GIRO Income tax: Can you make ad-hoc payments without double deductions?

GIRO saves your cash flow, but earning miles on ad-hoc payments is hard to resist. The good news is you can do both!

If you have an income tax bill to settle with IRAS, I certainly hope you’re on a GIRO payment arrangement.

There’s no reason not to, really. IRAS is offering the opportunity to break up your lump sum payment into twelve interest-free instalments, freeing up cash for necessities, investments, or a better camera that records surreptitious trysts between amorous politicians with a resolution higher than nine pixels.

But at the same time, there’s a lot of attractive promotions for earning miles on ad-hoc (aka lump sum) income tax payments, whether it’s CardUp’s 1.75% admin fee, or Citi PayAll’s upsized 2.2 mpd earn rate.

Income Tax Payment Promos
💳 CardUp Income Tax Promo
 MLTAX23MCTAX23
Applicable ToVisaMastercard
Admin Fee2.6%
 1.75% 
2.6%
 1.99% 
Min. SpendN/AN/A
CapN/AN/A
Schedule By31 Aug 2331 Aug 23
Due Date By31 Mar 248 Sep 23
Payment TypeOne-off or recurringOne-off only
💳 Citi PayAll Promo
Applicable To
Admin Fee2.2%
Earn Rate2.2 mpd
Min. SpendS$8,000
CapS$120,000
Schedule By20 Aug 2023
Due Date By24 Aug 2023
Payment TypeAny Citi PayAll payment

This then begs the question:

If I make an ad-hoc income tax payment while on a GIRO plan, will I suffer a double deduction?

After all, the whole purpose of GIRO is to free up cashflow. It rather takes the gloss off the promos if you end up paying twice!

Fortunately, the answer is no. There won’t be any double deduction, provided you time your payments right.

How do IRAS GIRO arrangements work?

Before we talk about making ad-hoc payments, it’s important to first understand how an IRAS GIRO arrangement works.

Income tax is normally payable one month from the date of your tax bill (aka Notice of Assessment/NOA).

However, if you opt for a GIRO payment arrangement, IRAS will spread your liability over 12 months, in interest-free instalments paid from May of this year to April of the following year.

❓ Why are my instalments unequal?

GIRO deductions for personal income tax commence from May, but IRAS needs time to calculate your income tax liability.

Therefore, a Provisional Instalment Plan (PIP) will be prepared based on your previous year’s taxes (basically the previous year’s instalment amount). This will be deducted each month until your finalised tax bill is ready, after which the monthly instalments will be revised based on the actual tax payable. Excess payments, if any, will be automatically refunded when the final tax bill is ready.

IRAS provides the following example:

With regards to IRAS GIRO deductions:

  • Deductions take place on the 6th of each month
  • If the deduction is unsuccessful, a second attempt will be made on the 20th
  • If the date of deduction falls on a weekend or Public Holiday, the deduction will be made on the next working day
  • If you cancel your GIRO arrangement, the remaining balance automatically becomes due immediately

Making ad-hoc payments while on GIRO

Note: We’re going to be referring to a lot of numbers in this section, so to make things easier to track I’m going to use  green  to highlight payments, and  red  to highlight amounts outstanding.

Let’s imagine you have a tax liability of S$12,000., and opt for a GIRO payment arrangement. IRAS will split your bill such that S$1,000 is paid each month.

Without any ad-hoc payments, this is what the schedule should look like (for the ease of illustration, I’ve assumed that instalments under the PIP are also S$1,000).

MonthGIROBalance
Total Tax Due= S$12,000
May 2023S$1,000S$11,000
Jun 20223S$1,000S$10,000
Jul 2023S$1,000S$9,000
Aug 2023S$1,000S$8,000
Sep 2023S$1,000S$7,000
Oct 2023S$1,000S$6,000
Nov 2023S$1,000S$5,000
Dec 2023S$1,000S$4,000
Jan 2024S$1,000S$3,000
Feb 2024S$1,000S$2,000
Mar 2024S$1,000S$1,000
Apr 2024S$1,000

Now let’s imagine that in the middle of June 2023, you decide to make an ad-hoc payment of S$400. After taking into account the May 2023 (S$1,000) and June 2023 (S$1,000) instalments that have already passed, the amount owed to IRAS now stands at S$9,600 (S$12,000 – S$1,000 – S$1,000 – S$400).

According to the payment schedule, the remaining balance after July’s GIRO payment is supposed to be S$9,000. Therefore, the GIRO deduction for July 2023 will be automatically adjusted to S$600, to ensure the payment schedule is on track. 

MonthGIROBalance
Total Tax Due= S$12,000
May 2023S$1,000S$11,000
Jun 20223S$1,000S$10,000
Ad-hoc Payment: S$400
S$9,600
Jul 2023S$600S$9,000
Aug 2023S$1,000S$8,000
Sep 2023S$1,000S$7,000
Oct 2023S$1,000S$6,000
Nov 2023S$1,000S$5,000
Dec 2023S$1,000S$4,000
Jan 2024S$1,000S$3,000
Feb 2024S$1,000S$2,000
Mar 2024S$1,000S$1,000
Apr 2024S$1,000

Then suppose the following month, you’re feeling generous. You want to do your bit for nation building, especially since parliament is down six members (and counting).

So you decide to make an ad-hoc payment of S$3,400, which reduces the balance owed to IRAS to S$5,600. When August 2023’s deduction comes round, IRAS looks at the amount you should owe as of this date, per the original payment schedule: S$8,000

Your actual balance is less than this, so IRAS basically says “you’re good,” and does not trigger a GIRO deduction for August 2023. The same repeats in September 2023 (when your scheduled balance should be S$7,000) and October 2023 (when your scheduled balance should be S$6,000).

But come November 2023, when your scheduled balance should be S$5,000, IRAS will trigger a S$600 payment to put you back on schedule.

MonthGIROBalance
Total Tax Due= S$12,000
May 2023S$1,000S$11,000
Jun 20223S$1,000S$10,000
Ad-hoc Payment: S$400S$9,600
Jul 2023S$600S$9,000
Ad-hoc Payment: S$3,400S$5,600
Aug 2023S$5,600
Sep 2023S$5,600
Oct 2023S$5,600
Nov 2023S$600S$5,000
Dec 2023S$1,000S$4,000
Jan 2024S$1,000S$3,000
Feb 2024S$1,000S$2,000
Mar 2024S$1,000S$1,000
Apr 2024S$1,000

So the basic logic is:

  • If ad-hoc payment < upcoming instalment, IRAS will deduct the difference in the upcoming instalment
  • If ad-hoc payment = upcoming instalment, IRAS will skip the upcoming instalment 
  • If ad-hoc payment > upcoming instalment, IRAS will skip the upcoming instalment, and skip/adjust future instalments based on the original payment schedule

Watch the dates!

In the previous section, I’ve assumed that your ad-hoc payment reaches IRAS in time to avoid a double deduction.

A double deduction happens when your ad-hoc payment reaches after IRAS has sent GIRO debiting instructions to your bank. 

For example, let’s say you make an ad-hoc payment of S$1,000 on 3 December 2023. However, this is too close to the GIRO deduction date, and IRAS has no idea you did this. It therefore bases its 6 December 2023 deduction instructions on the assumption that it needs to reduce your current S$5,000 balance outstanding to S$4,000, and triggers a S$1,000 deduction from your bank account nonetheless.

MonthGIROBalance
Total Tax Due= S$12,000
May 2023S$1,000S$11,000
Jun 20223S$1,000S$10,000
Ad-hoc Payment: S$400S$9,600
Jul 2023S$600S$9,000
Ad-hoc Payment: S$3,400S$5,600
Aug 2023S$5,600
Sep 2023S$5,600
Oct 2023S$5,600
Nov 2023S$600S$5,000
Ad-hoc Payment: S$1,000 (misses GIRO cut-off)S$4,000
Dec 2023S$1,000S$3,000
Jan 2024S$3,000
Feb 2024S$1,000S$2,000
Mar 2024S$1,000S$1,000
Apr 2024S$1,000

Therefore, your outstanding balance with IRAS is now S$3,000.

Assuming no further ad-hoc payments, IRAS will skip the January 2024 deduction and only resume debiting from February 2024. 

To avoid this from happening, make sure any ad-hoc payments you send reach IRAS before they send debiting instructions to your bank! However, we don’t know for sure when that happens. Some say it’s the last day of the month prior, but I can’t find any official source to confirm.

So my advice is to make any ad-hoc payments at least one week before the end of the month. For what it’s worth, CardUp builds some safeguards into its system by not allowing any income tax payments to be made during the last six days and first five days of each month.

Conclusion

Setting up a GIRO arrangement for personal income tax allows you to take advantage of interest-free instalments and avoid the pain of a lump sum payment. Even better, you can still make ad-hoc income tax payments to take advantage of cheap miles promotions from platforms like CardUp and Citi PayAll. 

Just make sure these ad-hoc payments reach IRAS in the last week of the month prior. Cut it too close, and you may end up being hit with a double deduction (which doesn’t mean you lose money as such, just that you’re paying off your tax bill faster than you’re obligated to).

Aaron Wong
Aaron Wong
Aaron founded The Milelion to help people travel better for less and impress chiobu. He was 50% successful.

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edward990

this was EXACTLY the question i had. thanks for clarifying it!

Bcc

I’m not sure if this is right . For ad-hoc payment > upcoming instalment , next month iras continued with the same monthly instalment . The reduction of taxes only comes in the final months . Ie if u paid 3 months in advance the reduction only applied to final 3 months

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