Income Tax related question

[aparnashekar]

Dear All,

Can you please confirm the following -

1. Pre PR, 15% tax is applicable on total income - Is this true?
2. Is medical component of salary taxable or not? Also, if entire medical portion is not claimed towards medical expenses, will this be given as a part of the salary?
3. Post PR, when the employee contributes 20% of Basic towards PF, can this amount be reduced from taxable income?
4. Post PR, the tax rates will become resident rates... 0 - 20% bracket? Is this correct?
5. Is annual bonus (equal to one month basic) taxable?
6. Is employer contribution to PF taxable?
7. What is the scheme in PF where one can get a medical insurance as well?

Waiting for any help on the same.

Thanks,
Aparna

[jpatokal]

1. Pre PR, 15% tax is applicable on total income - Is this true?

False. You're taxed at resident rates even on an EP.

3. Post PR, when the employee contributes 20% of Basic towards PF, can this amount be reduced from taxable income?

Yes. And it's "CPF" in Singapore.

4. Post PR, the tax rates will become resident rates... 0 - 20% bracket? Is this correct?

No. See 1.

5. Is annual bonus (equal to one month basic) taxable?

Yes.

6. Is employer contribution to PF taxable?

No.

7. What is the scheme in PF where one can get a medical insurance as well?

Medishield.

[sundaymorningstaple]

1. Pre PR, 15% tax is applicable on total income - Is this true?

False. You're taxed at resident rates even on an EP.

Additional: This is provided you are resident for 183 days or more during the tax year. If you arrive between now and 31 Dec 07 you will theoritically be taxed at 15% but provided you are going to be here past the following July 3, 2008 you will then be taxed at resident rates which are graduated on net taxable income and not 15% of the gross income as noted above. If you were to leave the country before 3 July 2008 you would then be taxed on all of your income for both 2007 & 2008 at the 15% resident rates. See here for more info: Tax Rates-Resident/Non-Residents

3. Post PR, when the employee contributes 20% of Basic towards PF, can this amount be reduced from taxable income?

Yes. And it's "CPF" in Singapore.

4. Post PR, the tax rates will become resident rates... 0 - 20% bracket? Is this correct?

No. See 1.

Possibly. See 1. My link at IRAS

5. Is annual bonus (equal to one month basic) taxable?

Yes.

But Annual Bonus is not a guaranteed part of a package although it is usually there. Quite a few companies do not pay Annual Bonuses anymore.

6. Is employer contribution to PF taxable?

No.

7. What is the scheme in PF where one can get a medical insurance as well?

Medishield.

Just a few clarifications and a link to Inland Revenue answer all the bits .

Additionally, here is the link the the CPF (Central Provident Fund) Board website for more details

[aparnashekar]

Thanks so much for the information. As I rightly understood from your reply, as long as you have worked for more than 183 days, you automatically get taxed only at Singapore slab rates of 0 - 20%.

How long does it take typically to get a PR?

[sundaymorningstaple]

How long does it take typically to get a PR?

If you got here based on on your MBA and experience and an EP has been granted I would guess, depending on internal quotas (which is info none of us has but we all suspect) you could probably do between 3 and 6 months. It could take up to 2 years or not at all. While you may have the qualifications, there are unpublished guidelines that we all are not privy to.

[jpatokal]

1. Pre PR, 15% tax is applicable on total income - Is this true?

False. You're taxed at resident rates even on an EP.

Additional: This is provided you are resident for 183 days or more during the tax year. If you arrive between now and 31 Dec 07 you will theoritically be taxed at 15% but provided you are going to be here past the following July 3, 2008 you will then be taxed at resident rates which are graduated on net taxable income and not 15% of the gross income as noted above. If you were to leave the country before 3 July 2008 you would then be taxed on all of your income for both 2007 & 2008 at the 15% resident rates. See here for more info: Tax Rates-Resident/Non-Residents

And in case your head is not spinning yet, if you are considered resident but spend over 90 days per year outside Singapore, you can apply for Not Ordinarily Resident status and get tax exemption for your days out of Sing. Lots of small catches here though, and you can only do this for your first couple of years of residency... I would've otherwise qualified once, but my tax rate was under 10% that year so I didn't. Wasn't too disappointed

What this all boils down to, though, is that if your salary is not ludicrous and you're staying here for over a year, your taxes won't be much over 10%. So don't worry about it too much.

[sundaymorningstaple]

What this all boils down to, though, is that if your salary is not ludicrous and you're staying here for over a year, your taxes won't be much over 10%. So don't worry about it too much.

Which is why both of us are probably still here!

[LBS03]

Thanks SMS and jpatokal - this was very helpful.