It’s Income Tax filing time in Singapore and some bloggers were shocked to receive the news from IRAS that they have to file for tax too. Yes dear, you are paid by brands, agents and agencies for work done, and now it is time to pay your dues.
All individuals earning, deriving or receiving income in Singapore need to pay income tax every year, unless specifically exempted under the Income Tax Act or by an Administrative Concession. If you’re a Singaporean or have been staying in Singapore long enough, you know there’s no free lunch here in Singapore. As long as you receive payment in return for a blog post, a shoutout on Instagram or sharing of a post on your Facebook page, all these are taxable income.
However, there’s one thing that’s very grey in the IRAS FAQ for Social Media earning. It is the part where benefits or in-kinds have to be declared too in our Income Tax. See the last point in the document published on IRAS website here.
Except for that in-kind and invitation declaration which is rather ambiguous cos not everything can be placed with a price tag, the rest of the points are pretty standard. You get paid, you got to declare to IRAS.
If you are unsure how to go about doing it, or what you need to keep track etc, here’s some basic guidelines which I’ve been doing for the past few years. Hope this will be useful for you.
Get Yourself Registered
All self-employed persons must report the income earned from their business operations as business income, not salary. The business income is part of the total personal income which is taxed at individual income tax rates.
In 2013, when I knew I am going to start getting paid for work done or blogging, I registered as a sole-proprietor so I will make it a point to have all my earnings and expenses recorded properly and done right. This is especially helpful too when come to applying for say childcare subsidies and all the other financial declaration stuff one needs to carry out when buying a house, taking a loan, apply for credit card etc.
Keep Proper Records of all In and Out
Having gone through business school in polytechnic helped me paint a better picture of what needs to be done when running a business on my own. To help me keep track of all the income and expenses, I use a free accounting and invoicing app online. I’ve used a couple of other paid and free apps before this, but since the day I started using Waveapps, it has become my trusted business solution which I recommend to all my friends. It not just help you with the daily quotation and invoicing, it also lets you record your expenses, upload receipts and generate your statement of accounts and profit and lost statements too. And it’s totally FREE! Yes you see banner ads at the side but it doesn’t bother me cos the app is really very useful.
Preparing For Income Tax Filing
This is the time of the year where I will make sure my records in Waveapps is up to date and accurate. Once that is done, with just a few clicks I get an overview of how much I’ve made over the year and how much I’d spent. All listed in proper accounting records and labelling. With my profit and loss statement, I can then prepare the 4-line statement for sole-proprietorship Income Tax declaration on IRAS. Use this step-by-step guideline on IRAS website to help you come up with the 4-line statement.
Basically you’ll need to know:
- Revenue – How much money you received in total for the year
- Allowable Business Expenses – How much money is spent in order to run your business or deliver your service E.g. advertising such as boosting of posts on Facebook, transport claim for business activities, phone bills for business etc.
- Profit/Loss – Revenue LESS Business Expenses
*One of the four lines statement was left out above as there’s no Cost of Goods Sold in service industry, which in the case of this post, blogging.
With the above you’ll be able to declare your income on IRAS. The profit declared may seem a lot at first glance, but after all the other rebates that most of us can claim for (especially parents and wife), the final TAXABLE Income may be less than $20,000 which will not be taxed in Singapore. So technically right we don’t have to worry too much about the need to declare our earnings from blogging or social media activities to IRAS.
So now that you know your obligations to file tax, go get all your finances sorted out and e-file by 18 April 2016.