List which parts of your pay and benefits are taxable.
When you file income tax in Singapore, your IRAS account usually shows one employment income figure that is already filled in. It can include payments you didn't think of as pay, and it can miss things. The return is still yours, so you need to know what belongs in that figure and how to check it.
Salary is employment income, and so are bonuses, commissions and overtime. The thirteenth-month payment counts too. Many employers call it the annual wage supplement. A company director's fees also count as employment income.
Allowances paid in cash are generally taxable, whatever they are called: transport, meal, housing, phone and shift allowances. A fixed monthly allowance is part of your pay even if you think of it as covering a cost. IRAS exempts some specific payments and reimbursements and lists them on its website, so don't decide that an item is taxable or exempt from its name alone.
Lump sums count as employment income: a sign-on bonus, a retention bonus, a long-service award and, in many cases, payment in lieu of notice. Some payments made when a job ends can be treated differently, for example genuine compensation for loss of employment, and IRAS explains how to tell these apart.
A benefit in kind is something your employer provides that has value to you, such as a home, a car, a club membership or school fees for your children. Benefits in kind are generally taxable, and IRAS has rules for how each type is valued.
Housing is the usual benefit in kind for people whose employer posted them to Singapore. If the company rents a flat for you, the value of that accommodation, worked out under IRAS rules, is added to your employment income. A company car you can use privately is treated in a similar way. Some benefits are exempt or given a low value, such as medical benefits that meet IRAS conditions, small festive gifts, and staff discounts within limits. These rules change, so check the IRAS page on employee benefits for anything you are unsure about.
Many employers, especially multinationals, pay part of their staff in shares, for example restricted share units vesting over three years, or options to buy shares at a set price. Gains from share plans are generally taxed as employment income. When the gain arises and how it is measured depend on the type of plan and on IRAS rules. For many plans the gain arises around the time the shares vest or the option is exercised, and it is measured as the market value of the shares at that time minus anything you paid. A rise in price after you own the shares, when you sell, is a separate matter covered in Module 5, "Declare investment, rental and side income correctly".
Most Singapore employers take part in the Auto-Inclusion Scheme (AIS) for employment income. They send IRAS each employee's income for the year, and IRAS pre-fills it in the employee's tax return. Your employer also gives you a statement of what it reported, usually on Form IR8A, with appendices for benefits in kind and share gains where these apply.
The AIS catches most income, but you are still responsible for the accuracy of your return, whether you typed the figures in yourself or accepted what IRAS pre-filled. Errors tend to come from three places. After a job change, one employer's income can be missing, especially if a small company is not in the scheme. Share gains from a former employer, or from an overseas parent company, may not be reported. A bonus paid in January may be reported in the wrong year.
Shu Ting's bonus is paid in March. In the same period she gets a cash award for a project that finished early and a few hundred dollars from her company's share plan. That year her employer also pays for her mobile phone line and gives her a transport allowance. The next spring she opens her IRAS account and sees one figure under employment income, without knowing which of those payments it includes.
She lists six items: salary, bonus, project award, share plan gain, transport allowance, and the phone line her company paid for. She adds up her IR8A and its appendix, and the total matches her pre-filled employment income to the dollar. Her share plan gain is a taxable employment gain that her employer included in the figures sent to IRAS, so her employment income was higher than her salary and bonus added together.
The phone line is the item she is unsure about. Her employer paid the bill directly, and she used the line mostly for work. She finds the IRAS guidance on mobile phone benefits, sees how that case is treated, and writes the answer next to the item on her list. She then confirms that the transport allowance, paid in cash each month, is taxable and already included in her total.
Work through the same steps Shu Ting did:
List every payment and benefit from your job for the year: salary, bonuses, awards, share plan gains, allowances, and anything your employer paid for. Gather your payslips and your IR8A with its appendices. Add up the IR8A and its appendices. Compare that total with the employment income IRAS pre-filled in your account. For any item you are unsure about, find the matching IRAS guidance and write down how it is treated. Confirm that taxable items, such as cash allowances, are inside the total. Look for the common gaps: income from a previous employer, share gains from a former or overseas parent company, and bonuses reported in the wrong year.
Lesson 4.2, "Check your income and reliefs before you pay", in "Reading the fine print: payslips, statements, policies and contracts", shows how to compare the IR8A with the notice of assessment line by line.
For the activity, start the same list from your own payslips and IR8A, then open your IRAS account to see what was pre-filled.
List every type of pay and benefit you received last year, and tick the ones that appear in your IRAS pre-filled income.
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