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taxable income on resignation (tax resident + tax clearance)

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jogi88
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taxable income on resignation (tax resident + tax clearance)

Postby jogi88 » Tue, 13 Mar 2012 10:50 pm

So I'm on EP and a tax resident. I have just resigned from my job and leaving Singapore. I haven't paid yet my tax for 2011, and my company has just filed for tax clearance.

So my question is how do they calculate my taxable income?

My income for last year (Jan-Dec 2011) is S$ 42k and tax (using the tax calculator) shows at about S$ 700.

My income for 2012 (Jan-March 2012) is S$ 11400.

What I can't figure out is if IRAS will combine 2011 and 2012 income. That means, my total taxable income would be S$ 53,400 and my tax would be S$ 1500.

OR if they will calculate it separately. Meaning 2011 tax is S$ 700, and since my income for 2012 is less than S$ 20k, then no tax for 2012. So total would only be S$ 700.

Of course I'm hoping for the 2nd scenario, but would like to ask if anyone knows how this is calculated?

Appreciate any info.

Thanks!

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sundaymorningstaple
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Postby sundaymorningstaple » Tue, 13 Mar 2012 10:55 pm

It will be the second scenario.

Assuming, that is, that your tax year follows a calendar year and not some other Fiscal year.

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Postby jogi88 » Tue, 13 Mar 2012 11:06 pm

Thanks!

But what do you mean by my tax year?

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Postby sundaymorningstaple » Wed, 14 Mar 2012 7:01 am

99.98% of the taxpaying public are on a calendar year basis for their income taxes. So, however, opt for a Fiscal year which runs on a different stand/finish date. Lots of corporations use other than calendar years. If you don't know what I am talking about, then you are on a calendar year so don't worry about it as it's more trouble that it's worth. ;-)

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Postby curiousgeorge » Wed, 14 Mar 2012 8:17 am

You don't mention when you are leaving, but one thing that often catches expats out is that employers are required to withhold the last month's salary from being paid out, in lieu of settling the tax burden.

Once the tax is paid, the employer can release the funds.

That is partly why MoM like 30 days notice of intent to leave SG, so IRAS can calculate the liability and you have time to pay it.

Just make sure you have that figured into your final few weeks here.

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Postby zzm9980 » Wed, 14 Mar 2012 9:40 am

It will be the second scenario.

This is good, and answered a question I had in my mind and was going to post; thanks SMS! Cuts the taxs significantly!

Now, since IRAS is going to take taxes on 3X of my salary (three months), the amount will be quite low. Since I'm taking another position locally (on PEP), next year I'll go to file the other 9X (nine months) of my taxs. Will IRAS or their online form already account for the credit I should have paying 3X? Or will I have to calculate it in myself and show proof?

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Postby sundaymorningstaple » Wed, 14 Mar 2012 11:38 am

Just file your tax return as normal including all your income from both jobs (if two or more in one year). Any job in which an IR-21 has been filed (Tax Clearance) will automatically be found and any taxes paid with that clearance, will be taken into account and credited toward the total tax bill for the year.

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Postby carteki » Wed, 14 Mar 2012 5:50 pm

zzm9980 wrote:Now, since IRAS is going to take taxes on 3X of my salary (three months), the amount will be quite low. Since I'm taking another position locally (on PEP), next year I'll go to file the other 9X (nine months) of my taxs. Will IRAS or their online form already account for the credit I should have paying 3X? Or will I have to calculate it in myself and show proof?


As you're taking another position from my discussions with them (IRAS) you can show them your new contract and then they will not require full payment of outstanding taxes. You can continue to pay monthly.

If you do "clear your taxes" now then remember that in your 2013 tax return (for the year ended 2012) you will need to include the $20k income earned in the 1st 3 months.

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Postby zzm9980 » Wed, 14 Mar 2012 5:58 pm

carteki wrote:As you're taking another position from my discussions with them (IRAS) you can show them your new contract and then they will not require full payment of outstanding taxes. You can continue to pay monthly.


Good to know. I'll call them tomorrow. thanks!

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Postby jogi88 » Wed, 14 Mar 2012 7:52 pm

Great! Thanks so much SMS!

Cleared me of worries :)

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Postby sundaymorningstaple » Wed, 14 Mar 2012 10:37 pm

Isn't that what I said?

carteki wrote:If you do "clear your taxes" now then remember that in your 2013 tax return (for the year ended 2012) you will need to include the $20k income earned in the 1st 3 months.


sundaymorningstaple wrote:Just file your tax return as normal including all your income from both jobs (if two or more in one year). Any job in which an IR-21 has been filed (Tax Clearance) will automatically be found and any taxes paid with that clearance, will be taken into account and credited toward the total tax bill for the year.


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