On 3 November 2020, Singapore government announced in Parliament that employers who have received wage subsidies under the Jobs Support Scheme (JSS) will not have to pay income tax on the subsidies. This is a great news for Singapore business owners who are worried about their tax in upcoming years of assessments.
Likewise, Self-Employed Person Income Relief Scheme (Sirs) or Covid-19 Support Grant, among other schemes, also do not have to pay income tax on these payouts, after changes were made to the Income Tax Act.
The subsidy funds up to 75 per cent of the first $4,600 of gross monthly wages paid to each Singaporean or permanent resident employee. The JSS, which comprises wage subsidies to help assist local businesses and local employee, was recently extended to cover wages paid up to next March 2021 for companies in sectors hit harder by the Covid-19 crisis, and up to next month for sectors that are managing well.
The exemptions will take effect in year of assessment 2021 or 2022, depending on when pay-outs were made. Tax agent will need to review the tax computation of the newly added the tax exemption when reviewing the financial statement dated 31 December 2020 or earlier.
Talk to your tax agent now to ensure that you get the right tax exemption amount in your application.