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Royalty, Charge, Estate/ Trust Income

This article explores Royalty, Charge, Estate/ Trust Income and their relative tax calculations and deductions as part of the Singapore Tax Calculator

Royalty

Royalty earned in Singapore is taxable. Royalty is the income received for the rights to use:

  • Copyrights
  • Patents
  • Trademarks etc.

What is royalty earned in Singapore?

Royalty is earned in Singapore if it is:

  • Paid directly or indirectly by a person resident in Singapore or by a permanent establishment in Singapore; or
  • Deductible against any income earned in or derived from Singapore.

When royalty is taxable?

Royalty is taxable in the year it is due and payable for that year.

Do I qualify for Tax Concession

To qualify for the tax concession, the royalties must be received for:

  • Any literary, dramatic, musical or artistic work
  • Approved intellectual property or approved innovation.

If you qualify, you will be taxed on the lower of:

  • Amount of royalties after allowable deductions
  • 10% of the gross royalties.

This concession does not apply to royalties or payment received for any work published in any newspaper or periodical. Also, it will no longer apply to approved intellectual property or approved innovation from the Year of Assessment 2017.

How do I report Royalties?

You must declare the amount of gross royalties received under 'other income ' in your tax form, and provide details of the royalties and statement of expenses incurred.

Should you qualify for tax concession, you will also need to provide the tax office with details on the sources of your royalties and any supporting documents.

Charge (Alimony, Maintenance Payments, etc.)

This charge refers to any income received under a deed or court order in Singapore. An example of this include alimony and or maintenance payments and other income from trust and settlements.

Alimony and Maintenance Payments

Effective Year of Assessment (YA) 2012, income from alimony and maintenance payments received from your ex-partner, whether paid voluntarily or under a Court Order or Deed of Separation is exempt from tax.

Tax Treatment Prior to YA 2012

Prior to YA 2012, alimony or maintenance payments received from your ex-partner under a Court Order or Deed of Separation is taxable.

If the Court Order did not state any specific amount for the maintenance of your child, the full amount of maintenance is taxable as your income.

If the court specified an amount for the maintenance of your child, only that portion of the payment for your maintenance is taxable as your income.

Maintenance Payments

A child may receive maintenance payments under a Maintenance Order or Deed of Separation. A parent may receive maintenance payments under the Maintenance of Parents Act.

Estate &Trust income

Estate and trust income is income received in Singapore from an estate under administration or a trust. These incomes are all taxable.

Tax on Legal Personal Representative (LPR)

The statutory income of a LPR, this will usually be the executor or administrator, is subject to income tax at 17% from YA 2010.

Distributed Income Tax on Beneficiaries

If the estate income is distributed to Singapore resident beneficiaries within a stated time frame, tax can be paid by the resident beneficiaries at their personal tax rates instead of the tax rate of a legal personal representative.

To qualify, the income has to be distributed before 31 Mar in the year following the year of assessment.

Below is an example of Income Earned in 2015 Must Be Distributed Before 31 Mar 2017;

Example of Income Earned in 2015

Estate income in 2015

$5,000

Less distribution in 2016

$4,000*

Chargeable income

$1,000

Tax on LPR: $1,000 at 17%

$170.00

The beneficiary will be assessed on the income distributed to and received ($4,000*) at his/her personal tax rate in the YA 2017 since he/she received it in 2016.

How do you Calculate Trust Income Tax?

Tax on Trustee

The statutory income of a trustee is subject to income tax at a 17% flat rate from YA 2010.

Tax on Resident Beneficiaries (Effective Year of Assessment 2008)

Beneficiaries entitled to a share of the trust income by virtue of the trust deed, the Will of the deceased or the Law of Intestacy will be:

  • Assessed on their share of entitlement of income at their personal income tax rates
  • Given the same tax exemptions and concessions as accorded to taxpayers who are resident individuals.

Tax on Non-Resident Beneficiaries

Where there are non-resident beneficiaries of Singapore, the trustee is required to pay tax on their shares of entitlement at the prevailing trustee rate for that year of assessment. 

Example Year of Assessment (YA) 2017

Estate income in 2016

$9,000

Less amount assessed on resident beneficiaries (2/3 of $9,000)

$6,000*

Chargeable income

$3,000

Tax on trustee: $3,000 at 17%

$510.00

The resident beneficiaries will be assessed on their share of entitlement ($6,000*) at their personal tax rates in YA 2017.

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