You must satisfy the following criteria.
Criteria 1: You must first qualify for the NOR Scheme; Criteria 2: You must be exercising a Singapore employment and must spend at least 90 days outside of Singapore for business reasons; and Criteria 3: Your total Singapore employment income must be at least $160,000
Firstly, you need to satisfy the 3 qualifying conditions before you are eligible for time apportionment of Singapore employment income. Secondly, you must compute the income tax rate on apportioned employment income:
If the rate is more than 10%, your apportioned employment income is added to your other sources of income and your final income tax is computed accordingly.
In YA2005, Mr A earns $400,00 per annum as the regional production manager of XYZ Pte Ltd. He travels out of Singapore for business reasons for 100 days in a year. Mr A has satisfied the 3 qualifying conditions for the time apportionment incentive.
Total Singapore employment income = $400,000Number of days outside of Singapore = 100Income tax on total employment income = $64,600
Income tax on apportioned employment income (assuming YA2003 income tax rate) = $41,378
As income tax rate on apportioned employment income is more than 10%, the employment income that is finally subjected to income tax is $290,411.
In YA2006, Mr A's employment income remains the same. Due to expansion of XYZ's business in the region, Mr A has to travel more. He travels 200 days in the year. Mr A has satisfied the 3 qualifying conditions for the time apportionment incentive.
Total Singapore employment income = $400,000 Number of days outside of Singapore = 200
Income tax on apportioned employment income (assuming YA2003 income tax rate) = $20,556
As income tax rate on apportioned employment income is less than 10%, Mr A's final employment income that is subjected to income tax must be restated such that it corresponds to 10% of his employment income before time apportionment.
Therefore, Mr A's employment income = $283,158
10% on total Singapore employment income of $400,000 = $40,000Tax payable on first $160,000 = $16,600
Y x 19% + 16,600 = 40,000
Solving for Y = $123,158
Therefore, $160,000 + $123,158 = $283,158