Income Tax For Medical Professionals: Managing Income From Healthcare Practices

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Income Tax For Medical Professionals: Managing Income From Healthcare Practices – Goods and Services Tax (GST), also known as Value Added Tax (VAT), is a consumption tax levied on goods and services in Singapore, whether received from domestic or foreign suppliers.

As GST is a personal tax, businesses based in Singapore should assess their need to register for GST. The following companies must register for GST:

Income Tax For Medical Professionals: Managing Income From Healthcare Practices

Income Tax For Medical Professionals: Managing Income From Healthcare Practices

Singapore’s GST rate is currently 8%. However, the government plans to increase the GST rate to 9% by January 2024. The main justification for this increase is to fund future infrastructure projects and increase spending on social services.

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GST paid on consumers is known as ‘input tax’, while GST levied on business purchases and expenses (including imports of goods) is known as ‘input tax’. The difference between sales tax and input tax is the total GST paid to the government.

Income Tax For Medical Professionals: Managing Income From Healthcare Practices

You can apply online through the MyTax portal using your company’s CorpPass (your company’s digital ID) along with other supporting documents such as your company’s Account and Corporate Authorization (ACRA) business profile and foundation certificate.

IRAS sends a notification to the company confirming that the company is registered for GST. Notifications include:

Income Tax For Medical Professionals: Managing Income From Healthcare Practices

Pre Tax Vs. Post Tax Deductions

The Inland Revenue Authority of Singapore (IRAS) divides goods and services into two categories: taxable supplies and non-taxable supplies. Companies registered for GST are required to charge GST on all taxable supplies.

Taxable supplies are further categorized into standard supplies, which are taxed at an additional GST rate of 8%, and non-standard supplies, which are not taxable (GST 0%).

Income Tax For Medical Professionals: Managing Income From Healthcare Practices

Additionally, from 1 January 2023, non-value-added goods (up to S$400 (US$295)) and non-digital B2C services will be subject to GST.

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Zero-rated supplies include exports (goods sold to overseas customers and delivered to overseas addresses) and services included in the list of international services in section 21(3) of the GST Act.

Income Tax For Medical Professionals: Managing Income From Healthcare Practices

This is useful if you want to evaluate your offer to international customers for products handpicked in Singapore via Changi International Airport.

Second-hand dealers who purchase goods without GST can collect and account for GST using the Gross Margin Scheme (GMS).

Income Tax For Medical Professionals: Managing Income From Healthcare Practices

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When selling a pre-owned/used car, GST is levied on 50% of the selling price. Companies do not need to seek prior approval from IRAS to use this scheme.

Approved GST-registered businesses pay GST on imports when their monthly GST returns are due at the time of import.

Income Tax For Medical Professionals: Managing Income From Healthcare Practices

GST registered businesses can provide GST refunds to travelers either as independent retailers or through the services of a central refund office.

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GST imports on foreign non-tariff goods will be suspended if the goods are moved to ZG warehouse. GST is payable only when imported goods leave the warehouse and enter the local market.

Income Tax For Medical Professionals: Managing Income From Healthcare Practices

GST on non-tariff goods ceases at the time of import and when the goods are withdrawn from Zero GST stores.

For warehouses used to supply specialist storage facilities to overseas customers, the majority of stored goods end up being exported.

Income Tax For Medical Professionals: Managing Income From Healthcare Practices

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Singapore levies Goods and Services Tax (GST) on small imports. Low value goods are goods imported by air or post at a reasonable price and include a GST import relief threshold of S$400 (US$301). GST must also be paid on non-digital services, such as online training or training where the customer is not present at the location where the service is provided.

Foreign digital service providers are required to register for GST and charge GST under Singapore’s Overseas Vendor Registration (OVR) regulations. Digital services include:

Income Tax For Medical Professionals: Managing Income From Healthcare Practices

However, foreign digital service providers must have an annual global turnover of at least S$1 million (US$737,705) and sell at least S$100,000 (US$73,747) worth of digital services to customers. Claim GST.

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IRAS has outlined the criteria under which taxes and service tax (0% GST) will not apply to media sales supplies. The changes will take effect from January 1, 2022.

Income Tax For Medical Professionals: Managing Income From Healthcare Practices

Currently, if a taxable person supplies media space for online advertising, the GST rate will not apply if the advertising is distributed overseas (at least 51%). Under the changes, media sales will be treated as zero-rated if the contract customer is located outside Singapore or is a GST-registered individual in Singapore.

Like many digital sectors, online advertising has seen significant growth during the pandemic, and new technological developments have made it more difficult for taxpayers to determine whether such offered media is eligible for free GST.

Income Tax For Medical Professionals: Managing Income From Healthcare Practices

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As previously mentioned, from 1 January 2022, a zero rating will apply if the media sales offer directly benefits a person located overseas or registered for GST in Singapore.

In the case of media sales provision, the supervisor (the person responsible for the quality of the company’s financial reporting) considers the contractual customer to be the sole beneficiary of the services if the following requirements are met:

Income Tax For Medical Professionals: Managing Income From Healthcare Practices

From 1 January 2022, if an overseas seller supplies media sales to a GST-registered person/business in Singapore, if the recipient is a Change of Business (RC), they will need to use the RC and credit GST to that business. The amount of services you import as if you were a supplier, regardless of where you advertise.

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RC transactions refer to transactions to which variable costing is applied when the full input tax credit is not available or the transaction belongs to a GST group that cannot receive the full input tax credit. Previously, supplying media sales to GST registrants from overseas suppliers was not within the scope of the RC if the advertisements were distributed outside Singapore.

Income Tax For Medical Professionals: Managing Income From Healthcare Practices

From 1 January 2022, export suppliers supplying digital media sales to non-GST registered persons in Singapore will be subject to GST under the OVR regime. Medical expenses incurred by an employee are tax deductible up to 1% of the employee’s total accumulated income for the year. See Example 1 (PDF, 56 KB) for an explanation of how to use the medical expense cap.

If your company makes temporary contributions to employees’ MediSave accounts through the CPF Council’s Supplementary MediSave Contribution Scheme (limit is $2,730).

Income Tax For Medical Professionals: Managing Income From Healthcare Practices

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(per employee per year) may be eligible for an additional tax deduction of up to a 2% medical expenses tax credit over the 1% limit on temporary MediSave contributions. This is true even if your company does not accept portable health benefit plans. See Example 2 (PDF, 56 KB) for an explanation of the tax deductions allowed in these scenarios.

If medical expenses (including passenger insurance premiums) do not exceed 1% of the employee’s gross salary during the applicable base period, the full amount of medical expenses is deductible.

Income Tax For Medical Professionals: Managing Income From Healthcare Practices

If medical expenses (including rider premiums) exceed 1% of the employee’s gross wages for the applicable base period, the excess not related to rider premiums will be deducted at 1% of the employee’s gross wages for the applicable base period.

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Effective January 1, 2018, the limit increased from $1,500 to $2,730 per employee per year. This is to encourage companies to contribute more to their employees’ MediSave accounts based on their medical needs.

Income Tax For Medical Professionals: Managing Income From Healthcare Practices

When calculating medical expenses, there is no need to reduce the salary amount by the amount paid by the company from the government (wage deduction, employment support, special employment service deduction, etc.) to calculate the ‘total employee salary’. Severance pay and government-paid childcare/maternity/parental leave).

The company will receive $100,000 in employee salaries, allowances, bonuses and CPF contributions and $5,000 from the government in paid maternity leave for affected employees.

Income Tax For Medical Professionals: Managing Income From Healthcare Practices

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Medical expenses that exceed the maximum allowable amount (e.g., 1% or 2% of an employee’s gross salary) are considered income and taxed at the current corporate income tax rate when the company receives tax-exempt or taxable business income. At preferential rates (e.g. pioneering companies, companies providing stimulus packages)

Automobile expenses incurred on commercial vehicles such as trucks, vans, and buses are tax deductible. Examples of car costs include repairs, maintenance, transportation, and fuel.

Income Tax For Medical Professionals: Managing Income From Healthcare Practices

No deduction is allowed for vehicle expenses incurred on personal vehicles (e.g. S-plated vehicles) and commercial vehicles (e.g. Q-plated and RU vehicles registered after April 1, 1998). This applies to expenses paid as direct expenses or compensation, especially if the vehicle is used for business purposes.

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Personal cars (e.g. S-plated cars) and commercial cars (e.g. Q-plated and RU-plated cars registered after April 1, 1998)

Income Tax For Medical Professionals: Managing Income From Healthcare Practices

Costs incurred for transportation services are the costs paid by passengers for the service of commuting from one place to another without controlling or owning the vehicle.

Payments for transportation services for business purposes are tax deductible. inside

Income Tax For Medical Professionals: Managing Income From Healthcare Practices

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