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, death gratuities). This note also covers how life policy proceeds pass on death — through nomination, a Will, intestacy or assignment — and when they are (or are not) shielded from creditors.
12 min read·8 sections
✓Checked against the IRAS individual income tax rates for residents (YA2024 onwards: 0% on the first S$20,000, then 2% to 24%), as at 2026-11-01; IRAS SRS contributions and tax relief (yearly caps S$15,300 citizens/PRs, S$35,700 foreigners), as at 2026-11-06. Unofficial prep, not endorsed by MAS or SCI.
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Must-know for the exam
✓Income Tax Act 1947 s10(1): tax on income accruing in/derived from/received in Singapore; capital gains, gifts, legacies and lottery wins are not taxable income.
✓Statutory income (s35) → Assessable income = Total income − Allowable expenses − Approved donations → Chargeable income = Assessable income − personal reliefs.
✓Resident rates 2%–24% above the first S$20,000 (from YA2024; 2%–22% for YA2017 to YA2023); no tax on chargeable income of S$20,000 or less; non-residents taxed at a flat 15% or resident rates, whichever is higher; personal reliefs only for tax residents.
✓Life insurance relief: deduction capped at 7% of the capital sum secured on death (excl. bonuses); unavailable if annual CPF contribution is S$5,000 or more; effectively aggregated with CPF relief and limited to about S$5,000.
✓Overall personal income-tax relief cap of S$80,000 applies across all reliefs.
✓SRS: contribution rate 15% (Singaporeans/PRs) or 35% (foreigners), giving yearly caps of S$15,300 and S$35,700 (IRAS, as at 6 Nov 2026); returns tax-free until withdrawal; only 50% of qualifying withdrawals taxable at retirement; premature withdrawal 100% taxable plus a non-refundable 5% penalty.
✓NOB framework in force since 1 Sep 2009 under the Insurance Act 1966 (nominations no longer made under s73 CLPA); to nominate, the policy owner and life insured must be the same person and at least 18.
✓Three options: leave the policy un-nominated, make a revocable nomination (s133 Insurance Act 1966), or make a trust/irrevocable nomination (s132); nominating is not compulsory.
✓Un-nominated policy: up to S$150,000 (Reg 7, Insurance (General Provisions) Regulations) advanced to a proper claimant (s150(12)(b)) without probate, one life per insurer; the proper claimant holds it as trustee, not beneficiary.
✓Trust nomination: owner loses all rights (living + death benefits to nominees); only spouse/children nominable; proceeds protected from creditors in bankruptcy; barred on CPF-funded, DPS and SRS policies (s132(1)).
✓Revocable nomination: owner keeps control, only death benefits to nominees, any legal entity nominable (not an animal); pays out without probate but is NOT protected from creditors.
✓A revocable nomination is a testamentary instrument with the same standing as a Will; the latest validly executed instrument governs, and a later Will overrides it only if it spells out explicit policy details.
✓A Will: the testator must be 21 and of sound mind (a soldier/mariner may be under 21); a grant of probate is needed before the executor (executrix if female) can administer the estate.
✓Intestate Succession Act 1967 governs a non-Muslim estate with no valid Will (Muslims: Administration of Muslim Law Act 1966); with no eligible relatives the estate passes to the Government.
✓Assignment transfers policy rights/ownership (assignor → assignee); an absolute assignment must be in writing with written notice served on the insurer (Civil Law Act 1909 s4(8)); a s73 CLPA / s132 IA trust policy cannot be assigned without the beneficiaries' written consent.
✓Estate duty was abolished in Singapore on 15 February 2008.
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Traps that cost marks
→A legacy or windfall is a capital receipt, not income — it is not taxed as income even though it is 'money received'.
→Do not stop at assessable income — chargeable income is only reached after personal reliefs are deducted.
→The cap is a percentage of the death sum assured (7%), not a percentage of the premium.
→Owner and life insured must be the same person — so a parent-owned juvenile policy on a child cannot be nominated.
→The wide 'any legal entity' choice belongs to revocable nominations; trust nominations are restricted to spouse and/or children.
→Only trust nominations pass living benefits to nominees; under a revocable nomination the owner keeps the living benefits.
→Do not deduct personal reliefs yet — that step produces chargeable income, not assessable income.
→Because CPF contributions of S$5,000+ already absorb the combined relief, life insurance relief drops to nil — it is not additive.
How personal income is taxed
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 24% (from YA2024; 2% to 22% for YA2017 to YA2023); 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 and who benefits
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)
the deduction cannot exceed 7% of the capital sum secured on death (excluding bonuses/profits)
•no relief is available if the taxpayer's total CPF contribution for the year is S$5,000 or more — if it is below S$5,000, he may claim the lowest of the difference between S$5,000 and his CPF, 7% of the insured value, or the actual premiums paid.
Because this relief is aggregated with CPF relief and effectively capped at S$5,000, the benefit is relatively small. Those who benefit most are self-employed persons who make no voluntary CPF contributions (e.g. sole proprietors, doctors, lawyers), and foreigners exempt from CPF. A separate personal income-tax relief cap of S$80,000 applies across all reliefs.
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