Singapore Influencers: Here’s How to Calculate Your Income Tax
Whether you are a blogger or influencer, heads up. It is mandatory for you to file your personal tax return for the income you have earned from your social media activities with the Inland Revenue Authority of Singapore (IRAS).
This matter is not to be taken lightly. Any omissions or understating of income done negligently or without reasonable excuse can result in you facing a penalty amounting to double the tax undercharged, plus a fine of up to $5,000 and/or imprisonment of up to 3 years.
For wilful tax evasion cases, where you deliberately intended to make a false return, the consequences are more severe. The penalty can amount to triple the tax undercharged, plus a fine of up to $10,000 and/or an imprisonment of up to 3 years.
When are You Considered a Blogger Carrying on a Trade or Business?
According to IRAS’ Essential Tax Information for Social Media Influencers, if your repeated or habitual blogging-related activities result in an annual net business income of more than $6,000, you will have to declare this as self-employed income.
Also, do not be confused by the word “blogging”. While most people associate the act of “blogging” to the posting of articles on websites or blogs, IRAS has clarified that any activities on social media platforms such as Instagram, Twitter, Facebook, YouTube, or the placing of banner advertisements on blogs can constitute blogging for the purposes of carrying on a trade or business as well.
What Will and Will Not be Taxable?
If you had received any form of monetary and/or non-monetary benefits-in-kind, there is a chance that these will be taxable. Further, any such benefits provided to your family and friends will be taxable on you.
Here is a flowchart to help you decide what you need or need not declare to IRAS:
(Click here to download the flowchart in a new tab.)
In summary, products/services received as a recurring supply or provided over a period of time will need to be declared. On the other hand, products/services received on an ad hoc basis for one-off consumption will need to be declared only if they are worth more than $100.
Here are some examples given by IRAS to illustrate the tax treatment of gifts or services received:
Example 1: You receive 5 sessions of eyebrow threading worth $98.
Tax treatment: As it is a service provided over a period of time, you will have to declare tax even though the service is worth less than $100.
Example 2: You receive a total of 10 masks upfront, and each mask is worth $10.
Tax treatment: This is neither a recurring supply, nor is it worth more than $100. Thus, you will not need to declare this.
Example 3: You attend a 5-course meal tasting provided by a restaurant totalling $156.
Tax treatment: Since this is for one-off consumption and is worth more than $100, you will have to declare this.
Apart from identifying which products or services are taxable, do remember that you also have to declare income from other sources as well. This would include income from investments, which could be in the form of dividends and/or rental, as well as any premiums or profits from property. More information on taxable and non-taxable income can be found on the IRAS website.
How Much Will You be Taxed?
Personal income tax rates in Singapore are progressive, where the amount of income tax you pay is proportionate to your income level. Income tax rates start from 2% and are currently capped at 22%. Find out your applicable income tax rate here.
As a rough guideline, if you earned $80,000 the past year, you will pay about $3,350 in taxes. Earned income of $160,000 will be taxed $13,950. For a more accurate calculation of your income tax, you can download and use IRAS’ Tax Calculators.
Claiming of Expenditure and Capital Allowances
To reduce your taxes, there are some expenses and capital allowances which are claimable as tax deductions, subject to the deductions allowed under section 14 of the Income Tax Act (ITA), as well as the deductions not allowed under section 15 of the ITA.
Under section 14 of the ITA, as a general rule of thumb, if the expenses were incurred “wholly and exclusively” in the production of your income, such expenses will be claimable. Additionally, any fixed assets such as office equipment and machinery you bought or used in your blogging trade or business may be claimed under capital allowances.
For example, if you had purchased and used a laptop for the purposes of running your blog, you may include it under your claims of expenditure. To ascertain how much you can write off for the cost of your asset(s), refer to this IRAS webpage on how to calculate capital allowance.
Section 14 of the ITA also allows the claiming of the following expenses:
- Rent for a building or office space that is used to run your blogging trade or business
- Repair expenses of machinery which are used to produce your income (possible examples are laptops or computers)
Following the guideline that expenses have to be incurred “wholly and exclusively” for the purposes of earning that income, it goes without saying that domestic or private expenses cannot be submitted for deductions. This is pointed out in section 15 of the ITA, among the other deductions that are not allowed.
After taking into account all the eligible deductions, the remaining chargeable income will then be used to calculate the amount of tax you have to pay.
There is no running away from this topic, especially since IRAS has already made it clear on several occasions that bloggers are obligated to file their income taxes. Hopefully, you now have a better idea of how you should go about filing your tax and what you can expect.
One tip is to make use of the resources available on the IRAS website to speed up your tax filing process. Some of these resources include the Basic Guide for New Taxpayers, Essential Tax Information for Social Media Influencers, Tax Calculators and How to File Tax. Keeping track of your accounts throughout the year will also reduce the hassle when the filing date is near.
One last (important) thing you do not want to miss – do remember to e-File your tax form by 18 April of each year, as stated by IRAS.
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