Budget 2020: Stabilisation and Support Package

 Budget 2020: Stabilisation and Support Package

On the 26th of March, the Government released a supplemental budget, to address the impact of Covid-19 on the Singapore economy and population. The new budget, known as Resilience Budget, will help employers to address cash flow issues while retaining their employees and it will also allow the employees to defer income tax payments 

The main measures that have been released can be summarized as follows:

1. Enhanced Jobs Support Scheme
2. Enhanced Wage Credit Scheme
3. Deferment of Income Tax Payments for Companies and Self-Employed Persons
4. Enhanced Property Tax Rebate for Non-Residential Properties
5. COVID-19 Support Grant
6. Enhanced Care and Support Package
7. Rental Waivers for Tenants in Government-owned/Managed Non-Residential Facilities
8. Enhanced Financing Support
9. Providing Sector-Specific Support
10. Building Capabilities and Resilience

As of now, for the purpose of this article, we will only focus on the first 4 measures that we believe will have a greater and direct impact on our clients’ business and operation

1. Jobs Support Scheme

The Jobs Support Scheme (JSS) will help enterprises retain their local employees during this period of uncertainty. It is a temporary scheme for 2020. All active employers, except for Government organizations (local and foreign) and representative offices, are eligible for the JSS.

After the first release, the Jobs Support Scheme has been enhanced, as follows:

• Higher support level: Employers will now receive a 25% cash grant (up from 8%) on the wages of each local employees for whom mandatory Central Provident Fund (CPF) contributions were made. The monthly wage cap will also be raised to $4,600 (up from $3,600) per employee to provide greater support for middle-income employees.

• Longer support duration: The JSS will be extended to cover nine months of wages (up from three months). This will be paid in two additional tranches (see Table 1).

Please note employers do not need to apply for the JSS. The grant will be calculated and based on their CPF contribution data.

Table 1: Illustration of Jobs Support Scheme computation

The JSS payout will be credited to the employers' GIRO bank account used for Income Tax/GST.

For companies that do not have a GIRO accounts, the JSS payout will be paid:

1. to their bank account registered with PayNow Corporate.
2. via cheque
   
   

2. Enhancement to Wage Credit Scheme

The Wage Credit Scheme (WCS) will be enhanced in the Singapore Budget 2020.  WCS supports enterprises embarking on transformation efforts and encourages employers to share productivity gains with workers, by co-funding wage increases. 

 A summary of the changes to WCS is in Table 2 below.

Table 2: Summary of Changes to WCS

Employers do not need to apply for WCS.

1. Employers will receive payouts automatically in the month of March after the qualifying year (Y+1), for qualifying wage increases given to their employees in the qualifying year (Y). This is the existing process.
2. Employers who benefit from additional wage credit arising from the Budget 2020 enhancements will receive a separate supplementary payout in the second half of 2020. Letters will be sent to all qualifying employers to inform them of the supplementary payout.

Illustration of Wage Credit Computation

Raising of Government Co-Funding Ratio

• Under the enhanced WCS, if an employer increases the gross monthly wage of an eligible employee by $100 each year from 2017 to 2020, and sustains these wage increases through to 2020, the Government will co-fund 20% of the total qualifying wage increase of $300 in 2019, and 15% of the total qualifying wage increase of $400 in 2020.

• This means that the Government will co-fund $1,4403 of the total $8,400 new and sustained wage increases in 2019 and 2020. This amount of co-funding from the Government is $4205 higher than that under the current WCS.

 Raising of Gross Monthly Wage Ceiling

• Under the current WCS, wage increases above the gross monthly wage of $4,000 will not count toward qualifying wage increases.

• The enhanced WCS supports increases in gross monthly wage of at least $50 given in 2017, 2018 or 2019 up to a gross monthly wage level of $5,000 and sustained in subsequent years of the scheme.

• This means that if an employer increases the gross monthly wage of an eligible employee earning $4,700 in 2016 by $100 each year from 2017 to 2020, and sustains these wage increases through to 2020, the Government will co-fund 20% of the total qualifying wage increase of $300 in 2019, and 15% of the total qualifying wage increase of $300 in 2020.

• The employee will receive a total of $8,400 in new and sustained wage increases in 2019 and 2020, of which the Government would have co-funded $1,260.

  3. Deferment Of Income Tax Payments For Companies And Self-Employed Persons

Support for companies

Automatic Deferment of Corporate Income Tax (CIT) Payments

All companies with CIT payments due in the months of April, May and June 2020 will be granted an automatic three-month deferment of these payments.

The CIT payments that are deferred from April, May and June 2020 will be collected in July, August and September 2020 respectively.

Companies can expect to receive a letter from IRAS by 15 April 2020.

Support for Employees

Some taxpayers who have filed their Income Tax Returns for Year of Assessment (YA) 2020 would have received their electronic Notice of Assessment (i.e. eNOA or tax bill).

A. Apply to Defer Tax Payment (GIRO)

Taxpayers who have filed their Income Tax Returns for Year of Assessment (YA) 2020 may opt to defer the income tax payments due in May, June and July 2020.

For those employees paying by GIRO, there will be no GIRO deduction in May, June and July 2020. The income tax deduction will resume in August, September or October 2020 and the end-date of the instalment plan will be extended by 3 months.

Employees who wants to benefit from this option must sign up by 31 July 2020.

B. Apply to Defer Tax Payment (Lump Sum Payment)

In case of lump sum payment, the taxpayers may opt to defer the payment by three months.

     4. Enhanced Property Tax Rebate for Non-Residential Properties

As part of the Resilience Budget announced on 26 Mar 2020, qualifying non-residential properties (“qualifying properties”) will be granted property tax rebate for the period of 1 Jan 2020 to 31 Dec 2020. This is an enhancement of the property tax rebate announced at Budget 2020, on 18 Feb 2020.

The property tax rebate is enhanced by extending the rebate to additional types of properties, and increasing the amount of rebate for certain types of properties.

Landlords are expected to fully pass on the rebate to their tenants, by reducing rentals, to directly ease the cash flow and cost pressures faced by tenants. For properties that are eligible for 100% property tax rebate, this is equivalent to more than one month’s rental.

Under the Resilience Budget, owners of qualifying properties will be granted rebates of up to 100% on their property tax payable. 

The rebate is 100% of the property tax payable for:

• Hotel room or function room of a hotel registered under the Hotels Act (“registered hotel”);

• Serviced apartment or serviced apartment function room;

• Premises of prescribed Meetings, Incentive Travel, Conventions and Exhibitions (MICE) venues, namely Suntec Singapore Convention and Exhibition Centre, Singapore EXPO, and Changi Exhibition Centre;

• Premises of an international airport i.e. Singapore Changi Airport;

• Premises of a prescribed international cruise or regional ferry terminal. The prescribed cruise and ferry terminals are Singapore Cruise Centre, Marina Bay Cruise Centre Singapore and Tanah Merah Ferry Terminal;

• Shops (e.g. retail) and restaurants, including those within hotels, serviced apartments, the prescribed MICE venues under Item 3 as well as those in office, industrial, residential and mixed-use developments; and

• Premises of tourist attractions (e.g. Singapore Zoological Gardens, Singapore Flyer and Haw Par Villa).

The rebate is 60% of the property tax payable for: 

• Marina Bay Sands; and

• Resorts World Sentosa.              

The above 100% property tax rebate does not apply to them.

The rebate is 30% for any premises excluding the following:

• Premises mentioned above that qualify for the 100% or 60% rebate;

• Premises used whether wholly or partly for an excluded purpose;

• The part of a carpark in the same building or development as premises mentioned in item 2 that corresponds to those premises; and

• Any other premises in the same building or development as premises mentioned in item 2, that are used or intended to be used for or in connection with the operation or enjoyment of those premises. Examples are space for base station and vending machine in a residential condominium.

For avoidance of doubt, no rebate shall be given to vacant land or land under redevelopment.

IRAS will inform owners of qualifying properties on their property tax rebates by 31 May 2020. Owners are not required to submit any claims for the rebate. Owners of qualifying properties can expect to receive their refunds by 30 Jun 2020.

For properties that qualify for 100% rebate, the property tax payable for 2020 will be fully refunded.

For owners who have an ongoing GIRO instalment plan, there will be no GIRO deduction from Apr to Dec 2020. However, if you have tax arrears, the GIRO deduction will resume in Jun 2020.

If owners of properties which are granted 60% or 30% rebate have an ongoing instalment plan, with the rebate offsetting the instalment payment, there will be no GIRO deduction for a period ranging from four to seven months starting from May 2020.

For full information, please visit the government website.

 Watch our free webinar on the Singapore budget 2020 on demand here.

This article is intended for general information only and is not intended to apply to any specific situations or to constitute legal advice.