ASK Yong Hui is a new column that provides a platform for you to get your questions about insurance and money matters answered.
Today’s question is about taxes since this is the tax filing season.
Question: How are my taxes calculated?
This was a question my client asked me recently. For her, tax filing has all along been a straightforward exercise of clicking an acceptance button – because her employer participates in the auto inclusion scheme. Still she was curious about how much she has to pay and how taxes are calculated.
How about you? And for those who just started working or recently got a pay raise, are you also wondering how much taxes or additional taxes you need to pay this year?
Answer:
The amount of taxes you pay depends on the tax bracket you fall under.
The table below shows the personal income tax rates for resident individuals i.e Singapore citizens, PRs or foreigner who has stayed and worked in Singapore for >183 days in the previous year. (extracted from the IRAS website)
How to determine how much taxes you have to pay?
Let’s take for example Ms Lee whose chargeable income is $70,000 (taxable income after deducting off tax reliefs from the total employment income).
That means she falls under the 3rd tax bracket
Here’s how Ms Lee’s payable tax will be calculated:
Tax payable on first $40,000: $550
Tax payable on next $30,000 @ 7%: $2,100
Gross Tax payable: $2,650
If Ms Lee gets a promotion this year and her net chargable income increases to $85,000
That means she moves up to the next bracket (assuming no change in the tax rates)
Ms Lee’s new payable tax will be calculated as follows:
Tax payable on first $80,000: $3,350
Tax payable on next $5,000 @ 11.5%: $575
Gross Tax payable: $3,925
If all these calculation seems too tedious, there’s always the income tax calculator which you can download from the IRAS website to help you compute your estimated tax
http://www.iras.gov.sg/irasHome/taxcalculators.aspx
Hope the above tip helps!
