Singapore Budget 2018 – Australian Expat Edition

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Singapore Budget 2018 – Australian Expat Edition

The Finance Minister of Singapore, Heng Swee Keat delivered the 2018 Singapore Budget on Monday of last week, so we’ve scoured through it to identify what changes will impact Australian expats and others living in, or considering moving to the lion city of Singapore.

First and foremost, Singapore’s GDP growth lifted last year to 3.6%, which is a significant jump from the 2.4% that was delivered in 2016. Now the key changes impacting us as expats:

1. GST to be lifted by 2%

The goods and services tax (GST) is to be lifted in Singapore for the first time in over 10 years by 2%, and this change will take place at some point between 2021 and 2025, depending on the levels of government expenditure. The last time the GST rate was increased was in 2007, when it was lifted from 5% to 7%. Personally, I’m a strong supporter of consumption-based taxes providing this allows us to enjoy low rates of personal income tax and corporate tax (Mathias Cormann, perhaps something to consider…). While a relatively low increase in the tax rate, this will impact particularly those with high levels of discretionary spending, which is the case for many Australian expats living in Singapore. Where a pint of beer or a glass of wine may have cost $14.04 with GST and the service charge, this will rise to $14.28. It’s unlikely this is going to cause any of us to consider our plans to remain in Singapore, it is worth being mindful of your household Budget when the change is implemented.

2. E-Services GST set to be introduced

Currently, any digital services that are outsourced by businesses in Singapore to companies outside of the country don’t attract GST, however from Jan 1, 2020 this is set to change. This will include such services as accounting and bookkeeping, IT, management, social media and other marketing services. This is an important change for any Australian expat in Singapore running a small or medium business where a significant portion of the services utilised are outsourced to companies not based in Singapore.

3. Stamp Duty rates to be increased

If you thought that property in Singapore was already expensive, it’s about to get slightly less affordable. It was announced in the Budget that the Buyer’s Stamp Duty (BSD) would be lifted from 3% to 4% for the top marginal rate, which applies to the portion of residential property above a value of S$1,000,000. For any Australian expat considering becoming a Permanent Resident (PR) in Singapore to purchase property at reduced rates of stamp duty, it’s important to consider the implications for you of this change, as well as the impact this may have to future growth rates of property in the country.

4. Duty on Tobacco set to be lifted

In an effort to discharge the consumption of tobacco products, the Singapore Government will increase the excise duty by 10%, which is effective immediately. The forecasts suggest, and we’ve already started to see, that the price of the average packet of cigarettes in Singapore will rise by approximately $1.00 on average. Whether this is enough to actually discourage smokers is yet to be seen, but needless to say it is a step in the right direction. The impact on the average household Budget of Australian expats in Singapore who smoke may not be terribly high, depending on the level of consumption of course.

5. Hongbao for the Singaporeans

In positive news for Singaporeans, the Budget Surplus that was delivered in 2017 means that they will be receiving a ‘hongbao’ this year, with an amount that will vary depending on their current level of income. While this may ring of K Rudd’s $900 stimulus payment for many Aussie expats, there is certainly a very different motivation behind Singapore’s kind gesture. The amounts that will be paid to Singaporeans will be as follows:

  • For those earning less than $28,000 per year, they will receive $300
  • For those earning between $28,001 and $100,000 per year, they will receive $200
  • For those earning over $100,00 they will receive $100

All of this is thanks to the Budget Surplus of $9.6 billion that Singapore delivered in 2017.

6. No easing of foreign labour policies

For many companies operating in Singapore, it has been difficult to find the right skilled people given the tight foreign labour rules that have been implemented. This is particularly true for those rapidly growing sectors of compliance, cyber-security, analytics and technology. It is unclear as to when these policies may be relaxed, but for those Australian expats owning and operating businesses in Singapore, or those in charge of recruiting top talent for their organisation, it is more of the same for at least the next 12 months.

 

To your financial success!

 

Jarrad Brown is an Australian-trained and qualified Fee-Based Financial Planner with Australian Expatriate Group of Global Financial Consultants Pte Ltd providing specialist financial advice and portfolio management services to Australian professionals in Singapore. Jarrad Brown is an Authorised Representative of Global Financial Consultants Pte Ltd – No: 200305462G | MAS License No: FA100035-3

Australian Expatriate Group is a division of Global Financial Consultants in Singapore providing specialist advice to Australians living abroad.

To learn more about how we may be able to help you, please contact us:

✆         +65 8282 5702
✉        info@australianexpatriategroup.com
☜         http://australianexpatriategroup.com

To discuss how these changes affect you, click here to book a complimentary consultation: http://bit.ly/Book_ApptNow

General Information Only: The information on this site is of a general nature only. It does not take into account your individual financial situation, objectives or needs. You should consider your own financial position and requirements before making a decision.

 

*Please note that Jarrad Brown is not a tax agent or accountant and none of the content outlined here should be taken as personal advice. You should consult your tax agent and financial adviser to review your current personal finances and financial goals to consider whether this strategy is appropriate for you.

Jarrad Brown is the trusted fee-based financial adviser in Singapore working with professional expats in the region. An Australian qualified and experienced Financial Adviser, Jarrad provides specialist advice to Australian expats as well as other nationalities.

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