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Being classified as a Self Employed Person or contractor ("SEP") can save you a lot of income tax

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PNGMK
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Being classified as a Self Employed Person or contractor ("SEP") can save you a lot of income tax

Post by PNGMK » Sat, 08 Apr 2023 5:35 pm

If you're a PR or SC (I don't think this is open for EP or Spass holders - it MAY work for PEP) and you can change the way you work to being a contractor (billing multiple companies with invoices and not being on their payroll - i.e. an SEP) you can deduct your full SRS and CPF contributions as tax deductions (rather than the usual 7k or so allowance).

My tax deductions for YA2022 were:

Earned Income 6,000.00
Child (QCR) 4,000.00
CPF 37,740
SRS 15,300.00

For a total of ~$63,000. I paid all of $424 in income tax for YA2022.

In addition as a contractor or trader or sole proprietor you can off course deduct legitimate business expenses from your income prior to declaring it (and if under 500k you don't need to file accounts). Mobile phones, computers etc are depreciated within 12 months I believe as well.

If you're laid off from a regular job (as I was) this is an interesting option as a PR or SC. I now contract to multiple Singapore companies for regular and irregular work as well as offshore companies.

https://www.iras.gov.sg/taxes/individua ... f-employed

For YA 2023, your tax relief for your MediSave and voluntary CPF contributions will be capped at the lowest of:

37% of your net trade income assessed; or
CPF relief cap of $37,740; or
Actual amount contributed by you in the year 2022.

No CPF relief will be allowed in respect of your compulsory MediSave or voluntary CPF contributions made in 2022 if you have no assessable net trade income for the Year of Assessment 2023.

I not lawyer/teacher/CPA.
You've been arrested? Law Society of Singapore can provide referrals.
You want an International School job? School website or http://www.ISS.edu
Your rugrat needs a School? Avoid for profit schools
You need Tax advice? Ask a CPA
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Re: Being classified as a Self Employed Person or contractor ("SEP") can save you a lot of income tax

Post by malcontent » Mon, 10 Apr 2023 12:40 am

My employer’s tax structure requires me to be an employee, no way out other than to resign.

Worse still, my employer extended social security coverage to all US citizens employed by their foreign entity here, which means 7.65% payroll tax comes right off the top. This is matched by my employer - but the employer match also attracts income tax in Singapore, so effectively I pay closer to 9.3% plus an extra 0.9% once my income exceeds a certain level.

Taxes.. I pay a few… but the hope is that social security will pay off eventually.

Fortunately I’ve managed to avoid paying US federal taxes all these years; this year is no exception - in fact, I will get a small refund for the 30% withheld on S27 in my SRS.

However, next year I won’t be so lucky; it will be a tax paying bonanza, due to the larger bonus and the house sale with capital gains… Uncle Sam will get a tasty 5 figure treat. There goes all the stimulus money they gave me during Covid #-o
Every great and deep difficulty bears in itself its own solution. It forces us to change our thinking in order to find it - Niels Bohr

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