Learn how Singapore’s Fixed Expense Deduction Ratio (FEDR) can simplify tax reporting for self-employed individuals, sole proprietors, and commission-based earners while maximising allowable deductions.
📌 What is the Fixed Expense Deduction Ratio (FEDR)?
The Fixed Expense Deduction Ratio (FEDR) is an administrative concession by the Inland Revenue Authority of Singapore (IRAS) that allows eligible self-employed individuals to deduct a fixed percentage of their gross income as business expenses, instead of tracking and claiming actual expenses.
This method is designed to simplify tax filing for taxpayers who may have difficulty keeping detailed expense records.
✅ Who Can Use FEDR?
The FEDR is typically available for:
- Self-employed commission agents
- Insurance agents
- Remisier representatives
- Other qualifying commission-based professionals
To use FEDR, you must meet IRAS’s eligibility criteria and the type of income you earn must fall within the scheme’s coverage.
📊 How FEDR Works
Instead of claiming actual expenses, IRAS allows you to deduct a pre-determined percentage of your gross commission or income. This percentage varies by industry and profession.
Example: If your FEDR rate is 25% and your gross income is SGD 100,000:
- Gross Income: SGD 100,000
- Less FEDR Deduction (25%): SGD 25,000
- Net Taxable Income = SGD 75,000
📌 Advantages of Using FEDR
- No need to keep detailed receipts and invoices for every expense
- Faster and simpler tax filing process
- Prevents disallowance of expenses due to poor record keeping
- Transparent and consistent deduction rate
🚫 Disadvantages of FEDR
- You cannot claim actual expenses if they exceed the FEDR percentage
- Not all self-employed individuals qualify
- May result in lower deductions if your actual costs are high
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🧾 How to Apply FEDR in Your Tax Filing
- Check IRAS’s latest FEDR eligibility list for your profession
- Calculate your deduction based on the fixed percentage
- Declare your gross income and FEDR deduction in Form B/B1
- Submit your tax return via e-Filing or paper filing before the deadline
📅 Filing Deadlines for Self-Employed Individuals
- 15 April — Paper filing
- 18 April — e-Filing
Missing these deadlines may result in penalties and interest charges.
💡 Tax Planning Tips for Self-Employed Individuals
- Compare FEDR deductions with actual expenses to decide which benefits you more
- Track large or unusual expenses even if using FEDR — for possible future claims
- Consider CPF contributions for additional tax relief
- Review IRAS updates annually to ensure continued eligibility
🔍 Final Takeaway
The Fixed Expense Deduction Ratio is an excellent tool for eligible self-employed individuals in Singapore to simplify their tax filings. However, always compare it against your actual expenses to ensure you’re maximising your tax savings.
