Tax, Nomination, Wills & Trusts

In Singapore income is taxed under the Income Tax Act 1947. Section 10(1) imposes tax on income accruing in, derived from, or received in Singapore — e.g. gains from a trade/employment, dividends, interest, pensions/annuities and rents. As a general rule capital gains are not taxable, and receipts such as gifts, legacies and lottery wins are not regarded as income at all. Certain items are specifically exempt (CPF withdrawals, war pensions, certain approved pensions, death gratuities, and — from YA2012 — alimony/maintenance). Tax works down three layers:

• •Statutory income (s35) — the full income from each source for the year preceding the Year of Assessment.
• •Assessable income = Total income − Allowable expenses − Approved donations (approved donations are currently deductible at 2.5× the amount given).
• •Chargeable income = Assessable income − personal reliefs (earned income, spouse, child, CPF, SRS, etc.).

Resident individuals are taxed at progressive rates of 2% to 22% (from YA2017); no tax is payable on chargeable income of S$20,000 or less. A non-resident is generally taxed at a flat 15% or the resident progressive rates, whichever is higher. Personal reliefs are granted only to tax residents.

Life insurance relief allows premiums paid on the taxpayer's own life (or, for a male taxpayer, his wife's life) to be deducted from assessable income, subject to conditions:

• •the policy must be on the life of the taxpayer or his wife (a female taxpayer may claim on her own life only)
• •the insurer must have an office or branch in Singapore (not required for policies effected before 10 Aug 1973)
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