You'll often encounter the concept of assessable income when dealing with tax documents or filing your annual income tax assessment. It generally refers to your annual gross income after subtracting certain allowable expenses, such as contributions to approved retirement schemes.

Outside of tax contexts, assessable income might be used by government agencies, banks, and private companies to determine eligibility for specific programs, benefits, or applications. For instance, some government assistance schemes may use assessable income to determine qualification.

Here's a brief guide to understanding what assessable income means, how it's calculated in Singapore, and why it's important to know yours.

Assessable income is a key figure used by the Inland Revenue Authority of Singapore (IRAS) to determine your tax liability. IRAS defines assessable income as your total income, minus allowable expenses and approved donations¹.

You calculate your assessable income by taking your annual income from your monthly salary and other income sources (total income) and subtracting specific allowable expenses and donations.

After determining your assessable income, you arrive at your chargeable income by further subtracting personal reliefs. Income tax rates are then applied to your chargeable income to calculate the final tax payable.

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In Singapore, determining your assessable income is the starting point for calculating your tax payable. IRAS defines assessable income as your total income, minus allowable expenses. Importantly, it's crucial to note that assessable income does not include the employer's portion of Central Provident Fund (CPF) contributions.

Generally, the calculation begins with your total income. This encompasses income from various sources, such as:

• Salaries and wages (e.g., monthly salary, bonuses)

• Business income (e.g., profits from a sole proprietorship)

• Rental income (e.g., income from renting out a property)

From this total income, you can subtract allowable expenses and donations. Examples include:

• Employment expenses (e.g., professional subscriptions, certain work-related travel)

• Donations to approved charities (e.g., donations to IPCs)

• Voluntary contributions to Medisave 

If your total income is S$80,000, and you have allowable expenses of S$2,000 and donations of S$5,000, your assessable income would be:

S$80,000 - S$2,000 - S$5,000 = S$73,000

The difference between assessable income vs chargeable income is crucial.

• Assessable income: This is your income after subtracting allowable expenses and donations.

• Chargeable income: This is the amount on which your income tax is actually calculated. You arrive at chargeable income by further subtracting personal reliefs from your assessable income.

Personal reliefs are deductions for personal circumstances, such as:

• Relief for self (e.g., you can claim a basic personal relief)

• Relief for spouse (if applicable)

• Relief for children (e.g., Qualifying Child Relief)

• CPF employee contributions (your contributions to your CPF)

Finally, income tax rates are applied to your chargeable income to determine the amount of tax you owe.

You can find your Assessable Income on your Notice of Assessment (NOA) issued by the Inland Revenue Authority of Singapore (IRAS).

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In Singapore, your assessable income is a key figure in calculating your income tax. It represents your total income after subtracting allowable expenses. From assessable income, further deductions through personal reliefs are made to arrive at your chargeable income, upon which income tax rates are applied. You'll encounter the term assessable income throughout your income tax forms.

Assessable income also determines your eligibility for various tax reliefs and government support measures. For example, it might be a factor in determining your eligibility for government support packages, such as the 2024 Cost-of-Living (COL) Special Payment.

It's important to understand your assessable income as it directly impacts your tax obligations and access to government benefits.

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Chargeable income is the amount on which your income tax is calculated in Singapore. It's determined by taking your assessable income and subtracting any applicable personal reliefs. Your chargeable income is relevant for:

• Calculating your final income tax liability.

• Determining your eligibility for certain tax reliefs and rebates.

It's important to understand that while assessable income is derived from your gross income minus allowable expenses, chargeable income is the final amount subject to tax rates after all eligible reliefs are applied.

Let's illustrate the calculation of chargeable income with a simplified example. (Note: Always refer to the official IRAS guidelines for accurate details.)

• Assume your Employment Income is S$70,000.

• Allowable Expenses and Donations = S$8,000

• Therefore, assessable income = S$70,000 - S$8,000 = S$62,000

• Personal Reliefs = S$15,000

• Therefore, chargeable income = S$62,000 - S$15,000 = S$47,000

(Remember to consult the official IRAS website for the specific types of Allowable Expenses and Personal Reliefs applicable to your situation.)

In Singapore, you can pay your income tax using certain credit cards. This can be a way to earn credit card rewards, such as air miles or cashback. Always check with your credit card issuer and IRAS for the latest payment options and any applicable fees.

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