The financial concerns of a locum doctor differs from that of a salaried GP. Locum doctors can earn more by working longer hours or choosing hospitals that pay more. This is, in fact, one of the advantages of working as a locum doctor.
Being a locum GP means being self-employed. You can either set yourself up as a Private Limited Company (PLC) or work with a locum agency. The Singapore government built a tax system that encourages entrepreneurship.
- It offers tax incentives based on sensible economic principle.
- It has a wide network of “double tax treaties” with other countries.
As a business owner or self-employed individual, you should know what’s taxable and what’s not.
As a locum GP, these are the income sources that are taxable according to the Singapore’s Inland Revenue Authority (IRAS):
- Employment income. This includes your basic salary, bonuses, commissions, income derived from overseas work, pensions, retirement benefits.
- Income from business, vocation or profession. Your income as a self-employed individual is taxable.
To reduce your tax bills, you can deduct the following:
- Employee Deductions. You can claim tax deductions on your “allowable expenses” or employment expenses obtained in earning your employment. This includes expenses made to entertain clients, payment for subscriptions to a professional organization, expenses incurred for networking endeavors, payment for public transport if it’s not reimbursed by your employer or if it was incurred while performing official business. IRAS’ employment expenses schedule can help you organize and take note of these expenses.
- Tax Deductions for the Self-employed. If you set up yourself as a single proprietor business, a self-employed individual or a partner, you can claim tax deductions for business expenses, medical expenses, and capital allowances among others.
- Tax Deductions on Donations. You can claim tax deductions on donations made from 2009-2018. You can claim up to “2.5 to 3 times” the total amount of your donation. Your donation may either be cash, shares, land, building or artifact donations.
- Other Forms of Income Exempted from Tax. Some employment income can be tax exempt. This includes benefits relating to your health such as dental, hospitalization, and outpatient treatment or benefits to encourage skills upgrade such as scholarship grants and training fees. The IRAS provides a full list of benefits-in-kind granted administrative concession.
Setting yourself up as business allows you to enjoy certain deductions that are not enjoyed by salaried employees.
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- Expenses Obtained Before the Start of Your Business. Your indicated date of business commencement is the day you first earned your revenue. Costs incurred before that date can be tax deductible. This is one of the many ways the Singapore government encourages entrepreneurship. Before YA 2012, only expenses obtained after the date of business commencement were tax deductible. Now, the government allows deductions on expenses one year before you received your first revenue.
- Business Expenses. Your expenses while running your business can be tax deductible. This includes employee remuneration and benefits (insurance and bonuses), finance and professional costs, running costs (licenses, advertising).
- Medical Expenses. You can claim tax deductions for “medical expenses of up to 1% of the total employee compensation” for the given year. This includes employee salaries, bonuses, and allowances. This, however, does not include your own and your partner’s salary, bonus, and allowances.
Given the above taxable items and exemptions, you can be a responsible member of the Singapore workforce by filing your taxes on time. It would be easy to handle your financial concerns as a locum doctor if you follow these tips:
Organize your records
Each assessment year, you need to file your taxes. An organized record system makes it easy for you to compute and file your taxes when the year ends. Remember as a self-employed locum doctor, you need to pick an accounting period and declare your real business income.
Some of the records recommended by the IRAS are “business Balance Sheets and Profit and Loss statements”. You can seek the help of a professional accountant or bookkeeper to handle these things for you.
File your Taxes Properly and On Time
Your income will be assessed on a preceding year basis at the end of each year. This means that your income in 2017 would come under tax returns for YA 2018. The IRAS sends a letter or an SMS to remind you to file your tax. You should do so and if you are overseas and you couldn’t file taxes on time, you can assign a representative to handle your tax concerns.
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