit, don’t worry. IRAS has a handy tax calculator on their website that does all the heavy lifting for you. Just plug in your numbers and let the calculator work its magic.

More on income tax Singapore, check out our in-depth guide.

Tax reliefs and rebates

Singapore lightens the tax load with several reliefs and rebates. You can benefit from Earned Income Relief, CPF Relief, and even get breaks for employing a maid or looking after elderly parents.

These can significantly affect your final tax bill, so make sure you take advantage of all the reliefs you’re eligible for.

IRAS tax bracket for resident individuals

If you’re a Singapore permanent resident, congrats. You qualify for some of the lowest resident tax rates in the world. Understanding these rates issued by the tax authority is crucial for effective personal tax planning, ensuring you can make the most of deductions and rebates specific to your situation. This proactive approach can significantly impact your finances, optimizing your tax responsibilities and savings.

infographic about key differences between ya 2023 and ya 2024 tax brackets

Resident tax rates for YA 2023

For the Year of Assessment (YA) 2023, the resident tax rates start at 0% for chargeable income up to $20,000. That’s right, you pay zero taxes on your first $20k. The rates then gradually increase, maxing out at 22% for income over $320,000.

Resident tax rates for YA 2024

Now, here’s some exciting news. The resident tax rates for YA 2024 have been updated and are even more favorable for taxpayers. The top marginal tax rate increased from 22% to 24% for chargeable income exceeding S$1 million.

Part-year residents

If you’re a part-year resident, things can get a bit tricky. Your employment income will be taxed at either the resident or non-resident rate, whichever results in a higher tax amount in the IRAS tax. This is to ensure fairness between part-year and full-year residents.

IRAS tax bracket for non-resident individuals

Are you not a Singapore citizen or PR? No worries; the non-resident tax rates are still relatively low compared to many other countries.

Non-resident tax rates

For non-residents, your employment income is taxed at a flat rate of 15% or the progressive resident rate, whichever results in a higher tax amount. This applies to your salary, bonuses, director’s fees, and pretty much any income you earn while working in Singapore.

Withholding tax for non-residents

Now, here’s where it gets a bit more complicated. Certain types of income earned by non-residents are subject to withholding tax. These include interest, royalties, rent, and management fees.

Reduced final withholding tax rates vary depending on the type of income and any applicable tax treaties.

Corporate income tax rates in Singapore

If you’re running old or startup companies in Singapore, you’ll be happy to know that the corporate income tax rates are among the lowest in the world. To comply with local regulations, most companies will need to submit , a simplified tax declaration for companies claiming fewer deductions and with an annual turnover of less than SGD 5 million. This streamlined form makes it easier for smaller enterprises to manage their tax commitments efficiently.

Corporate tax rates

The corporate tax rate in Singapore is a flat 17% on chargeable gross income. There are no complicated brackets or tiers to worry about. Your effective tax rate could be even lower with various tax exemptions and incentives available.

Looking for a guide on the Singapore corporate tax rate? We have crafted the perfect guide for you.

Tax exemption scheme for new start-up companies

Qualifying new start-up companies can enjoy a 75% tax exemption on the first $100,000 of chargeable income and a further 50% tax exemption on the next $100,000. This is a huge boost for new businesses trying to get off the ground.

Partial tax exemption scheme

But wait, there’s more. Even if you’re not a new start-up, you can still benefit from the partial tax exemption scheme. Under this scheme, 75% of the first $10,000 of chargeable income and 50% of the next $190,000 are exempt from corporate income tax. To apply for these exemptions accurately, companies must file their taxes using either Form C-S/Form C-S (lite), depending on their revenue and the complexity of their tax affairs. This ensures you take full advantage of the tax benefits available while maintaining compliance with IRAS regulations.

Determining your tax residency status in Singapore

Figuring out your tax residency status in Singapore is crucial. It determines which withholding rates apply to you and what kind of relief you can get.

Tax resident criteria

You’re considered a tax resident if you’re a Singapore Citizen, permanent resident, or foreigner who stayed or worked in Singapore for 183 days or more in the previous year (unless you’re a company director).

Not Ordinarily Resident Scheme

If you’re new to Singapore, you might be eligible for the Not Ordinarily Resident Scheme (NOR). This scheme is for individuals who haven’t met one of the qualifying conditions for Singapore tax residents for three years before the year they first qualify for the scheme.

With NOR, you can get some tax breaks for five years. It’s a helpful way to get used to Singapore’s taxes if you’re moving from another country.

Administrative concession

There’s also an administrative concessionary rate for foreigners who have worked in Singapore for at least 183 days, straddling two calendar years. Even if their stay in the first year is less than 183 days, they can be treated as tax residents for both years.

Types of income taxable in Singapore

Curious about what’s taxable in Singapore? The answer might surprise you – it covers various net income sources. Let’s take a closer look at the main categories.

Employment income

Your salary, bonuses, allowances, and benefits are taxable if you’re employed in Singapore. It doesn’t matter if your employer is local or overseas, or if your income is paid in Singapore or elsewhere. If the employment is exercised in Singapore, it’s taxable.

Business income

If you’re self-employed or own a business in Singapore, you need to pay taxes on your income. This applies to some resident or non-resident professionals like doctors, lawyers, consultants, or partners. Depending on your business’s revenue and financial activities, you may need to use Form C-S or Form C to streamline the tax filing process. This form is crucial for declaring your income accurately to IRAS and ensuring compliance with local tax laws.

Investment income

Investment income like dividends, interest, and rental income are taxable in Singapore. However, there are some exceptions, such as Singapore one-tier dividends and income derived from Singapore Government Securities.

Other income

Singapore has a few other types of taxable income, such as royalties, grants, and awards. Even certain gains from the sale of property may be taxable if they’re considered to be of an income nature.

If you’re unsure about the taxability of any income, it’s always best to check with IRAS or a tax professional. It’s better to be safe than sorry.

Filing your Singapore income tax return

Alright, now that we’ve covered what’s taxable, let’s discuss filing your tax return.

Filing deadlines

The filing deadline for individual income tax returns is April 18 each year. If you’re self-employed and filing your return electronically, you get an extension to April 18. But if you’re old-school and prefer paper filing, your deadline is April 15.

Modes of filing

You have two options for filing your tax return: electronically via the myTax Portal or by paper filing. Electronic filing is definitely the way to go—it’s faster and more secure, and you get an acknowledgement from IRAS instantly.

Required documents

When you’re ready to file your tax return, ensure everything is in order. You’ll need your personal particulars, income, deductions, and relevant financial documents like those related to stamp duty. For corporate income tax, you need your Form C-S. Organizing these documents beforehand will streamline the process and help avoid delays.

Sleek: Your shortcut to stress-free tax filing

As you plan your 2024 tax strategy, consider our team of experts and our cloud-based accounting software here at Sleek, designed to simplify your financial life. Sleek’s user-friendly interface automates tax filing, ensuring you claim all eligible deductions and stay compliant with IRAS regulations.

With Sleek, you’ll get:

  • Automated tax calculations and form generation
  • Maximized deductions and reliefs
  • Access to expert tax advice
  • Peace of mind knowing your taxes are done right

Don’t let tax season stress you out. Let Sleek handle the complexities so you can focus on your financial goals. Switch to Sleek today!

Talk to our experts today

Key Takeaway:

Singapore’s progressive tax system means higher income leads to higher taxes. Calculate your chargeable income by subtracting deductions and personal reliefs from total income. Apply the tax rates to find your payable amount. Utilize IRAS’s online calculator for help. Tax reliefs and rebates can significantly reduce your final bill.

Conclusion

So, there you have it. Everything you need to know about the IRAS tax bracket. It isn’t just a series of numbers; it’s a playground for the savvy saver and the strategic planner. Whether you have a business or an individual hustling through your daily grind in Singapore, understanding these brackets is like having a secret weapon.

Sure, dealing with taxes can feel as appealing as watching paint dry, but mastering your knowledge about different income rates and rebates means more money stays right where it should – in your pocket! And who doesn’t want that? It’s not just about paying what’s due; it’s also about seizing opportunities to save through every tax exemption and relief available..

FAQs about Singapore's IRAS tax bracket

Figuring out your taxes in Singapore can feel a little overwhelming, right? We get it. Don’t worry, we are going to break down some common questions about Singapore’s IRAS tax bracket. This should give you a better idea of how it all works.

Singapore uses a progressive tax system, which is actually pretty cool. Basically, the more money you make, the higher the withholding tax rate applicable on the additional income. But, don’t worry, not all your income is taxed at that highest rate. Pretty fair right?

Want to calculate your income tax? Singapore’s IRAS has a handy income tax calculator on its website. You can plug in your details, and, bam, it does the math for you!

Alright, so there are these things called tax reliefs, and they can actually lower the amount of your income that’s taxed. Some popular ones include working from home, parent reliefs, and even course fees. It’s worth looking into to see what you qualify for.

Sleek is the preferred partner of entrepreneurs
Previous slide
Next slide
Expertise in company incorporation, accounting, tax services, and compliance.
Trusted by over
450,000
businesses worldwide.
4.8/5
on Google
from 4,100+ reviews.
95%
satisfaction rate from
16,000 surveyed clients.