Examples on how tax-on-tax is computed
INLAND REVENUE
AUTHORITY
OF SINGAPORE
Click on the following examples on how tax-on-tax is computed:
Example 1: Tax fully borne by employer (Year of Assessment 2015 – with personal tax rebate)
Example 2: Change in employer during the year and tax fully borne by both employers (Year of
Assessment 2015 – with personal tax rebate)
Example 3: Change in employer during the year and tax borne by one of the employers (Year of
Assessment 2015 – with personal tax rebate)
Example 4: Tax fully borne by employer (Year of Assessment 2015 – with personal tax rebate &
change in marginal tax rate)
Example 5: Tax partially borne by employer (Year of Assessment 2015 – with personal tax rebate)
Example 6: Tax fully borne by employer (Year of Assessment 2016)
Example 7: Change in employer during the year and tax fully borne by both employers (Year of
Assessment 2016)
Example 8: Change in employer during the year and tax borne by one of the employers (Year of
Assessment 2016)
Example 1: Tax fully borne by employer (Year of Assessment 2015 – with personal tax rebate)
Year of Assessment 2015)
The employee was employed by Company A from 1 Jan 2014 to 31 Dec 2014. His income tax for Year
of Assessment (YA) 2015 is fully borne by Company A:
−
−
−
Total salary from Company A: $220,000
No other sources of income
Total personal reliefs: $7,000
Tax Allowance Computation (YA 2015)
Salary from Company A
Less: Personal reliefs
$
220,000
(7,000)
Notional chargeable income
213,000
Tax on first $200,000
Tax on next $13,000 @ 18%
20,750.00
2,340.00
23,090.00
Less: 50% personal tax rebate capped at $1,000
(1,000.00)
Notional tax payable
22,090.00
Tax-on-tax on remuneration:
$22,090.00 x [0.18/(1-0.18)]
Tax allowance
4,849.02
26,939.02
Actual Tax Computation (YA 2015)
Salary from Company A
Tax allowance
Total income
Less: Personal reliefs
Chargeable income
$
220,000.00
26,939.02
246,939.02
(7,000.00)
239,939.02
Tax on first $200,000
Tax on next $39,939.02 @ 18%
20,750.00
7,189.02
27,939.02
Less: 50% personal tax rebate capped at $1,000
(1,000.00)
Net tax payable
26,939.02
Example 2: Change in employer during the year and tax fully borne by both employers (Year of
Assessment 2015 – with personal tax rebate)
The employee was employed by Company A from 1 Jan 2014 to 30 Jun 2014 and Company B from 1
Jul 2014 to 31 Dec 2014. His income tax for Year of Assessment (YA) 2015 is fully borne by both
companies.
−
−
−
−
Total salary from Company A (1 Jan 2014 to 30 Jun 2014): $100,000
Total salary from Company B (1 Jul 2014 to 31 Dec 2014): $120,000
No other sources of income
Total personal reliefs: $7,000
The salaries are added together and the tax to be paid by each company is apportioned based on the
salary earned from the respective company.
Where tax clearance had been sought previously by Company A, adjustments will be made to the tax
liability of Company A. The adjustment may result in an additional tax to be borne by Company A.
Tax Allowance Computation (YA 2015)
$
Salary from Company A
100,000
Salary from Company B
120,000
Total income
220,000
Less: Personal reliefs
(7,000)
Notional chargeable income
213,000
Tax on first $200,000
Tax on next $13,000 @ 18%
Less: 50% personal tax rebate capped at $1,000
20,750.00
2,340.00
23,090.00
(1,000.00)
Notional tax payable
22,090.00
Tax borne by Company A:
($100,000/$220,000) x $22,090.00
10,040.91
Tax-on-tax on remuneration (Company A):
$10,040.91 x [0.18/(1-0.18)]
2,204.10
Tax allowance (Company A)
12,245.01 (A)
Tax borne by Company B:
($120,000/$220,000) x $22,090.00
12,049.09
Tax-on-tax on remuneration (Company B):
$12,049.09 x [0.18/(1-0.18)]
2,644.92
Tax allowance (Company B)
14,694.01 (B)
Total tax allowance (A+B)
26,939.02
Actual Tax Computation (YA 2015)
Salary from Company A
Tax allowance (Company A)
Salary from Company B
Tax allowance (Company B)
Total income
Less: Personal reliefs
Chargeable income
Tax on first $200,000
Tax on next $39,939.02 @ 18%
$
100,000.00
12,245.01
120,000.00
14,694.01
246,939.02
(7,000)
239,939.02
20,750.00
7,189.02
27,939.02
Less: 50% personal tax rebate capped at $1,000
(1,000.00)
Net tax payable
26,939.02
Example 3: Change in employer during the year and tax borne by one of the employers (Year of
Assessment 2015 – with personal tax rebate)
The employee was employed by Company A from 1 Jan 2014 to 30 Jun 2014 and Company B from 1
Jul 2014 to 31 Dec 2014. His income tax for Year of Assessment (YA) 2015 is borne by only Company
A.
−
−
−
−
Total salary from Company A (1 Jan 2014 to 30 Jun 2014): $100,000
Total salary from Company B (1 Jul 2014 to 31 Dec 2014): $120,000
No other sources of income
Total personal reliefs: $7,000
Tax Allowance Computation (YA 2015)
Salary from Company A
$
100,000
Salary from Company B
120,000
Total income
220,000
Less: Personal reliefs
(7,000)
Notional chargeable income
213,000
Tax on first $200,000
Tax on next $13,000 @ 18%
20,750.00
2,340.00
23,090.00
Less: 50% personal tax rebate capped at $1,000
(1,000.00)
Notional tax payable
22,090.00
Tax borne by Company A:
($100,000/$220,000) x $22,090.00
10,040.91
Tax-on-tax on remuneration (Company A):
$10,040.91 x [0.18/(1-0.18)]
2,204.10
Tax allowance (Company A)
12,245.01
Tax borne by employee:
($120,000/$220,000) x $22,090.00
12,049.09
24,294.10
Actual Tax Computation (YA 2015)
Salary from Company A
Tax allowance (Company A)
$
100,000.00
12,245.01
Salary from Company B
120,000.00
Total income
232,245.01
Less: Personal reliefs
Chargeable income
Tax on first $200,000
Tax on next $25,245.01 @ 18%
(7,000)
225,245.01
20,750.00
4,544.10
25,294.10
Less: 50% personal tax rebate capped at $1,000
(1,000.00)
Net tax payable
24,294.10
Example 4: Tax fully borne by employer (Year of Assessment 2015 – with personal tax rebate &
change in marginal tax rate)
The employee was employed by Company A from 1 Jan 2014 to 31 Dec 2014. His income tax for Year
of Assessment (YA) 2015 is fully borne by Company A:
− Total salary from Company A: $174,900
− No other sources of income
− Total personal reliefs: $15,000
Tax Allowance Computation (YA 2015)
$
Salary from Company A
174,900
Less: Personal reliefs
(15,000)
Notional chargeable income
159,900
Tax on first $120,000
Tax on next $39,900 @ 15%
7,950.00
5,985.00
Notional tax payable before personal tax rebate
13,935.00
Less: 50% personal tax rebate capped at $1,000
(1,000.00)
Notional tax payable after personal tax rebate
12,935.00 (A)
Tax-on-tax on remuneration As there is a change in marginal tax rate from 15% (for first
$160,000) to 17% (for next $40,000), the notional tax payable is
therefore broken down into:
− $100 x 15% ($100 is derived from $160,000 – $159,900)
− $12,835 x 17% ($12,835 is derived from $12,935 – $100)
$2,196.95 x [0.17/(1-0.17)]
Tax allowance (A+B+C)
15.00
2,181.95
2,196.95 (B)
449.98 (C)
15,581.93
Actual Tax Computation (YA 2015)
Salary from Company A
Tax allowance
Total income
Less: Personal reliefs
Chargeable income
$
174,900.00
15,581.93
190,481.93
(15,000)
175,481.93
Tax on first $160,000
Tax on next $15,481.93 @ 17%
13,950.00
2,631.93
Net tax payable before personal tax rebate
16,581.93
Less: 50% personal tax rebate capped at $1,000
(1,000.00)
Net tax payable after personal tax rebate
15,581.93
Example 5: Tax partially borne by employer (Year of Assessment 2015 – with personal tax rebate)
The employee was employed by Company A from 1 Jan 2014 to 31 Dec 2014. His income tax on
education allowance of $20,000 is borne by Company A for Year of Assessment (YA) 2015:
− Education allowance: $20,000
− Salary: $38,000
− No other sources of income
− Total personal reliefs: $4,000
Tax Allowance Computation (YA 2015)
Salary
Education allowance
$
38,000
20,000
Total income
58,000
Less: Personal reliefs
(4,000)
Notional chargeable income
54,000
Tax on first $40,000
Tax on next $14,000 @ 7%
550.00
980.00
Notional tax payable before personal tax rebate
1,530.00
Less: 50% personal tax rebate capped at $1,000
(765.00)
Notional tax payable after personal tax rebate
Tax borne by Company A on education allowance:
($20,000/$58,000) x $765.00
Tax-on-tax on education allowance:
$263.79 x [0.07 x (1 – 0.5) / 1 – {0.07 x (1-0.5)}]
765.00
263.79 (A)
9.57 (B)
Tax allowance (A+B)
273.36
Tax borne by employee:
($38,000/$58,000) x $765.00
501.21
774.57
Actual Tax Computation (YA 2015)
Salary
Education allowance
Tax allowance
Total income
Less: Personal reliefs
Chargeable income
Tax on first $40,000
Tax on next $14,273.36 @ 7%
$
38,000.00
20,000.00
273.36
58,273.36
(4,000)
54,273.36
550.00
999.14
Net tax payable before personal tax rebate
1,549.14
Less: 50% personal tax rebate capped at $1,000
(774.57)
Net tax payable after personal tax rebate
774.57
Example 6: Tax fully borne by employer (Year of Assessment 2016)
The employee was employed by Company A from 1 Jan 2015 to 31 Dec 2015. His income tax for Year
of Assessment (YA) 2016 is fully borne by Company A:
−
−
−
Total salary from Company A: $220,000
No other sources of income
Total personal reliefs: $7,000
Tax Allowance Computation (YA 2016)
Salary from Company A
Less: Personal reliefs
$
220,000
(7,000)
Notional chargeable income
213,000
Tax on first $200,000
Tax on next $13,000 @ 18%
20,750.00
2,340.00
Notional tax payable
23,090.00
Tax-on-tax on remuneration:
$23,090.00 x [0.18/(1-0.18)]
Tax allowance
5,068.54
28,158.54
Actual Tax Computation (YA 2016)
Salary from Company A
Tax allowance
Total income
Less: Personal reliefs
Chargeable income
$
220,000.00
28,158.54
248,158.54
(7,000)
241,158.54
Tax on first $200,000
Tax on next $41,158.54 @ 18%
20,750.00
7,408.54
Net tax payable
28,158.54
Example 7: Change in employer during the year and tax fully borne by both employers (Year of
Assessment 2016)
The employee was employed by Company A from 1 Jan 2015 to 30 Jun 2015 and Company B from 1
Jul 2015 to 31 Dec 2015. His income tax for Year of Assessment (YA) 2016 is fully borne by both
companies.
−
−
−
−
Total salary from Company A (1 Jan 2015 to 30 Jun 2015): $100,000
Total salary from Company B (1 Jul 2015 to 31 Dec 2015): $120,000
No other sources of income
Total personal reliefs: $7,000
The salaries are added together and the tax to be paid by each company is apportioned based on the
salary earned from the respective company.
Where tax clearance had been sought previously by Company A, adjustments will be made to the tax
liability of Company A. The adjustment may result in an additional tax to be borne by Company A.
Tax Allowance Computation (YA 2016)
$
Salary from Company A
100,000
Salary from Company B
120,000
Total income
220,000
Less: Personal reliefs
(7,000)
Notional chargeable income
213,000
Tax on first $200,000
Tax on next $13,000 @ 18%
20,750.00
2,340.00
Notional tax payable
23,090.00
Tax borne by Company A:
($100,000/$220,000) x $23,090.00
10,495.45
Tax-on-tax on remuneration (Company A):
$10,494.45 x [0.18/(1-0.18)]
2,308.88
Tax allowance (Company A)
12,799.33 (A)
Tax borne by Company B:
($120,000/$220,000) x $23,090.00
12,594.55
Tax-on-tax on remuneration (Company B):
$12,594.55 x [0.18/(1-0.18)]
2,764.66
Tax allowance (Company B)
15,359.21 (B)
Total tax allowance (A+B)
28,158.54
Actual Tax Computation (YA 2016)
Salary from Company A
Tax allowance (Company A)
Salary from Company B
Tax allowance (Company B)
Total income
Less: Personal reliefs
Chargeable income
$
100,000.00
12,799.33
120,000.00
15,359.21
248,158.54
(7,000)
241,158.54
Tax on first $200,000
Tax on next $41,158.54 @ 18%
20,750.00
7,408.54
Net tax payable
28,158.54
Example 8: Change in employer during the year and tax borne by one of the employers (Year of
Assessment 2016)
The employee was employed by Company A from 1 Jan 2015 to 30 Jun 2015 and Company B from 1
Jul 2015 to 31 Dec 2015. His income tax for Year of Assessment (YA) 2016 is borne by only Company
A.
−
−
−
−
Total salary from Company A (1 Jan 2015 to 30 Jun 2015): $100,000
Total salary from Company B (1 Jul 2015 to 31 Dec 2015): $120,000
No other sources of income
Total personal reliefs: $7,000
Tax Allowance Computation (YA 2016)
Salary from Company A
$
100,000
Salary from Company B
120,000
Total income
220,000
Less: Personal reliefs
(7,000)
Notional chargeable income
213,000
Tax on first $200,000
Tax on next $13,000 @ 18%
20,750.00
2,340.00
Notional tax payable
23,090.00
Tax borne by Company A:
($100,000/$220,000) x $23,090.00
10,495.45
Tax-on-tax on remuneration (Company A):
$10,494.45 x [0.18/(1-0.18)]
2,308.88
Tax allowance (Company A)
12,799.33
Tax borne by employee:
($120,000/$220,000) x $23,090.00
12,594.55
25,393.88
Actual Tax Computation (YA 2016)
Salary from Company A
Tax allowance (Company A)
$
100,000.00
12,799.33
Salary from Company B
120,000.00
Total income
232,799.33
Less: Personal reliefs
Chargeable income
(7,000)
225,799.33
Tax on first $200,000
Tax on next $25,799.33 @ 18%
20,750.00
4,643.88
Net tax payable
25,393.88