This article explores Royalty, Charge, Estate/ Trust Income and their relative tax calculations and deductions as part of the Singapore Tax Calculator
Royalty earned in Singapore is taxable. Royalty is the income received for the rights to use:
Royalty is earned in Singapore if it is:
Royalty is taxable in the year it is due and payable for that year.
To qualify for the tax concession, the royalties must be received for:
If you qualify, you will be taxed on the lower of:
This concession does not apply to royalties or payment received for any work published in any newspaper or periodical. Also, it will no longer apply to approved intellectual property or approved innovation from the Year of Assessment 2017.
How do I report Royalties?
You must declare the amount of gross royalties received under 'other income ' in your tax form, and provide details of the royalties and statement of expenses incurred.
Should you qualify for tax concession, you will also need to provide the tax office with details on the sources of your royalties and any supporting documents.
This charge refers to any income received under a deed or court order in Singapore. An example of this include alimony and or maintenance payments and other income from trust and settlements.
Effective Year of Assessment (YA) 2012, income from alimony and maintenance payments received from your ex-partner, whether paid voluntarily or under a Court Order or Deed of Separation is exempt from tax.
Prior to YA 2012, alimony or maintenance payments received from your ex-partner under a Court Order or Deed of Separation is taxable.
If the Court Order did not state any specific amount for the maintenance of your child, the full amount of maintenance is taxable as your income.
If the court specified an amount for the maintenance of your child, only that portion of the payment for your maintenance is taxable as your income.
A child may receive maintenance payments under a Maintenance Order or Deed of Separation. A parent may receive maintenance payments under the Maintenance of Parents Act.
Estate and trust income is income received in Singapore from an estate under administration or a trust. These incomes are all taxable.
The statutory income of a LPR, this will usually be the executor or administrator, is subject to income tax at 17% from YA 2010.
If the estate income is distributed to Singapore resident beneficiaries within a stated time frame, tax can be paid by the resident beneficiaries at their personal tax rates instead of the tax rate of a legal personal representative.
To qualify, the income has to be distributed before 31 Mar in the year following the year of assessment.
Below is an example of Income Earned in 2015 Must Be Distributed Before 31 Mar 2017;
| Estate income in 2015 | $5,000 |
| Less distribution in 2016 | $4,000* |
| Chargeable income | $1,000 |
| Tax on LPR: $1,000 at 17% | $170.00 |
The beneficiary will be assessed on the income distributed to and received ($4,000*) at his/her personal tax rate in the YA 2017 since he/she received it in 2016.
Tax on Trustee
The statutory income of a trustee is subject to income tax at a 17% flat rate from YA 2010.
Beneficiaries entitled to a share of the trust income by virtue of the trust deed, the Will of the deceased or the Law of Intestacy will be:
Where there are non-resident beneficiaries of Singapore, the trustee is required to pay tax on their shares of entitlement at the prevailing trustee rate for that year of assessment.
| Estate income in 2016 | $9,000 |
| Less amount assessed on resident beneficiaries (2/3 of $9,000) | $6,000* |
| Chargeable income | $3,000 |
| Tax on trustee: $3,000 at 17% | $510.00 |
The resident beneficiaries will be assessed on their share of entitlement ($6,000*) at their personal tax rates in YA 2017.