In 2017, the Singapore Government raised the tax rates for individuals and this brought about an increase in the tax rates for high-income earners. As a Singapore resident who is looking for ways to pay less tax, the best way is to own investments that will yield tax-free income. A good accounting service in Singapore can point you in the right direction. Here’s a few ways to do so.
Buy Shares in a Singapore Company.
There are a lot of companies that you can buy ordinary shares or preference shares from. Get expert accounting services in Singapore to give you pointers on which companies to purchase shares from. You don’t have to pay taxes for any dividend you earn.
Buy Shares in Foreign Companies
If you are in Singapore and you buy shares in a foreign company, you will not have to pay tax for any dividend you receive from the company. However, an exception is if you receive the dividends through a Singapore partnership. If that were the case, you would have to meet some conditions for the dividends to be tax-exempted.
Real Estate Investment Trusts
Investing in Real Estate Investment Trusts (REITs) has proven to be a high dividend-yielding business. When it comes to tax payment for Real Estate Investment Funds, you are exempted from paying taxes on any dividends earned.
But if you’re receiving your dividends through your business, partnership or trade based in Singapore, you will be taxed.
Dividends from Supplementary Retirement Scheme Accounts
Tax exemption also applies to Singapore dividends received from Supplementary Retirement Scheme accounts. Any amount you put into your Supplementary Retirement Scheme account can enjoy tax relief in the year of contribution if you decide to claim it. From 2016, the yearly contribution cap for Singapore Retirement Scheme was increased to $15,300 for Singaporean citizens. What this means is that, for anybody who contributes this amount, such a person will save more on tax. The only disadvantage of this is that the money in an SRS account is meant to be kept and not withdrawn, so you have to consider the taxation rules and the penalty for making withdrawals from these accounts.
Dividends from Unit Trusts in Singapore
Dividends received from unit trusts in Singapore are not required to be taxed. Except, like in the case of REIT dividends, you are receiving the dividend through your business or partnership in Singapore. You can also use the money in your Supplementary Retirement Scheme account to invest in unit trusts so you can have different financial institutions to choose from, depending on their offerings and potential returns. An accounting service in Singapore expert can advise you on which trusts to invest in.
With these tips, you can keep all or most of your income without being obligated to pay any tax. For more tax efficient investment, get in touch with expert accounting services in Singapore.