For most of my working life, income tax filing has been a non-event. Like most law-abiding Singaporeans, I do not wish to be on the wrong side of the law.
This is reflected in the latest tax statistics. The annual report from Inland Revenue Authority of Singapore (Iras) for financial year 2016/2017 indicated that the vast majority adhered to the tax filing deadline. Nine out of 10 individuals, nine out of 10 GST-registered businesses and eight out of 10 firms filed their tax returns on time.
Also, tax compliance remained high with tax arrears kept low at 0.68 per cent of net tax assessed. And tax revenue collection hit a record high of $47 billion, partly boosted by the global and domestic economic recovery beginning late last year.
Unfortunately, my tax record is marred by one incident when I missed filing my returns on time and copped a $50 penalty from the taxman. It was back in the late 1980s when I was in my first job as a Ministry of Defence army officer.
For some reason, I did not receive my income tax IR8A form (Return of Employee's Remuneration) from my employer. I did nothing and missed the filing deadline. I was mistaken in believing that Iras would not penalise me as I was unable to file taxes without my IR8A.
Ignorance was not bliss and I paid for it. As I learnt the hard way, the onus is on me to file my taxes by the stipulated deadline.
A check at the Iras website indicates it is now possible to appeal against the late filing fee imposed. The taxman will take into account if it is your first appeal, if you had no other late offences in the last two years, and if you undertake to file your tax return by the due date in future.
My second brush with Iras was more pleasant.
The incident occurred in the 1990s. My other half and I had bought an apartment that came with a tenancy in May 1996 so its property tax was based on the then tax rate of 12 per cent (for properties that were rented out).
When the tenancy ended a few months later, we lived in it for three years before it was sold via a collective sale in December 1999.
Being first-time residential landlords, we were unaware that we could claim for a lower property tax liability when the apartment was no longer rented out. The tax rate for owner-occupied property was a much reduced flat rate of 4 per cent back then. Instead, we continued to pay our property tax at the 12 per cent rate - resulting in an overpayment of our property tax for three years from November 1996 to December 1999.
When I finally realised the mistake in July 2000, Iras was very prompt in refunding the overpaid amount of about $4,600 via a cheque. This was after the taxman was satisfied with my submission of documentary evidence (by way of utility bills) to show that the apartment was occupied by my other half and me during the claim period.
According to the Iras website, most tax refunds are given automatically and taxpayers rarely have to make a claim. In fact, the taxman will pay interest if you do not receive your refund within 30 days of the date that credit arises or the information/request was received.
However, automatic refunds will not be given under certain circumstances. For instance, if a taxpayer has outstanding taxes or penalties, the tax credit will be used to offset the outstanding liability.
Last Thursday, Iras celebrated its 25th anniversary since becoming a statutory board on Sept 1, 1992. One key development in its 25-year journey has been its early adoption of technology, making the mundane chore of filing one's tax a convenient one.
Fortunately for taxpayers here, there was also a shift in mindset recognising that most taxpayers are voluntarily compliant as opposed to them being dodgers.
As a taxpayer for 31 years, I have witnessed the transformation of Iras and benefited from its investment in innovation and technology to improve the ways that individuals and corporates can file their returns and obtain their tax bills.
Meanwhile, personal income and property taxes have been revised to ensure that the system becomes more progressive. From the 2017 Year of Assessment, a new personal income tax rate structure takes effect for individual taxpayers. The highest personal income tax rate is now 22 per cent (20 per cent previously) for tax residents with annual chargeable income in excess of $320,000.
And taking effect from the 2018 Year of Assessment will be a new $80,000 cap on total personal income tax reliefs that a person can claim. A total of 14 personal tax reliefs are available for those who meet the qualifying conditions. These include course fee relief and relief for taxpayers supporting parents/handicapped parents.
In the case of property tax, instead of a flat rate for all residential properties, a progressive property tax regime for such properties was introduced in Budget 2010 and enhanced in Budget 2013. Since then, property tax has been computed by applying the applicable tax rate to the property's annual value.
The taxman explains that this is "socially equitable" since taxpayers with more valuable residential properties pay higher property tax.
The annual value of a property is generally derived from the estimated annual rent that it can fetch if it were rented out.
Relevant factors Iras will consider include rentals of similar properties in the vicinity, as well as the size and condition of the property. The annual value of a property is determined in the same manner regardless of whether the property is rented out, owner-occupied or vacant.
Generally, the tax rates for owner-occupied residential properties continue to be lower than those for non-owner-occupied residential properties. Other changes include the removal of the property tax refund for vacant residential and non-residential properties from Jan 1, 2014. This is because the policy intent of property tax is to tax property wealth, irrespective of whether it is occupied or not.
An enhanced tax filing feature that I found useful is the auto-inclusion scheme where employers inform Iras how much their employees have earned. Iras then pre-fills the amount in their tax returns. This pre-filling service has been expanded to cover individual commission earners, including real estate and insurance agents.
Bear in mind that employees and commission earners will still need to log into mytax.iras.gov.sg to check the pre-filled information and relief details, claim any relevant expenses, and submit their tax returns, unless they received a letter or SMS from the taxman informing them that they are on the no-filing service.
Other enhanced features include e-filing for taxpayers who still have to file their returns, and the no-filing service where filing season becomes a breeze for those who do not need to go through the motion of filing taxes.
An initiative that I will look forward to is when all taxpayers are able to receive their finalised tax bill or Notice of Assessment immediately on filing their return. This will help me better plan my budget and finances.
Filing a tax return is a requirement for most of us. So the easier it is, the less taxing for all.
An enhanced tax filing feature that I found useful is the auto- inclusion scheme where employers inform Iras how much their employees have earned. Iras then pre-fills the amount in their tax returns. This pre-filling service has been expanded to cover individual commission earners, including real estate and insurance agents.