All-inclusive Personal Income Tax Guide in a Post-Covid19 Era
Updated: Apr 5
With 2020 swiftly behind us, most of us will be looking for ways to reduce our taxes for YA2021. As COVID-19 reshaped the way we work, IRAS recognize that employers may have provided support to employees on COVID-19-related costs or inconveniences arising from this global health pandemic. In response, they announced tax exemption on payments made for accommodation, food, transport, and daily necessities.
This guide gives you all the information you need to file your income tax for the YA2021.
Deadline for filing of income tax (e-filing): 18 April 2021
(paper filing): 15 April 2021
Covid-19: Work From Home Tax Deductions
During the pandemic, most companies have closed their physical doors and opened up their computers, encouraging their employees to work from home. Even after the Circuit Breaker, many employees continue to work from home.
Exemptions from tax
Due to the increased costs from travelling and various work from home requirements from COVID-19, cash allowances or reimbursements for costs in the following categories will be exempt from tax for the year 2020, subjected to conditions and capping:
• Accommodation in Singapore (including furniture and fittings) up to S$75 per day; and
• Food, transport, and daily necessities for consumption in Singapore up to S$50 per day.
Conditions for exemption:
• Employee did not ordinarily receive such benefits n Singapore before 1 February 2020
• The employer provided these benefits because
a) the employee does not ordinarily reside in Singapore but was require to reside in
Singapore for the continuation of the employer's business during Covid-19, or
b) the benefit has reduced the risk of the employee contracting Covid-19 and/or risks
of infecting others
Allowable Employment Expenses
Most WFH expenses are considered allowable employment expenses. Allowable employment expenses are expenses:
Incurred from official duties
Not reimbursed by employer
Not private or capital in nature
Eg. Travelling expenses on public transport. Travel between home and office is not valid
Below are the most common allowable employment expenses:
For more on deductions on employment expenses, click here.
How to file and pay personal income tax YA2021
Alright, so who needs to pay income tax?
All individuals earning, deriving or receiving income in Singapore have to pay income tax annually, unless exempted under the Income Tax Act or by an Administrative Concession.
Singapore adopts a progressive tax system. This means that tax rates increases as the taxable income increases. These are separated into tax brackets that progress to higher rates. This ensures that there is a better and more proper distribution of the tax burden as higher-income earners pay more tax.
Singapore has one of the lowest-tiered tax rates in the world and that is pretty commendable considering our high standard of living.
Personal Income Tax Rates for Residents 2021
Steps to file your taxes now
To file your tax return, log into myTax Portal using your SingPass and follow these 3 steps.
For more information on deductions for individuals, click here.
What happens if I miss the deadline?
If you fail to meet the deadline for the filing for income tax, IRAS have the right to take the following actions:
Late filing fee not exceeding $1,000; or
Issue an estimated Notice of Assessment (NOA); or
Summon you to court.
Paying your taxes
After filing your income tax, you will receive a copy of your tax bill (Notice of Assessment) for YA2021 within a month after submission. You might also receive an SMS alert when your tax bill has been finalized if you have updated your mobile number with IRAS. You will have to pay the amount indicated in the tax bill.
You can choose to pay your taxes in the following ways:
For credit cards, do take note that credit card rewards cannot be earned from payment of taxes. However, in order to work around that, you can pay an administrative fee from your tax deduction amount or apply for a payment facility to use your card for tax payment purposes.
Did not pay tax in time?
If you miss the payment due date, you will incur a 5% late payment fee and an additional 1% for every month subsequently (up to a maximum of 12% of the tax outstanding). A letter will be sent to you regarding this 5% late payment fee. You will have to make payment before the due date stated on the letter to avoid any further penalties.
If the tax continues to remain unpaid, IRAS can carry out the following enforcement actions to recover the taxes owed:
Appointment of agents like your bank, employer, tenant or lawyer to pay the money to IRAS
Issuance of a Travel Restriction Order (TRO) to prevent you from leaving the country; and/or
Taking legal action