Write a note showing how each of your foreign income sources is treated and what to do if you move.
If you have money coming in from outside Singapore, the details tend to end up in different places: a figure in a spreadsheet, a line in an email, a question you meant to ask someone. When it's time to file, or when your circumstances change, you have to piece it all back together. A one-page foreign income note keeps it in one place. You can hand it to a tax adviser, reread it before filing, and update it if something changes, such as a posting abroad.
The exercise takes about twenty minutes. Have these ready: statements for any overseas accounts, your brokerage dividend records, and the IRAS pages from lessons 6.1 to 6.3.
Start a new tab or document. Give each foreign source its own entry with four items: the country, the type of income, last year's amount in Singapore dollars, and how the money reaches you.
Record the route the money actually took, because it affects the tax treatment. Income paid into an overseas account and left there, income transferred to Singapore, and income received through a partnership or a company can each be treated differently.
If you have no foreign income, a single line saying so is a valid list, and the next two steps then go quickly.
Under each source, write how Singapore treats it and the rule behind that conclusion. Use lesson 6.1, "Foreign income received in Singapore", to work this out. Most investment income an individual receives from abroad is exempt as foreign-sourced income. Income from work done in Singapore for an overseas client is usually Singapore-sourced, so it does not fall under that exemption. Be careful, too, with income received through a partnership.
Next, record any foreign tax paid as an amount plus the document that proves it, such as a dividend statement showing withholding or a foreign tax assessment. If Singapore exempts the income, any foreign tax paid on it is a cost and cannot be credited in Singapore. Lesson 6.3, "Double taxation agreements and foreign tax credits", covers this rule. Write it in the entry so you don't go looking for a credit later.
Write this section even if you have no plans to move, and make it detailed if you do. Lesson 6.2, "Working overseas and moving away", supplies the questions to answer:
your Singapore residency in the year you leave and in the years you're away whether tax clearance applies, and what your employer would hold back how the new country would tax your salary and your other income whether a tax treaty applies, and what it says about your main income what happens to your CPF, your SRS account and any Singapore rental income
For every conclusion in the note, record the IRAS page or treaty article you relied on and the date you read it. Rules change, and a note without sources goes out of date without any warning. Finish the note with one question to take to IRAS or a tax adviser.
Shu Ting is a Singapore citizen with a husband and a daughter. By the end of module 6, her foreign income notes were in three places: her tax workbook, an email to HR about a possible Jakarta posting, and a list of questions for her tax adviser. She wanted them on one page that she could hand to her adviser, reread before filing, and update if the posting went ahead.
Her first entry is Australia: interest on a savings account, S$300 for the year (an invented figure), left in the Australian account. It is exempt as foreign-sourced income received by an individual. Australian withholding on interest paid to a non-resident applies, and her bank's annual statement shows it. She notes it as a cost with no Singapore credit. Her source is the IRAS page on foreign-sourced income for individuals, checked in March (an invented example).
Her second entry is the United States: dividends on a US-listed fund, S$600 received after withholding (an invented figure), paid into her brokerage account. It is exempt as foreign-sourced income. The US withholding is shown on her broker's dividend statements and is a final cost. Singapore has no general income tax treaty with the US. Her source is the same IRAS page.
Her third entry is the possible posting to Jakarta, Indonesia. Her Singapore residency during the posting is still to be confirmed. Tax clearance is not needed because she is a citizen. Her salary during the posting is likely to be taxed in Indonesia, and generally not in Singapore if the job is carried out wholly there. Singapore and Indonesia have a tax treaty, and she has read its employment article. She expects no CPF contributions while she is employed overseas by the Indonesian entity, which she still needs to confirm with HR, and she plans no SRS contributions during the posting. Rental income from the room in Bukit Batok stays Singapore-sourced and taxable in Singapore while she is abroad. Marcus, the co-owner, would keep declaring his half.
At the bottom she writes one question for her adviser: during a two-year posting, with her husband and daughter staying in Singapore, which country treats her as resident under the treaty, and does that change how her share of the rent is taxed?
Now write your own note for the activity, and end it with one question to take to IRAS or a tax adviser.
Write the note for your own situation, then write one question to take to IRAS or a tax adviser.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).