“Mr Phang Yu Hon, 47, is a tuition millionaire and shows his income tax records readily to prove how much he earns and what he pays in taxes each year. It took just two years for him to double his income from about half a million dollars in 2009 to $1 million in 2011.
All from teaching physics, and mostly to students from top schools such as Raffles Institution, Hwa Chong Institution and National Junior College – many already doing well, but keen to make sure they continue scoring As.
Mr Phang runs physics.com.sg, and is its only tutor. He says the secret to his success lies in running group sessions for 30 or more students at a time, and doing it all himself. That, and a reputation that has kept students coming even as his fees rose to between $380 and $720 for four two-hour lessons.
Mr Phang was candid in describing his income to The Sunday Times, showing his tax records. He recalled the year his income crossed $1 million and he had to pay taxes of $186,000. “My heart ached when I had to pay my tax bills. I can buy a Mercedes-Benz (with that sum),” he said. But he said he was happy to pay more tax because he was earning a lot more.”
We came across this news article from The Straits Times recently. This highlights the importance of income tax planning if you do not want to end up like him, paying a fortune for his income tax. Most importantly, it is not true that you need to pay more taxes just because you are earning more. In this case, the millionaire tutor has paid a whopping 18.6 percent from his declared income to the tax authority.
As many of us know, many millionaires and profitable companies pay very little taxes or any at all. They know how to leverage on the tax deductions, reliefs and structures that is permitted by the tax provisions to minimise their tax liability. Obviously, behind all this schemes are their tax consultants!
So, it is essential to plan ahead if you want to pay minimal tax. Try to engage a tax expert which can advise you on your tax matters. Trust us, the money will be well spent.