Pre-filling of Income and Fixed Expense Deduction Ratio for self-employed persons (SEPs)

Commission agents such as general commission agents, real estate agents, insurance agents, multi-level marketing (MLM) agents and remisiers can check if a commission-paying organisation is under e-Submission of Commission Income for YA2023 (XLS, 194KB).

The commission income transmitted by the commission-paying organisation to IRAS will include any allowances, incentives, referral fees, benefit-in-kind and other payment.

For more information, please refer to FAQ on Pre-filling of Income for Commission Agents (DOC, 21KB)

Drivers whose transport service operators are participating in the pre-filling of income scheme, can choose to have their driving income pre-filled into their individual income tax returns.  The driving income of the participating drivers will be transmitted by their transport service operators to IRAS electronically and these include:

• Gross Passenger Fares¹
• Incentives / Rebates² / Promotion / Miscellaneous Payments³

For more information, you may refer to FAQ on Pre-filling of Income for PHC / Taxi Drivers (PDF, 146KB)

Video on Pre-filling of Income for PHC / Taxi Drivers

Qualifying commission agents refer to general commission agents, real estate agents, insurance agents, Multi-Level Marketing (MLM) agents and remisiers who meet the following conditions:

• Carrying on a trade, business, profession or vocation and incurred deductible business expenses on the commission income earned.
• Received commission income not exceeding $50,000 annually (Total commission income received from all commission sources)

From Year of Assessment (YA) 2020 (i.e. for income earned in 2019), qualifying commission agents can claim 25% of the gross commission income earned subject to the condition that the income does not exceed $50,000. The amount of business expense is deemed to be the sum of all deductible business expenses incurred (including expenses on entertainment, transport, gifts and telecommunications) in earning the commission income.

If you derive commission income from more than one sources in the same year, you will need to exercise the same option for all your commission income sources. You cannot claim the 25% prescribed deemed expenses against one commission income source and actual deductible business expenses against other commission income source.

Example 1:

The example below illustrates the application of the prescribed deemed expense ratio for commission:

Example 2:

Andrew derived commission income of $400 as an MLM distributor and he did not incur any deductible business expenses.

The prescribed deemed expense ratio of 25% would not be applicable to Andrew as he did not incur any deductible business expenses on the commission earned.

Example 3:

Ben was an insurance agent for the first 6 months in year 2022 and switched to become a real estate agent subsequently. Ben wished to claim actual business expenses incurred against his commission income as an insurance agent and the prescribed 25% deemed expense ratio against his commission income as a real estate agent.

Ben has to claim either actual business expenses incurred or deemed expenses against all of his commission income earned in the same year.

For more information, you may refer to FAQ on the 25% Fixed Expense Deduction Ratio for Commission Agents (PDF, 75KB)

Video on Fixed Expense Deduction Ratio for Commission Agents

Infographic on Simplifying Tax Filing for Commission Agents (PDF, 119KB)

The prescribed deemed expense ratio for all self-employed private-hire car (PHC) and taxi drivers is set at 60% of the gross driving income and the amount is deemed to be the sum of all deductible business expenses incurred (including car rental, repairs, maintenance, fuel, parking fees, service fees paid to booking service operators) in earning the driving income.

IRAS regularly reviews the deemed expense ratio for PHC and taxi drivers in consultation with stakeholders such as the Land Transport Authority. The review takes into account changes in the environment such as fluctuations in fuel prices and trip fares.

The example below illustrates the application of the prescribed deemed expense ratio for a PHC / taxi driver:

Both PHC and taxi drivers with deductible business expenses that are more than 60% of their gross driving income can still choose to claim their actual amount of such expenses. Drivers who wish to claim actual deductible business expenses are subject to the following conditions:

1. If the expenses are incurred partly for earning the driving income and partly for private or other purposes, you are required to ensure that the amount you claim is correctly apportioned. You can claim only the portion of expense that is incurred in earning your driving income which could be apportioned by usage or mileage.
2. PHC drivers will not be allowed to deduct the purchase cost of the private car against their income.
3. If the amount of actual expenses claimed by you is more than your driving income, you can carry forward the losses to be offset against future years’ driving income. However, these losses cannot be claimed against your other sources of income in the same or future years of assessment.
4. If you derive income as both PHC and taxi driver in the same year, you will need to exercise the same option for all your driving income. You cannot claim the 60% prescribed deemed expenses against your PHC driving income and actual deductible business expenses against your taxi driving income, or vice versa.

Special Relief Fund (“SRF”) payouts funded by the Government (Budget 2020)

To help taxi drivers and PHC drivers cope with the impact of the COVID-19 pandemic, the Government has provided relief of $300 per vehicle per month (or $10 per day) for active eligible taxi drivers and PHC drivers for the period of February 2020 to December 2020.

The SRF payouts received by taxi drivers and PHC drivers which are funded by the Government will be exempt from income tax in YA 2021 (i.e. for basis period 2020) as the payouts are meant to provide financial support for taxi drivers and PHC drivers during the COVID-19 pandemic. 

COVID-19 Driver Relief Fund (“CDRF”) payouts funded by the Government (Budget 2021)

The CDRF payouts received by taxi drivers and PHC drivers which are funded by the Government will be exempt from income tax in YA 2022 (i.e. for basis period 2021) as the payouts are meant to provide financial support for taxi drivers and PHC drivers during the COVID-19 pandemic.

Additional support given by taxi operators and PHC operators to drivers in year 2020 and year 2021

Taxi drivers will claim the actual rental expenses which is charged by the operator. For additional monetary payments or e-wallet credits received from the operators, these will be treated as additional income to the drivers and will be taxable.

For more information on how to report the additional support provided by your Taxi/PHC Operators and to claim tax deduction based on actual expenses or deemed expense ratio (60% of driving income) for YA2021 and YA2022, refer to Point-to-Point Transport Industry for illustrations and more details.

Savings from Road Tax Rebate (“RTR”) given by taxi operators and vehicle lessors to drivers in year 2021 and year 2022

The Government will provide RTR for petrol and petrol-hybrid vehicles for a one-year period from 1 August 2021 to 31 July 2022. Taxi operators and vehicle lessors, who will receive RTR for their petrol and petrol-hybrid vehicles, are encouraged to pass on the savings from the RTR to eligible taxi and PHC drivers to help drivers alleviate the higher petrol costs.

The savings from the RTR passed on to the drivers are intended to reduce a driver’s business expenses in driving a taxi or car. If the drivers receive the RTR savings in the form of reduced rental, they can claim the actual rental that is charged by the taxi operator or vehicle lessor. If the drivers receive the RTR savings in the form of monetary payments or e-wallet credits, the business expenses claimed by the drivers have to be reduced by the amount of the monetary payments or e-wallet credits.

Additional Petrol Duty Rebate (“APDR”) given by taxi operators and PHC operators to drivers in the year 2021

To help drivers alleviate the higher petrol costs, the Government will provide APDR of $360 to active drivers of petrol and petrol-hybrid taxis and PHCs in the year 2021. The APDR will be disbursed by taxi operators and PHC operators, on behalf of the Government, to the drivers. For taxi drivers who own their own taxis, LTA will disburse the APDR directly to them via bank transfers.

The APDR from the Government is intended to reduce a driver’s’ business expenses in driving a taxi or car. If the drivers receive the APDR in the form of reduced rental, they can claim the actual rental that is charged by the taxi operator or PHC operator. If the drivers receive the APDR savings in the form of monetary payments or e-wallet credits, the business expenses claimed by the drivers have to be reduced by the amount of the APDR.

Example:

A taxi driver/PHC driver earned driving income of $20,900 in the year 2021. His yearly taxi/car rental expense (before any reductions) for the year 2020 is $12,000. Other than taxi/car rental expense, he also incurs other business expense of $1,000 in the year 2021. RTR savings of $100 and APDR of $360 are disbursed by the taxi operator to the taxi driver in the form of reduced taxi rental, while the PHC operator/vehicle lessor disburses them to the PHC driver by crediting amounts to the PHC driver’s e-wallet.

1. If the drivers choose to claim tax deduction based on actual expenses incurred, the amount of total business expense that the taxi driver/PHC driver can claim deduction for YA 2022:

*The actual taxi rental payable by the taxi driver is $11,540 (i.e. $12,000 less the RTR of $100 and APDR of $360.

2. If the drivers choose to claim expenses based on 60% of driving income (deemed expense ratio), the amount of business expense that the taxi driver/PHC driver can claim for YA 2022 is $12,540 ($20,900 x 60%). The RTR savings and APDR should not be included in the driving income when computing the 60% deemed expense ratio as they are meant to reduce the business expenses incurred in driving a taxi/car and hence there is no change to the driving income.

One-off relief payout of $150 given to eligible taxi main hirers and PHC drivers in August 2022

In August 2022, the Government provided eligible taxi main hirers and PHC drivers a one-off relief payout of $150. The payout was disbursed by taxi and PHC operators, on behalf of the Government, to taxi drivers through a reduction in taxi rental fees payable by the drivers and to PHC drivers in the form of additional credits to the drivers' e-wallets.

The usual tax treatment will apply to the $150 relief payout which was given to cushion the impact of higher operating costs for drivers. If the drivers receive the payout in the form of reduced rental, they will claim the actual rental expenses that is charged by the operators. If the drivers receive the payout in the form of e-wallet credits, it will be treated as additional income to the drivers and will be taxable.

For more information, you may refer to FAQ on 60% Fixed Expense Deduction Ratio for chauffeured PHC / Taxi Drivers and Special Relief Fund (DOC, 156KB).

Infographic on Simplifying Tax Filing for Taxi and Private Hire Car Drivers (PDF, 5.3MB)