Freelancers and SEPs: Guide to Income Taxes and CPF Contributions in Singapore

Are you a freelancer or self-employed person (SEP) in Singapore — or considering becoming one? Like every other job, you’ll first need to weigh the pros and cons, starting with the fact that you might not earn as stable an income. A myriad of other factors come into play, too. For one, you’ll no longer have a mandatory, monthly CPF contribution from your employer to grow your retirement fund. And, while personal CPF contributions aren’t compulsory, MediSave contributions are. It’s also a requirement for freelancers and SEPs to file their income taxes annually. So: where do you start? This guide will simplify the process for you.

Freelancers vs Self-Employed Persons (SEPs): What’s the difference?

The differences between a freelancer and self-employed person are minute.

The Central Provident Fund (CPF) defines a self-employed person (SEP) as any Singaporean or Singapore PR who earns an income through any trade, business, profession or vocation under a contract of service. This is regardless of whether that income has been earned within or outside of Singapore.

To put things in clearer terms, these are some examples of self-employed persons in Singapore:

  • Freelancers (e.g. writers, photographers, artists)

  • Taxi drivers and private-hire drivers

  • Hawkers

  • Entrepreneurs

  • Commission agents (insurance agents, or real estate agents)

  • Business owners (e.g. of a law firm, clinic or auditing firm)

  • Tuition teachers (i.e. you teach privately, and not under a tuition school)

Additionally, you’re considered an SEP if you’re a sole-proprietor or partner registered with the Accounting and Corporate Regulatory Authority (ACRA).

 

Can I be a freelancer or SEP if I’m already an employee of a company?

Yes, you can. If you’re an employee of a company, but choose to start a business on the side — or take up freelance work — then you’re considered an SEP and an employee. However, many employers in Singapore choose to submit employees’ income information to the Inland Revenue of Authority (IRAS) digitally, in what’s known as the Auto-Inclusion Scheme (AIS) for Employment Income. The onus is on you, then, to declare any extra income you’ve made.

 

How do I file for income tax as a freelancer or SEP?

If you earn more than S$20,000 a year from freelance work or as an SEP, filing for your income tax is compulsory.

Here’s how to ease the income tax-filing process:

  • #1: Set an accounting period

    This accounting period should be within a 12-month timeframe. To simplify things, record your profits and losses from 1 Jan to 31 Dec. This timeframe is also known as your financial year.

  • #2: Track your records and accounts

It sounds obvious enough, but tracking your earnings is essential. The IRAS site lists specific requirements on how to maintain your records and accounts — including keeping a copy of all receipts for:

  • Sales of goods amounting to S$18,000 or more

  • Providing services amounting to S$12,000 or more

  • #3: Prepare a Statement of Accounts

A Statement of Accounts isn’t as complex as it sounds. You’ll need to include the following when filing for your Income Tax Returns:

  • Revenue

  • Gross profit

  • Allowable business expenses

  • Adjusted profit

  • #4: File your income tax via IRAS’ myTax Portal

    Having readied all your documents, you’re now ready to file your income taxes. You should receive a notice of assessment from IRAS by 15 Mar of each year asking that you file your income tax.

 

Do I need to make CPF contributions as a freelancer or SEP?

As mentioned, CPF contributions aren’t mandatory for freelancers of the self-employed.

Regardless, it’s a good idea to set aside a percentage of your earnings in a high-interest savings account for rainy days. Or grow your money in other ways: you could earn 4% interest by contributing a sum to your CPF Special Account, for instance.

 

Do I need to make MediSave contributions as a freelancer or SEP?

That really depends on who you’re working for. If you’re a freelance contractor for the Government or its public sector agencies, you’ll automatically have a portion of your project fees funnelled into your MediSave account. The initiative, better known as the Contribute-As-You-Earn (CAYE) scheme, took effect in early 2020. If you’re a freelancer working for companies and agencies outside of the Government, though, it’s compulsory to make an annual MediSave contribution so long as you’re earning more than S$6,000 a year. The MediSave contribution sum for freelancers and SEPs is calculated based on two things: your age, and your net income for the year.

The CPF site includes a MediSave Contribution Calculator for the self-employed:

You can also check on outstanding MediSave payments, as well as the status of your payments, here.

 

How to pay for MediSave as a freelancer or SEP

You’ll have 30 days to make your MediSave contribution, starting from the date you receive your Notice of Assessment from IRAS.

To make your payment, access the official CPF website, and click on My Requests. From here, select ‘self-employed’, then on the ‘contribute to my MediSave’ dropdown.

Payment options include:

  • eNETS

  • GIRO

  • iBanking

  • DBS PayLah!

  • AXS/SAM machines

You can also choose to pay via monthly instalments over a period of 12 months, as opposed to a one-time payment. This might be the better option if you’re concerned about costs, since there isn’t chargeable interest for choosing this option.

 

The Self-Employed Person Income Relief Scheme (SIRS)

In response to COVID-19, the Government launched SIRS to help the self-employed better cope with their possible loss of income. If you’re eligible, you’ll be paid up to S$9,000 in three trenches. You’ll find more details on the NTUC Income website — including other support schemes you may be eligible for.

Being a freelancer or SEP is by no means easy. But by tracking your expenses regularly and keeping clean records of your income, you’ll find the income tax-filing process a smooth one.

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