Singapore is a popular destination for Australians wanting to work overseas, but here’s the lowdown on the tax implications.
With insights from Liam Branagan, the manager of global mobility services and tax at KPMG
1. Tax resident or not?
An Australian is considered to be a resident in Singapore for tax purposes if he or she spends more than 183 days in the country in a year. There are other administrative concessions available subject to conditions.
However, an Australian who departs to Singapore will likely remain a resident of Australia, unless they intend to remain in Singapore on a permanent basis (generally, longer than two years).
Under the tax treaty, Australians who are considered residents of both countries will generally then be considered resident only of:
- The country in which they have a permanent place of abode available to them
- The country in which they have their habitual abode, or
- The country in which their personal and economic ties are closer, depending on their circumstances.
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When an Australian ceases employment in Singapore, the employer must file a tax clearance and report income earned for the year-to-date (that is, file an exit tax return). In this exit tax return, a departing Australian will also be taxed on the full amount of the gain derived from the right or benefit to acquire shares that may have been granted to them in relation to the Singapore employment.
2. Salary packaging
While Singapore does have an attractively low personal tax rate, it does not have many items that are worth salary packaging.
Some items that attract concessional tax treatment include:
- Home leave packages
- Medical expenses
3. Retirement plans
The mandatory pension scheme in Singapore is not applicable for Australians.
Singapore tax regime at a glance
Australian tax considerations for individuals continuing to be Australian residents
Australians who live in Singapore permanently enjoy much lower tax rates than those that apply in Australia. So where a person remains an Australian tax resident (for example, through short stays in Singapore, or where the Australian returns to Australia to visit regularly), they will generally continue to pay tax at Australian rates on worldwide income.
In addition, certain types of income earned in Singapore are exempt from tax, for instance capital gains. But anyone who remains an Australian resident for tax purposes will pay tax on any capital gains earned in Australia.
Someone who is a non-resident of Australia for tax purposes will only be subject to tax on Australian-sourced income (i.e., for employment income, income that relates to services performed in Australia). Accordingly, the following comments relate to items provided as a resident of Australia (i.e,. an individual subject to tax on worldwide income).
An Australian in Singapore
Here is an example of how much tax an Australian tax resident might pay
- Australian employee sent on work assignment to Singapore for two-plus years
- Single employee (no partner or children)
- Singaporean employer pays employee a salary of AUD$250,000
- Exchange rate of AU$1.00 = 1.08 SGD
- Australian tax rates used are for the income year ended 30 June 2015
- Singapore tax rates used are for the income year ended 2014.
 Medicare levy rate for the income year ended 30 June 2015 is 2%. Calculation based on the assumption the employee holds the appropriate level of private patient hospital cover for the year.