Capital gains tax (CGT) is owed on the profits of something (an ‘asset’) that’s been sold at an increased value. The increased value (i.e. the ‘gains’) is taxed, not the total income received.
In Singapore, any gains made from shares and other financial assets are generally non-taxable. Likewise, insurance policy payouts are non-taxable. The non-existence of capital gains tax in Singapore contributes to its tax haven status.
Gains from the sale of a property are not taxable unless the seller has bought and sold the property with a profit-seeking motive (i.e. the majority of their income comes from trading properties). Criteria for determining whether somebody is deemed to have profit-seeking motives include:
For further information, contact the IRAS here.
Dividends are the distribution of profits you receive as a company’s shareholder, usually paid out in cash or in kind. In Singapore, dividends are not taxable if they are:
You can tell which forms of dividends are subject to tax by the exclusions given above!
The luxury of not paying tax on capital gains or dividends makes investing an attractive way of earning tax-free income in Singapore, which you could choose to reinvest for potentially supercharged compounding gains. Many of us choose to invest for long-term financial goals, such as retirement, which require a very large sum of money. Therefore, not having to pay typical capital gains tax rates could mean your profits are substantially higher (as long as you’re a successful investor!).
Capital acquisitions – inheritances/gifts above a certain limit.
Inheritance – the estate of an individual who has passed away and left to a Singapore tax-payer. The value is based on the value of their assets, minus liabilities.
Wealth – an individual’s net worth, which is their assets minus liabilities. Singapore relies purely on taxing income instead of wealth tax.
NON-TAXABLE EVENTS. COMPLETED. ✅
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