Common mistakes to avoid in filing returns
It is tax time again, which means undertaking the mundane exercise of filing our personal returns.
The clock is definitely ticking away: Paper returns are due by April 15 while e-filers have until April 18.
There are about 2.2 million taxpayers this year, so plenty of people are affected.
The good news is that the Inland Revenue Authority of Singapore (Iras) has introduced several enhancements to make the experience less of a chore.
This year, there are three new enhancements, including Iras filling in rental expenses for people who own investment properties and a tool that offers immediate confirmation on your eligibility for certain reliefs.
The Sunday Times highlights the enhancements.
NO-FILING SERVICE (NFS)
Thanks to NFS, it is not compulsory for all taxpayers to go through the process of filing a return.
Taxpayers selected for NFS get their tax bill without having to submit a tax return.
This has made tax filing a non-event for 1.4 million taxpayers - or three in five taxpayers - this year.
If you have been informed that you are eligible for NFS, you do not have to file a return. Your tax bill or Notice of Assessment (NOA) will be sent from June.
However, if you have additional income, say rental money or relief claims to adjust, you can e-file a tax return by April 18.
The NOA is computed based on your auto-included income and the previous year's relief claims, subject to eligibility.
Once you receive the NOA, you should inform Iras within 30 days if you have any income not shown in the tax bill or if the relief claims are incorrect. It is your responsibility to ensure that your NOA is accurate.
If you are not on the NFS, you would have received a letter or SMS informing you to file via mytax.iras.gov.sg. This means you have to file a tax return this year even if your employers have sent your salary details to Iras under the Auto-Inclusion Scheme (AIS) for employment income.
Under AIS, employers send the salary information of their staff to Iras electronically. Employers with 11 or more staff members are now on this scheme.
If you are unsure whether you need to file a tax return this year, log in to mytax.iras.gov.sg and go to "view return status" to check whether you are on NFS, or check with virtual assistant Ask Jasmine.
PRE-FILLED INCOME DATA
About 1.7 million taxpayers will continue to enjoy the convenience of pre-filled employment income information in their online returns.
These are typically salaried people, and their employers are under the AIS.
Last year, the Iras pre-filling service was expanded to cover individual commission earners, including real estate and insurance agents.
If you are one of them, you just need to verify or edit the pre-filled income information and claim your expenses, saving much time and effort. The taxman says more than 70,000 individual commission earners will benefit from this service this year.
This is possible because more than 210 organisations, up from 110 organisations last year, are participating in the e-Submission of Commission Income Scheme that involves submitting the income records of commission earners.
PRE-FILLED RENTAL EXPENSES
Thanks to this new service, owners of tenanted residential properties who wish to claim rental expenses can now enjoy simplified tax filing, thus saving time.
In their online tax form, an amount of deemed rental expenses calculated based on 15 per cent of the gross rent has already been filled in for them. In addition, taxpayers can still claim mortgage interest on the loan taken to buy the tenanted property.
Alternatively, taxpayers can choose to claim the amount of actual rental expenses incurred.
Taxpayers with more than one property should note that the option they choose - either the pre-filled 15 per cent or actual rental expenses incurred - will apply to all their tenanted residential properties.
ELIGIBILITY FOR PERSONAL RELIEFS
You can now obtain immediate confirmation that you are eligible for certain personal reliefs such as Qualifying Child Relief, Grandparent Caregiver Relief and Foreign Maid Levy Relief.
You can use the new Personal Reliefs Eligibility Tool to see if you are eligible for the reliefs you want to claim.
Standard personal reliefs, like Earned Income Relief and NSman Relief, will continue to be granted automatically, subject to eligibility.
SMARTPHONE TAX FILING
This year's smartphone filing is optimised for mobile browsers. Previously, smartphone filing was more cumbersome as the user had to navigate left and right to read the online text on the phone screen.
The enhanced service, which has been available from this month, saves time. Taxpayers are encouraged to file early to avoid a last-minute rush, as tax filing via a smartphone can be done easily anywhere, any time.
1. Not filing a tax return
Some taxpayers tend to confuse the AIS of employment income with the NFS. Under the AIS, the employers only tell Iras how much their employees have earned. Iras then fills in the amount in their tax returns.
Employees will still need to log in to mytax.iras.gov.sg to check that information and relief details, and submit their tax returns by April 18, unless they receive a letter or SMS from the taxman informing them that they are on the NFS.
2. Ensure eligibility for reliefs
If you are selected for NFS, you have to ensure that you remain eligible for the personal reliefs claimed the previous year when you receive the NOA or tax bill.
If there are any changes to your income/deductions/reliefs, you can file a tax return this year.
Amendments to personal relief claim may include child relief claims on a newborn child, or removing child relief claims if your child started working and had income exceeding $4,000 last year.
The self-employed include taxi drivers, private tutors, hawkers, remisiers, bloggers, property agents, insurance agents and sole proprietors who could be medical practitioners, accountants and renovation contractors.
Recently, there were reports on bloggers who were unclear on what they needed to declare as their income. Some voiced their concerns after being informed by the taxman that non-monetary benefits in kind may be taxable. They have been encouraged to clarify with Iras and meetings are being arranged to clear the air.
In general, common mistakes that the self-employed make include not keeping invoices of purchases and not having proper records of all fees/revenue received, understating income, artificial inflation of expenses claimed and claim of business expenses based on estimates.
Other non-deductible expenses commonly claimed wrongly include domestic and private expenses, salary paid to yourself and private care expenses.
To file or not to file
IRAS HAS CONTACTED YOU
If you have been informed by the Inland Revenue Authority of Singapore (Iras) either via a letter, form or an SMS to file your tax return, you must do so by April 18. It does not matter how much you earned in the preceding year or whether your employer has electronically submitted your salary information to Iras.
If you have been selected for the No-Filing Service, you don't need to file a return although you can opt to file if you have additional income or changes in relief claims to declare. Check your Notice of Assessment, which will be sent out from June. If there are inaccuracies, inform Iras within 30 days of receiving it.
IRAS HAS NOT CONTACTED YOU
- You have to declare income earned in the preceding year in Singapore if you are:
- A self-employed individual who has received an annual net business income exceeding $6,000 in the preceding year here.
- An individual who has received an annual income (from employment, rental, business, and so on) exceeding $22,000 in the preceding year.
This article was first published on March 27, 2016.
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Individuals can file a return via mytax.iras.gov.sg