In Singapore, most of us earning an income are paying taxes, as part of our contribution to the nation’s growth. It sounds taxing and complicated, especially for those that are filing for the first time.
So here’s a guide to help you!
First, let’s break things down for a more straightforward understanding.
Gig worker or nah?
A gig worker may work for multiple employers doing various work that is paid separately. They are independent workers hired for their specific skills on a short-term or on-demand basis.
So how do you determine whether one is a gig worker or not?
You are considered self-employed when you are under a contract for service. This refers to you having almost full control of your work without receiving instructions from anyone and being able to work on your own.
As gig workers do not have regular working hours and are mostly engaged on a short-term basis, they are self-employed persons who are under a contract for service.
As such, the income earned is assessed to tax as gains or profits from a trade, business, profession or vocation and is taxed at individual income tax rates.
Reporting your gig income
You must report your income from gig work if you receive a notification from IRAS to file tax. If your annual net trade income exceeds $6,000 or if your total income from all sources exceeds $22,000 in a year, you are also obligated to file your tax even if you do not receive any notification from IRAS.
Filing your tax
Here are 4 simple steps to ease your tax filing process:
- Set your accounting period.
Also known as your financial year, it is a 12-month timeframe that includes your profits and losses.
- Keep your records and accounts.
It’s essential to keep track of your earnings so that it makes the verification process easier and readily determined. IRAS require you to maintain your records and accounts to avoid any misreporting and penalties.
- Prepare a statement of accounts.
As income earned from gig work is taxable, you are required to provide a 2-line or a 4-line statement.
|2-line statement||Revenue and adjusted profit/loss|
|4-line statement||Revenue, gross profit/loss, allowable business expenses and adjusted profit/loss|
If your revenue is more than $200,000, a 4-line statement must be used.
- File via IRAX myTax portal.
With all your necessary documents prepared, you should be ready to file your income taxes when IRAS notifies you.
It may sound troublesome but making a habit of tracking your expenses will definitely make your tax filing process a smooth one. Best to have your taxes filed as soon as you get notified, so you’ll have time to rectify and get help where needed!
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