Nowadays, many people in Singapore ask if freelancers need to pay GST? The answer is hat all your incomes are fully taxable. Similarly, there are many other things that a freelancer needs to know about the things that are taxable and non taxable. So, here is our in-depth guide to help you understand GST, the exemptions, and also how to file your GST.
Understanding Taxable Sources
In Singapore, there are fewer income sources for which you’ll have to pay taxes. These include the following:
Employment income – Basic salaries, bonuses, director’s fees, commissions, gains from exercise of stock options, income received from overseas, pensions, and retirement and retrenchment benefits
Income from trade, business, profession, or vocation – Incomes derived from self-employment or in virtual currencies.
Other sources of income – Incomes from gifts, inheritance, royalties, and annuity.
Knowing the Tax Exemptions
You need to report the income earned for tax implications. This will constitute the trade income that you have earned as a freelancer. There are several tax exemptions in GST. They include:
Employee deductions: Employees may be able to claim tax deductions on employment expenses incurred during the production of earning in Singapore. Allowable expenses include entertaining clients, subscriptions paid to professionals, fees paid during networking, or travel expenses on public transport.
Deductions for self-employed: A self-employed individual, sole proprietor or partner are qualified. Deductions for regular expenses, capital allowances, and medical expenses.
Deductions for donations: You can claim tax deductions on donations made from the year 2009 to 2018. The tax deduction claim can include cash, shares, or land and building donations.
Other forms of income: There are other forms of employment income you might receive that could exempted from taxes. You receive income like outpatient treatment, corporate dinners, death gratitudes, or sponsored outings. These are fully exempted from taxes.
You may be able to claim tax deductions on any of the following, provided you satisfy these qualifying conditions:
- Business expenses
- Productivity and Innovation Credit (PIC)
- Capital Expenditure incurred on renovation or refurbishment works
- Capital allowances on Fixed assets
- Medical expenses
- R&D expenditure
- Land Intensification allowance
- Expenses incurred before commencement of business
- Business making losses and unabsorbed capital allowances
- Business and IPC partnership scheme (BIPS)
- Double tax deduction for Internationalisation scheme
GST Registration and Filing
Singapore has always been a great place for freelancers to demonstrate their skills. Sometimes, filing your freelancer tax is a little more complicated. If you have a freelance business in Singapore, you can easily manage the paperwork and payment demands of the government if you break down the job in the following few steps.
Know the tax obligations – All self-employed people in Singapore must report to the income earned from their business. Business income is the part of their business operations. If you are a freelancer where you earn money from different sources, you come under the self-employed category.
Decide on the accounting period – Every year you have to declare your business income for a specific accounting period. When you start your business you need to decide on your accounting period to start your business. Many businesses in Singapore choose the accounting date that is close to 31st December each year.
Keep accurate records and accounts – As a freelancer, you get income from different sources. Therefore, it is crucial to keep an accurate and complete record and accounts of your transactions made in your business. Make sure to support these records with invoices, receipts, vouchers, and other documents. You need to preserve these documents, as Inland Revenue Authority of Singapore (IRAS) will not accept any inaccurate or improper records.
Prepare account statement – Once you have worked out the status and the accounting periods, prepare a few statements. In Singapore, self-employment taxes are largely based on self-reporting. This means that the government depends mostly on the profit-loss statements to calculate your bill.
File your income tax – At the beginning of the year, IRAS will send you notification on your income tax return to report the income of your business as well as the income from other sources. This is to remind you that the business taxes are due along with a definitive statement of how much you owe. They might include the Form B or B1, depending on the revenue level. If you review this document and find no significantly errors, you can pay your self-employment taxes by the due date.
Freelancers need to file the self-employment taxes. Before you file your taxes, make sure you check the tax laws and be aware of the tax implications that apply to your type of business.
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