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Expat Tips on tax issues

Query: If I earn S$4000 how much should I put aside each month for taxes? Is there a basic untaxed allowance e.g. the first $2000 is tax free for example?

Tip: Here are relevant text extracts from the government website, plus the tax rates for resident individuals. As you can see from quote 1, most expats here for longer than 6 months will qualify for the rates listed in the table (i.e.
resident for tax purposes).

Quote 1: "You will be regarded as a tax resident for any Year of Assessment, if you were physically present or working (other than as director) in Singapore for 183 days or more during the 12 months prior to that year."
Quote 2: "As a tax resident, you will be taxed on all income derived in Singapore and any overseas income which is remitted, transmitted or
brought into Singapore. However, you will be entitled to the personal reliefs given under the Income Tax Act. Your income (less personal reliefs) will be taxed at the graduated rates of 2% to 28% from Year of Assessment 1997."

   Website for tax rates for resident individuals: http://www.iras.gov.sg/info/taxrate.html

Tip: You will pay 7.55% on your first 50k (per year) of taxable income, so that will be about your rate. You'll be able to assume close to the $3,775 bill for a 50k income. You also get tax reliefs, which I asume are like deductions (I've only been here 9 months so havn't done this yet either). I assume the 3k personal relief is like the tax free threshold, ie, it comes off your gross income, in which case your tax will be a little lower. I'm no accountant, but you should be able to get a close estimate from the stuff below.
TAX RATES:
On the first $35000 -> $1,975.00
- 12% On the next $15000 -> $1,800.00
On the first $50000 -> $3,775.00

TAX RELIEFS (Deductons?)
Personal* $3,000
Earned Income* $1,000
Wife/Handicapped Spouse Relief $2,000/$3,500
Handicapped Siblings $3,500 each
Dependent Parents:
1) Living in the same household
2) Not living in the same household
$4,500
$3,500
Course fees $2,500 (maximum)
CPF Actual compulsory contributions
(You can call Iris at 1800-356 8311 for more details).

Query: When expats leave Singapore, does anybody know how many days in advance one should notify the immigration office? Should the tax authority be notified too? I heard that they would not allow you to exit unless you show some proof that you have paid all of your taxes.

Tip #1:  There is an obligation on your employer to file a notice advising the taxation office of the cessation of your employment. Your employer in effect guaranteed your tax liablities when they sponsored your employment so they will be left with the bag, so to speak, if you were to do a "runner". I think they may even be required to withhold your last month salary until given evidence of tax clearance (which you can arrange to be paid out of what they withhold).

Tax clearance and cancellation of your work permit will follow. The people to see are the adminstration/human resource officers at your place of employment. If your employer does not have anyone experienced in this I would suggest you go in person to the Inland Revenue Department and get them to explain the system for you. They are generally most helpful, and have the ability to process matters very quickly. Another alternative is to speak with your taxation advisor/accountant if you have one.

As an aside, it is not unusual to receive, as much as a year after you have left, a cheque from the Singapore IRD for a refund of tax paid which turns out to be too much. (Tax clearance may involve assessment according to rules/rates which are altered in the following year's Budget).

The preparation of a tax return is always primarily the individual's responsibility. Of course the HR dept should have most of the relevant information to cover income from that source. Even if you engage a professional to prepare a return it will still only be correct in so far as they are fully informed and you check all the details. There are many instances in which returns have been submitted on an incorrect basis for years culminating in a hefty adjustment when the IRD discovers the "error".
Contributed by Buffy

Tip #2:  If you are a foreigner leaving Singapore, your HR Department is responsible for helping you to prepare your tax return. Your HR Manager will inform the Inland Revenue Department that you have resigned from your job and that you will be leaving Singapore. He/she will usually handle all of the paperwork for you and withhold your last month's salary for tax purposes. If your final month's salary does not cover your tax completely, you will be required to pay the difference. If your final month's salary is more than enough to cover your tax, you will receive a refund cheque. Some multinational companies in Singapore hire tax consultants from one of the Chartered Accounting firms eg. Price Waterhouse and ask them to provide tax advice and assistance to all of their "expat" staff. This kind of tax preparation assistance is usually only provided to employees who have been employed on "full expat terms" or as "international assignees" ie. they are not hired on local terms.
Contributed by Alison

Query: Does everyone here come to Singapore on an expat pacakge? If so, how did you get this kind of package? - Pat

Tip:  No, a lot of people come over to Singapore on "full local terms". Some foreigners come over to Singapore on "full expat terms" ie. they are given a housing allowance, car allowance, club membership, relocation allowance, have their children's international school fees paid by the company etc. (Note - these expat benefits may not be offered by every MNC and financial institution in Singapore. Every company is different in terms of the benefits that they offer to their staff.) Others are employed on "semi-expat terms" ie. they are given a housing allowance by the company but generally receive standard benefits like the locals eg. medical and hospital insurance, CPF etc. A large number of Australians, New Zealanders, Indians and Brits, not to mention other nationalities, are employed on full local terms. Some of these people are happy to come over to Singapore to work because of the low tax rate here or for lifestyle reasons or because they've always wanted to work in Asia.

Many people have a stereotyped image in their minds that anyone who looks "white" and works in Singapore must be on a huge expat package. This is far from the truth. I personally know a lot of Europeans, Australians and New Zealanders who came over to Singapore on full local terms and are sharing a house or condo with 2 or 3 other expats.

If you want to receive some expat perks in your package, you have to negotiate these things up front with your employer before you sign the dotted line and accept the job offer. I always encourage candidates to be open about their current salary packages and to tell me what sort of package they are looking for in their next job. It doesn't hurt to ask for a housing allowance up front. You can always try to get as much out of your employer as possible. The worst thing that can happen is that they say "No". If the company really wants to hire you and think that you're a great candidate, quite often they'll be willing to negotiate with you. It all depends on how good you are and how keen they are to hire you.
- submitted by HR Manager

Query: My wife and I will be moving to Singapore at the end of the month and are considering living in Johor Bahru. We don't have a great housing allowance and want a nice house or condo. I would commute daily to Singapore and understand that I would have to buy a vehicle entry permit for about S$600 per month. Does anyone have any advice, experiences or suggestions?

Tip: What is not in dispute are the following: 1. JB is cheap. 2. You'll probably regret the move. Some Singaporeans have tried exactly what you are planning to do. I know a family. They sold their HDB flat and moved into a proper house and bought a car with the leftover proceeds. To get their kid to school, they ended up waking at 5 am. Because they needed to wake up early the following day, they often had to leave Singapore by 8 pm. Meaning: just about zero social life.

Within 3 months, they were back in Singapore. The aggro from fighting traffic was just not worth the money saved. Also, as someone pointed out, you can get new 3-bedroom apartments, in the suburbs, for S$1,500 a month. So much so that some expats are spoiled for choice and acting that way too. Contact any of the real estate agent advertisers. They will be able to help you. - contributed by Ang Peng Hwa

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