You will be able to explain who is a tax resident and how residents and non-residents are taxed differently.
Shu Ting's team at a logistics firm in Changi took on a new analyst last September. Arjun had moved from Bengaluru, and by March he was asking the whole team the same question: why did his tax look so different from everyone else's, when he earned about the same? The answer had nothing to do with his salary. It came down to one word on his IRAS account, his residency status.
Everything in lesson 1.1, Chargeable income, and why reliefs save tax at your top rate, assumed you are a tax resident. This lesson explains who counts as one, what changes if you don't, and why a move in or out of Singapore part way through a year deserves a careful look.
For income tax, residency turns on where you live and work during the year. Your passport doesn't settle it. IRAS decides it separately for each year of assessment, and it looks at the calendar year in which you earned the income.
Singapore citizens and permanent residents who live here are tax residents. That covers most people reading this course, and if it covers you, there is nothing to apply for. You are treated as resident unless you have moved away.
Foreigners can be tax residents too. IRAS treats a foreigner as resident for a year if they stay or work here long enough in that year, and it has further rules for people whose stay runs across two or three calendar years. The tests use day counts and dates, and IRAS sets them out on its page about tax residency. This course doesn't repeat the numbers, because they are exactly the kind of detail you should read at the source, for the year you are checking.
So for Arjun, the question was simple to ask and needed the IRAS page to answer: how many days had he stayed or worked here in the calendar year he arrived, and would his stay carry on long enough for one of the multi-year rules to apply?
A tax resident is taxed on chargeable income at the progressive resident rates, the banded rates from lesson 1.1, and can claim personal reliefs. The first slice of income is taxed at zero, so a resident on a modest salary may pay little or nothing.
A non-resident is taxed differently. Employment income is generally taxed at a flat rate, or at the resident rates if that gives more tax, and IRAS publishes how the comparison works. Non-residents generally cannot claim personal reliefs either. So the same salary can produce a much larger bill for a non-resident, with none of the reliefs that later modules of this course spend their time on.
Here is how that played out for Arjun, with example figures only. Suppose he earned S$18,000 in his first four months here. Taxed as a resident, all of that would sit inside the zero band of the practice table this course uses, so he would owe nothing. Taxed as a non-resident at a flat rate, even a modest one, he would owe something on every dollar. Look up the actual non-resident rate on the IRAS website before you work out your own figures.
The year you arrive and the year you leave are where most surprises happen.
If you arrive late in a year, you may not meet the day test for that year on its own. IRAS's multi-year rules can still make you a resident. Whether they do turns on how long you stay on into the next year. Sometimes that is only clear later, so IRAS may first assess you as a non-resident and then revise the assessment once you qualify.
Leaving works the other way round. A citizen or PR who moves abroad for good can stop being a tax resident for the years they no longer live here. A foreigner who leaves part way through a year may find that year assessed as non-resident. Module 6, Handle foreign income and moving countries, covers the steps for a move. One of them is tax clearance, which employers must arrange for non-citizen employees who leave.
A holiday or a business trip changes none of this. A citizen who spends three weeks in Japan is still a resident, because the tests look at where you live and work over the whole year.
Citizen or PR, here all year? Then you're almost certainly resident, and you can move on. Your notice of assessment will show resident rates and your reliefs.
Foreigners, and anyone who moved in or out during the year, have three jobs. First, count the days you were physically in Singapore or working here in that calendar year. Passport stamps, flight bookings and your employer's records all help. Then read the residency page on the IRAS website and find the rule that fits your dates. Last, open your notice of assessment. Did it apply resident or non-resident treatment? That tells you how IRAS read your year.
Arjun counted his days, found the multi-year rule that fit his dates, and saw that IRAS had first assessed him as a non-resident. Once his stay continued into the next year, he could ask IRAS to review it. He wrote down the rule's name and the date he checked, so he wouldn't have to work it out again.
Do the same for yourself before the activity: find last year's status on your notice of assessment, and if anything about your year was unusual, open the IRAS residency page beside it.
Write your residency status for last year and the IRAS rule that decides it.
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