Partners in a partnership are considered "self-employed" – i.e. you do not pay yourself any wages. The business income is treated as part of your total personal income and taxed at personal income tax rates.

This guide is not meant to be a comprehensive guide on income tax. It only covers the tax obligations of partners.

The Basics
Tax Rates & Exemptions
Deductions, Relief & Rebates
Medisave & Income Tax
Filing Your Tax Return
Payment Of Taxes
Where Can I Get Help?

The Basics

Taxable Income

• Any income that is "accrued" or received in Singapore by a person or business is subject to income tax.
  
  
• In essence, it means that if your customer pays you for a product in Singapore or you receive money from your overseas sales in Singapore, the money is subject to tax.
  
  
• Taxable income includes income from your business, salary from employment, interest earned on your deposits and rental income.

Capital Gains

• Capital gains are not subject to tax.
  
  
• For instance, if you buy and sell shares at a profit, the profit is not subject to tax. However, the dividends that you earn from the shares are income and subject to tax.

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Tax Rates & Exemptions

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Deductions, Reliefs & Rebates

Your chargeable income (the portion that is subject to taxes) is your total income minus any deductions and reliefs. You can also utilise tax rebates to reduce your taxes.

Business-Related Deductions

• Allowable Business Expenses
  You can deduct any expenses that are incurred solely for the purposes of generating income for your business. Items such as rent, wages paid to employees and expenses on stationery and supplies are all considered "allowable business expenses".

  See:	Claim Allowable Business Expenses

• Capital Allowances
  You can claim capital allowances on plant and machinery that you have purchased for your business.

  See:	Claim Capital Allowances

• Unutilised Losses & Capital Allowances
  Losses and capital allowance can be used to offset your total chargeable income. Any part of the losses or capital allowance not fully used to offset income in the financial year is termed as "unutilised".
  
  
  • You can also carry forward unutilised losses and capital allowances to offset income made in the next financial year.
    
    
  • With effect from Year of Assessment 2006, you can also carry back unutilised losses and capital allowances of up to S$100,000 in the current year to offset the income made in the preceding year.

  See:	Losses and capital allowances

Personal Donations, Reliefs & Rebates

• As your trade income forms part of your personal income, you can also use personal reliefs and donations to reduce your taxes.
  
  
• You can claim deductions for donations made to certain charitable organisations.

  See:

  Donations

• You can claim tax reliefs. There are various types of tax reliefs such as course fees, child, wife/handicapped spouse, etc.

  See:	Tax reliefs

• You can claim tax rebates such as the Parenthood Tax Rebate.

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Medisave & Income Tax

Compulsory Medisave

• All self-employed persons who are Singapore Citizens or Permanent Residents must contribute to their Medisave as long as their net trade income exceeds S$6,000 per year.
  
  
• Net trade income is your business income minus all allowable business expenses, capital allowances and trade losses.

Calculation Of Medisave Contribution

• The amount of Medisave you contribute is a percentage of your total business trade income subject to a maximum cap.

Yearly Net Trade Income	S$6,000 and below	Above S$6,000 to S$12,000	Above S$12,000 to S$18,000	Above S$18,000
Age As At 1st Jan	Contribution rate	Contribution rate	Contribution rate	Contribution rate
Below 35	Voluntary contribution at 2.17%	2.17%	Between 2.17% and 6.5%	6.5% (max. S$3,510)
35 to below 45	Voluntary contribution at 2.5%	2.5%	Between 2.5% and 7.5%	7.5% (max. S$4,050)
45 and above	Voluntary contribution at 2.83%	2.83%	Between 2.83% and 8.5%	8.5% (max. S$4,590)

How & When To Contribute To Medisave

• After you file your income tax, IRAS will send you a Notice of Computation (NOC) which states clearly how much you have to contribute.
  
  
• You can make your contributions directly to the Central Provident Fund (CPF).

Relief For Medisave Contributions

• You can claim relief for your Medisave contributions and voluntary contributions subject to a fixed cap.

For More Information

• IRAS: Make Medisave Contributions
• CPF: Check your outstanding Medisave liabilities
• CPF: FAQs on Medisave and the self-employed

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Filing Your Tax Return

How Do I Pay Taxes?

• The precedent partner must file a tax return on behalf of the entire partnership (Form P). The precedent partner is appointed or by default is the first name on the partnership agreement.
  
  
• All partners, including the precedent partner, must report their share of profit / loss from the partnership business in their Individual Income Tax Return (Form B or Form B1).
  
  
• Based on your tax return, the Inland Revenue Authority of Singapore (IRAS) will assess how much tax you need to pay. IRAS will then send you a Notice of Assessment and Statement of Account.
  
  
• You can submit your tax return by:
  
  
  • E-Filing at myTaxPortal; or
  • Filling up Form B/B1/P and mailing it back to IRAS

See:	• Getting and submitting your individual income tax form (Form P) • Getting and submitting your individual income tax form (Form B or B1)

When Do I File My Tax Return?

• You need to file your tax return by 15 April every year. You should be filing your trade income for the previous year.
  
  
• Example: In 2009, you should be filing a return on business income for year 2008.
  
  
• If you fail to file your tax return by 15 April, you will have committed an offence under the Income Tax Act.

See:	• Form B: Penalties for filing late or not filing • Form B1: Penalties for filing late or not filing • Form P: Penalties for filing late or not filing

How Do I Report My Business Income?

• The precedent partner reports the entire partnership’s business income using Form P. On Form P, you will need to report:
  
  
  • turnover
  • gross profit / loss
  • allowable business expenses
  • adjusted profit / loss
  
  
• If the partnership’s turnover is more than S$500,000, you have to submit a certified statement of accounts together with Form P.
  
  
• From Year of Assessment 2005, the precedent partner of a husband and wife partnership must also file Form P.
  
  
• All partners, including the precedent partner, must report their share in the business income using Form B or B1. On this form, you will need to report:
  
  
  • your share of the profit/loss after all deductions ("divisible profit/loss")
  • your salary, bonus, CPF and benefits from the partnership
  • your share of “other partnership income”
    
    
  "Divisible profit/loss” is your share of the profits/loss after deducting:
  
  
  • all partners’ salaries, bonuses, CPF and benefits
  • all partners’ share of the “other partnership income”
    
    
  "Other partnership income” refers to income from:
  
  
  • savings (e.g. interest)
  • investments (e.g. Singapore dividends)
  • rent
  • foreign income

See:	• Explanatory Notes for Form P (PDF) • Reporting your income on Form B or B1 • Working sheets for preparing Statement of Accounts (EXCEL)

Can You Help Me Calculate My Taxes?

• You can use the Working sheet for the self-employed (EXCEL) to calculate the amount of income tax you need to pay.

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Payment Of Taxes

When Do I Pay My Taxes?

• You have to pay your taxes within 1 month of receiving the Notice of Assessment and Statement of Account.
  
  
• You can pay off all your taxes at one go or by monthly instalments using GIRO. You should pay your taxes promptly or you may have to pay penalty fees.

  See:	Making payments

What If I Do Not Agree With The Tax Assessment?

• If you disagree with the tax assessment, you can write to IRAS and state the reasons why you feel the tax assessment is incorrect.
  
  
• Please note that you must still pay your taxes within 1 month of the Notice of Assessment even if you object to the assessment.

  See:	What if the tax amount is not correct?

What If I Object To My Share Of The Profit / Loss In The Partnership

• If a partner wants to object to his share of the profit / loss, the objection must be lodged by the precedent partner. The precedent partner must write to IRAS stating clear reasons for the objection.

  See:	Objection to the allocation of profit/ loss to partners

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Where Can I Get Help?

• Visit these websites and web resources for more in-depth information on partnership income tax or consult with your accountant.
  
  
  • IRAS website for the self-employed
  • Download all tax forms
  
  
• You can also contact IRAS:
  
  
  • Local Toll-Free: 1800 356 8300
  • International: (65) 6356 8300
  • Fax: (65) 6351 4358
  • Email via IRAS website 

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This article is a simplified write-up of taxation in Singapore and is not intended to replace advice from a tax professional. You should speak to your accountant or contact the Inland Revenue Authority of Singapore (IRAS) for more information.