Contract "of" or "for" Service
You are employed or an employee if you perform work under a contract of service where you work under the control of your employer.
You are self-employed when you perform work for others (e.g. provide a service) under a contract for service.
As a self-employed with your own business, you work for yourself and you are in the position to realise a business profit or loss. Your income is derived from the buying and selling of goods, or from providing professional or personal services.
A self-employed may be a sole-proprietor or a partner in a partnership.
Partners in a Partnership
Partners who are registered with the Accounting and Corporate Regulatory Authority (ACRA) are generally regarded as self-employed persons.
Partners who are self-employed should report their share of profit/loss and remuneration (salary, bonus, CPF, and other benefits) from the partnership in the 'Trade, Business, Profession, or Vocation' section and 'Partnership' sub-section in the personal income tax return.
Partners under Employment Contracts
There could be some cases where ACRA-registered partners are engaged under an employment contract with the partnership.
In such cases, the partners generally do not assume the liabilities of the partnership and do not have a share in the profit/loss of the partnership. They are considered employees of the partnership even though they have the title of 'partner'.
The precedent partner of the partnership should not allocate the income of such partners in the partnership tax return Form P. Partner engaged under an employment contract with the partnership should report income from the partnership in the ' Employment' section in the personal income tax return.
Factors in Determining Status
#1: Exposure to Financial Risk and Ability to Realise Profit/Loss
Employee |
Self-employed |
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#2: Payment Received
Employee |
Self-employed |
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Note: Some self-employed like lawyers are paid on an hourly basis. |
#3: Level of Control
Employee |
Self-employed |
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#4: Flexibility to Provide the Same Services to More Than One Person / Business at the Same Time
Employee |
Self-employed |
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Note: Some employees can work for more than one employer at any one time. |
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#5: Provision of the Necessary Tools, Equipment and Machinery Required
Employee |
Self-employed |
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#6: CPF Contributions and Other Benefits
Employee | Self-employed |
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Multiple Jobs / Multiple Engagements
When you work for more than one payer concurrently, you have to determine your status using the above factors for each job or engagement you do. You can be an employee and a self-employed at the same time.
For example, you may be an employee of an organisation, and are also engaged in direct selling or running of an online business. In this case, you will be classified as a self-employed despite also earning employment income, and the income from the direct selling or online business is a trade income. Both employment and trade income are taxable.
Examples of Self-Employed Persons
- Baby-sitter*
- Commission agent (e.g. insurance agent, real estate agent)
- Direct seller
- Freelancer (e.g. you receive fees for providing services as a delivery rider, consultant, book keeper, graphic designer)
- Hawker (you are the owner of a hawker business or a food stall)
- Owner of a business that buys and sells goods and/ or services
- Owner of an online business (i.e. you buy and sell goods or provide services through the Internet)
- Owner of your own practice (e.g. accountant, architect, doctor, lawyer)
- Taxi driver / Private-hire car driver
- Private tuition teacher* (you look for your own students by yourself or through agencies and do not receive a salary from a tuition centre)
* Allowances received for carrying out family support roles (including cooking, cleaning, pet-sitting, gardening) for family members which are not payment for services rendered and not with the intention to make profit are generally not considered as self-employment income.
e.g. Token of appreciation monies received by grandparents for caring for their own grandchildren, monies received by an individual for reimbursing the costs (e.g. transport trips, stationeries, printing materials) incurred in giving tuition to his/her nieces or nephews unless the individual is already in the business of providing tuition centre service.