What must freelancers know about the legal implications of working in a gig economy?
In Singapore, it’s common to see enterprising employees running a side-business on top of their priority job or experienced professional working as a self-employed. However, in both scenarios, those side gig are fully taxable. We have come up with a quick guide to assist you
- Have you derived any income from you business activities
- Have you received a Tax Form / invitation to E-file from IRAS
- Do you earned more than S$20,000 (by 31 December 2018)
If you meet the above checklist, then you are obligated to file your tax.
Basic guide to filing your tax:
- Determine your tax obligation
- Decide on the accounting period (12-month period)
- Keep proper records and accounts (Invoices, receipts, vouchers and other documents)
- Prepare Statement of Accounts (Profit and Loss Accounts and Balance Sheet)
- Prepare a 4-liners statement ( Revenue, Gross Profit, Allowable Business Expenses and Adjusted Profit)
- File income tax to IRAs through e-filing/form
- Medisave as it is a requirement for all Singaporean Self-Employed Personnel / Freelancers
What is the difference between being self-employed and a freelancer in Singapore?
Freelance is categorised as a form of self-employment as defined by the Inland Revenue Authority of Singapore (IRAS). Freelance provide service in return for monetary compensation, it is another form of self-employment include commission-based agency work. Yet, according to Ministry of Manpower, freelancers is defined as own account workers who operate a business or trade without employing any paid workers, and these make up more than 50% of the total self-employed population.
Here are some of the legal tips for Singapore Influencers and Blogger:
It is mandatory for you to file personal tax return for the income you have earned from social media. Any omissions or understating of income done negligently or without reasonable excuse can result penalty amounting to double the tax undercharged with fine up to $5,000 and/or imprisonment of up to 3 years. In another scenario whereby tax evasion, when there’s an intention to make a false statement, you will have to face several consequences. The penalty can be triple the tax undercharged with fine of up to $10,000 and/or an imprisonment of up to 3 years.
According to IRAS Essential Tax Information for Social Media Influencers, if you blogging-related activities have generated an annual net business income of more than $6,000, it has to be declared as self-employed income. However, many people have been misled by the term of blogging as posting articles on a website or blog site.
To clear the doubt, any activities related to social media platforms like Instagram, Facebook, Youtube, Twitter, or placing of banner advertising. Either you received in the form of cash and goods (monetary and/or non-monetary) benefits-in-kind, there is a chance that it is taxable regardless of part time hobby or full time job or contract between the payer and recipient.
In short, products/services received as a recurring supply or provided over a period of time will need to be declared. For products/services received on ad-hoc basis for one time consumption will need to be declared if it worth more than $100 at market price.