While it may not seem a priority at first glance, financial planning is a prudent consideration for a freelancer. Without subsidised or sponsored healthcare benefits, and the responsibility for your own business assets and liabilities, insurance is a form of risk management that may help protect against income loss.
While you might not receive a regular income or have CPF contributions from employers, income declaration and MediSave contributions are still important for freelancers. This is because such records of your regular income declaration will be required if you are planning to take out bank loans e.g. to buy a house, so if this might be something you are considering for the future, it will help to get started early.
This section will outline the value of insurance, and explain why both income declaration and MediSave contributions can be useful investments for your future plans and expenses.
Do I need to declare my income and pay taxes?
If you are doing paid freelance work full-time or part-time, you are said to be a self-employed person receiving income from trade, business, vocation or profession. This is true whether you are self-employed without a registered entity or a sole proprietor or a partner with a registered entity.
So, yes, you will need to declare this income to the Inland Revenue Authority of Singapore (IRAS). IRAS allows deductions (subject to qualifying conditions) such as for business expenses, and only your self-employed net income is subjected to tax.
This record of your regular income declaration will be required if you are planning to take out bank loans e.g. to buy a house or get a credit card.
For detailed information on how to file your taxes, click here.
Do I need to contribute to MediSave?
CPF Board refers to your self-employed net income as Net Trade Income (NTI). If you earn an annual NTI of more than $6,000(current as of 2019) from your freelance work, you will need to contribute to MediSave.
As a self-employed person or freelancer, you will not receive MediSave contribution from your hirers, therefore, it is even more critical that you contribute regularly to MediSave. This is to ensure you have put aside savings to cater for your healthcare needs, especially when you get older and have stopped working.
For more information on MediSave, click here.
Do I need to contribute to other CPF accounts?
As a self-employed person or freelancer, you will not receive CPF contribution from your hirers. Conversely, it is not compulsory for you to contribute monthly to your CPF Ordinary and Special/Retirement Accounts other than MediSave contribution mentioned above. However, it is prudent to consider making voluntary contributions beyond MediSave to build a nest egg for your retirement.
For more information, click here.