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Tax residency (183 day rule confusion)

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praznina
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Tax residency (183 day rule confusion)

Postby praznina » Tue, 15 Jan 2013 9:54 pm

Hey there,

sorry if the question has already been posted, I have found similar threads but could not quite find the data that would answer my question.

So, I'm an SPass holder (duration 5 years) who came to Singapore in November 2012. My contract with the employer is for 6 months - to be precise - 181 days.

Since this is so close to the 183 needed to be considered a tax resident, I have a couple of questions and some clarifications are needed:

- If I stay in Singapore for a couple of more weeks (actually, my flight back is already scheduled to be at the end of May), it would add up to 200 days. Would this then make me a tax resident and am I even permitted to stay in Singapore after my contract is terminated?

- The tax for non-residents is flat 15%, and I think I would pay 200$ total tax for the 6 months being here - at least that's what I have calculated using the IRAS tax calculator. In these 6 months, I will be earning less than $20K. Is my calculation ok or did I make a mistake somewhere?

This question is really important to me, because the difference between tax-resident and non-resident is 2000$, which is almost my full salary. So I would be very grateful if you could help me out with your advice. ;)

Thanks!

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Re: Tax residency (183 day rule confusion)

Postby the lynx » Wed, 16 Jan 2013 9:04 am

praznina wrote:Hey there,

sorry if the question has already been posted, I have found similar threads but could not quite find the data that would answer my question.

So, I'm an SPass holder (duration 5 years) who came to Singapore in November 2012. My contract with the employer is for 6 months - to be precise - 181 days.

Since this is so close to the 183 needed to be considered a tax resident, I have a couple of questions and some clarifications are needed:

- If I stay in Singapore for a couple of more weeks (actually, my flight back is already scheduled to be at the end of May), it would add up to 200 days. Would this then make me a tax resident and am I even permitted to stay in Singapore after my contract is terminated?

- The tax for non-residents is flat 15%, and I think I would pay 200$ total tax for the 6 months being here - at least that's what I have calculated using the IRAS tax calculator. In these 6 months, I will be earning less than $20K. Is my calculation ok or did I make a mistake somewhere?

This question is really important to me, because the difference between tax-resident and non-resident is 2000$, which is almost my full salary. So I would be very grateful if you could help me out with your advice. ;)

Thanks!


It doesn't matter when is your flight out of Singapore. It is the termination date of your pass that matters. 183 day rule applies from the date your pass is issued until the date your pass is terminated, or the end of assessment of that year (whichever comes first). Check your pass termination date, then you will have your answer.

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Postby sundaymorningstaple » Wed, 16 Jan 2013 10:07 am

Sorry lynx, but this time you may have blown it. (Partially)

Time here starts from the day you enter the country until your last day of work (Actually doesn't say last day of work anywhere, but the employer has no knowledge of that at the time of filing the IR-21.

Tax resident (183 days or more)

Under our tax residency rules, you will be regarded as a tax resident for the calendar year(s) concerned if you stay or work in Singapore:

for at least 183 days in a calendar year; or
continuously for 3 consecutive years; or
for at least 183 days for a continuous period over two years (from 1/1/2007)
Otherwise, you are regarded as a non-resident for tax purposes.

The number of days in Singapore include weekends and public holidays. Any absences from Singapore that are temporary (eg overseas vacation leave) or incidental to your Singapore employment (eg business trips) are still regarded as employment exercised in Singapore for the purpose of determining your tax residency.


Now, the problem is that if you are short at the end of you contract the employer has to note on the IR-21 the date you entered the country and the last day of employment. If the span between the two is 183 he's clear and using resident tax rates. If he's short he will pay at 15% but if he continues to stay here until he has exceeded 183 days, he can file for an amended tax computation to claim the refund of the difference.
Last edited by sundaymorningstaple on Wed, 16 Jan 2013 10:11 am, edited 1 time in total.

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Postby the lynx » Wed, 16 Jan 2013 10:10 am

sundaymorningstaple wrote:Sorry lynx, but this time you may have blown it. (Partially)

Time here starts from the day you enter the country until your last day of work.

Tax resident (183 days or more)

Under our tax residency rules, you will be regarded as a tax resident for the calendar year(s) concerned if you stay or work in Singapore:

for at least 183 days in a calendar year; or
continuously for 3 consecutive years; or
for at least 183 days for a continuous period over two years (from 1/1/2007)
Otherwise, you are regarded as a non-resident for tax purposes.

The number of days in Singapore include weekends and public holidays. Any absences from Singapore that are temporary (eg overseas vacation leave) or incidental to your Singapore employment (eg business trips) are still regarded as employment exercised in Singapore for the purpose of determining your tax residency.


Now, the problem is that if you are short at the end of you contract the employer has to note on the IR-21 the date you entered the country and the last day of employment. If the span between the two is 183 he's clear and using resident tax rates. If he's short he will pay at 15% but if he continues to stay here until he has exceeded 183 days, he can file for an amended tax computation to claim the refund of the difference.


Ah my bad!

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Postby praznina » Wed, 16 Jan 2013 10:34 am

Thanks, guys!

@sundaymorningstaple, the quote you gave states that I will be considered as a tax resident "if you stay or work in Singapore for at least 183 days in a calendar year". So, if I stay here longer (but work for 181 days), I will be able to claim the refund? How does one do apply for that - I don't think the employer has to do anything with it, and it should be business between me and IRAS, right?

And how much of a hassle would this be? Maybe it would be easier for me to ask the employer to prolong my contract for a week: then I'd have no trouble at all.

In addition, just to clarify, if I would work for more than 183 days (let's say 183 exact) over two calender years, I'd be considered a tax resident?

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Postby sundaymorningstaple » Wed, 16 Jan 2013 10:50 am

praznina wrote:Thanks, guys!

@sundaymorningstaple, the quote you gave states that I will be considered as a tax resident "if you stay or work in Singapore for at least 183 days in a calendar year". So, if I stay here longer (but work for 181 days), I will be able to claim the refund? How does one do apply for that - I don't think the employer has to do anything with it, and it should be business between me and IRAS, right?

Correct. That would be between you and IRAS. The employer can only go by the end of contract/cancellation of the employment pass. Should you pass the 183 while on the SVP issued at the end of the contract, you can approach IRAS at Newton Road to file an amended return. (if you don't make the 183 before your work pass is terminated, the employer has no option but to pay the tax and deduct it from your salary).

And how much of a hassle would this be? Maybe it would be easier for me to ask the employer to prolong my contract for a week: then I'd have no trouble at all.

Yep, prolonging the contract to get past the 183 is the easiest and least painful way.

In addition, just to clarify, if I would work for more than 183 days (let's say 183 exact) over two calender years, I'd be considered a tax resident?

Provided the employment pass was valid without interruption across the two years, yes.

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Postby praznina » Wed, 16 Jan 2013 11:25 am

sundaymorningstaple wrote:Provided the employment pass was valid without interruption across the two years, yes.

Sorry, I made a mistake in forming the question.

To make it simpler, I'll just use some dates:

Date of arrival: 9th Nov 2012
Date of assumption of duty: 12th Nov 2012
Date of contract end: 12th May 2013

Days between arrival and contract end: 184
Days between assumption of duty and contract end: 181

So, arrival to the country is more important than assumption of duty? If it's from 9th Nov 2012 to 12th May 2013, I'm regarded as tax resident?

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Postby sundaymorningstaple » Wed, 16 Jan 2013 12:48 pm

Correct. You are in the clear but the company has to put the date of arrival on the IR-21. There is a field for Arrival, Start date and completion date. There are also field for date of departure, if known. So, if your company is giving you a ticket home they may well be using that date for computation purposes as well. I reckon it is but if left blank, then they compute using the Visa cancellation date.

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Postby praznina » Wed, 16 Jan 2013 1:06 pm

Thanks, you really helped a lot!

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Postby kurtrules » Thu, 21 Aug 2014 3:20 pm

Reviving an old thread.

So if a foreigner works in Singapore for say - 90 days only, and then the employment is terminated and the employment pass gets cancelled, however the foreigner continues staying in Singapore for a year, on a dependent pass, so the foreigner would be considered a resident tax payer or a non-resident tax payer?

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Postby the lynx » Thu, 21 Aug 2014 5:16 pm

kurtrules wrote:Reviving an old thread.

So if a foreigner works in Singapore for say - 90 days only, and then the employment is terminated and the employment pass gets cancelled, however the foreigner continues staying in Singapore for a year, on a dependent pass, so the foreigner would be considered a resident tax payer or a non-resident tax payer?


When your EP is terminated, your tax clearance will be done at that stage itself, so that you can start your DP stage tax debt-free.

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Postby sundaymorningstaple » Thu, 21 Aug 2014 5:35 pm

If you were on a DP before taking up the contract, that time also counts towards the 183 days, so the odds are that, even with only a 90 day contract, you were probably already here for the requisite time. If not, going back onto a DP will surely get you over it. (That's why the IR-21 has a date of arrival as well as a date of commencement.

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Postby ecureilx » Fri, 22 Aug 2014 12:41 am

sundaymorningstaple wrote:If you were on a DP before taking up the contract, that time also counts towards the 183 days, so the odds are that, even with only a 90 day contract, you were probably already here for the requisite time. If not, going back onto a DP will surely get you over it. (That's why the IR-21 has a date of arrival as well as a date of commencement.


and additionally from experience .. if IRAS asks you to pay, you pay first, and if they realised they over charged you, they will take it as 'tax paid in advance' ..

don't refuse payment ... or withhold payment disputing the amount

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Postby kurtrules » Fri, 22 Aug 2014 3:51 pm

ecureilx wrote:
sundaymorningstaple wrote:If you were on a DP before taking up the contract, that time also counts towards the 183 days, so the odds are that, even with only a 90 day contract, you were probably already here for the requisite time. If not, going back onto a DP will surely get you over it. (That's why the IR-21 has a date of arrival as well as a date of commencement.


and additionally from experience .. if IRAS asks you to pay, you pay first, and if they realised they over charged you, they will take it as 'tax paid in advance' ..

don't refuse payment ... or withhold payment disputing the amount


And I take it that, you can file for a refund by visiting the IRAS, once you complete 183 days in Singapore?

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Postby ecureilx » Fri, 22 Aug 2014 5:30 pm

kurtrules wrote:And I take it that, you can file for a refund by visiting the IRAS, once you complete 183 days in Singapore?


you don't get a refund as i said

they will offset in the next year's tax due

I never heard of IRAS refund, unlike in other countries where tax authorities get scammed with refund requests :twisted:


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