You will build a sheet that classifies each income source and records what to declare.
Shu Ting had the rules from the last three lessons in her head. What she didn't have was a single page that showed, for last year, every bit of money that had come in apart from her salary, what IRAS made of each one, and why. If anyone ever asked about her return, she wanted to be able to answer in a minute.
This exercise builds that page. It takes about twenty-five minutes, and most of that is collecting figures. You'll need last year's bank and brokerage statements, your CDP statement if you hold SGX shares directly, any tenancy agreement, and records of side income.
Add a tab to your tax workbook and give it these columns:
Source: where the money came from, specific enough to find again Amount: for the calendar year being assessed Taxable or exempt: your conclusion Rule: the reason, in a few words Record kept: the statement, receipt or agreement that supports the amount Checked: the IRAS page you read, with the date, or "unsure"
The "rule" and "checked" columns do most of the work. A sheet that says "exempt" with no reason is a guess. One that says "one-tier dividend, IRAS page on dividends, checked 14 March" is something you can stand behind.
Work through the categories from this module in order, so nothing slips through.
Dividends first. Give Singapore one-tier dividends, which lesson 5.1, Dividends, interest and investment gains, showed are exempt, a row of their own, and put REIT distributions and overseas dividends on separate rows below them.
Then interest. Bank and finance company deposits, government securities and Savings Bonds go in one group, and anything unusual, such as a private loan, goes in its own row.
Then gains. List any investment you sold, with the gain, and write a line about your pattern: how long you held, how often you trade, whether you borrowed. That line is your reason for treating the gain as not taxable, or for deciding it might be.
Rent comes next, using what you worked out in lesson 5.2, Renting out a room or a property. Record your share of the gross rent and your share of the expenses on separate rows, with the method you used.
Last, side income, from lesson 5.3, Side income and other income you must declare. One row per activity, with income and expenses.
If you're unsure about any item, write "unsure", note the IRAS page you checked, and come back to it before you file.
Here is how hers came out, with example figures throughout.
One-tier dividends from SGX shares, S$1,800: exempt under the one-tier system. Fixed deposit interest at a local bank, S$400: exempt, interest from an approved bank. US fund dividends received after US withholding, S$600: exempt, foreign-sourced income she received as an individual, with no partnership involved. Gain on an ETF sold to rebalance, S$2,000: not taxable, a long-term holding bought monthly and sold once.
Then the room. Her half of the gross rent, S$7,200: taxable. Her half of the expenses, S$2,050, actual expenses method: deductible. Net rent to declare, S$5,150.
No side income.
The total she should have declared beyond her salary was S$5,150 of net rent, reported as S$7,200 of rent and S$2,050 of expenses. Everything else was exempt or not taxable, with a reason written beside it.
Her brother Darren did the same. His ETF gain of S$3,000 was not taxable. His tuition income was S$6,000 with S$500 of expenses, so S$5,500 of net income to declare. He hadn't declared it, so he marked the row in red and added a note to deal with it in module 7.
Save the sheet with the rest of that year's tax records, together with the statements behind each amount. IRAS can ask about a return after it has been assessed, and the period for which you must keep records is on its website. A sheet with a reason and a source on every row makes that conversation short.
Next year, copy the tab and update it. Most rows will repeat, and the new ones are the ones worth thinking about.
For the activity, build the sheet for last year with your own figures and write the total you should have declared beyond your salary.
Build the sheet for last year and write the total you should have declared beyond your salary.
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