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Monday, February 9, 2015

Reduce Singapore Income Tax in Summary

I have been asked by many and like to share this out with the help of a friend, Hwee Bing Koh, a financial adviser from fin-exis.

For all individual employed or self employed updated as of Jan 2015 2017.

Some of the ways you can reduce your assessed income tax.  Some are automatic credited due to it is based on what is announced during Singapore Financial report while the rest are ways you can do it yourself.
https://www.iras.gov.sg/irashome/Individuals/Locals/Working-Out-Your-Taxes/Deductions-for-Individuals--Reliefs--Expenses--Donations-/

You can also download a spreadsheet from here to do your own calculation.

Here are some of the ways which would you can help yourself to reduce tax:

For Self Employed Only
- Perform a voluntary CPF contribution to a maximum of $31,450
Source:
http://mycpf.cpf.gov.sg/CPF/News/News-Release/NR_23Nov2002.htm
https://www.iras.gov.sg/irasHome/page.aspx?id=12312

Course fee relief
- Up to $5,500 from an approved institute or qualification including exam fee incurred by yourself not by company.  You can refer https://www.iras.gov.sg/IRASHome/Individuals/Locals/Working-Out-Your-Taxes/Deductions-for-Individuals/Course-Fees-Relief/

Cash CPF Top up for loved ones up to $7,000 or your own RA or SA
- Spouse not earning an annual income exceeding $4,000 or parents, grandparents, disabled siblings or disabled spouse has no income cap.
- Top up your own RA or SA up to $7,000 not exceeding the minimum sum stated.
Source: http://mycpf.cpf.gov.sg/CPF/my-Cpf/reach-55/Reach55-2.htm)
- Top up your loved ones/siblings SA (below 55 annual income not exceeding $4,00 a year), or parents RA (above 55) up to $7,000
Source:
https://www.iras.gov.sg/IRASHome/Individuals/Locals/Working-Out-Your-Taxes/Deductions-for-Individuals/Compulsory-and-Voluntary-Medisave-Contributions/

Cash Top up to self
- Maximum of $7,000 allowed
- Only to Special or Retirement Account
Source:
https://www.iras.gov.sg/IRASHome/Individuals/Locals/Working-Out-Your-Taxes/Deductions-for-Individuals/CPF-Cash-Top-up-Relief/

Volunteer Contribution to CPF
- Contribute to your Medisave Account (inclusive of Mandatory Contribution) as of 2015 (assuming you have not hit your maximum allowed contribution) based on CPF Annual Limit or Medisave Contribution Limit whichever is lower.
Source:
https://www.iras.gov.sg/IRASHome/Individuals/Locals/Working-Out-Your-Taxes/Deductions-for-Individuals/Compulsory-and-Voluntary-Medisave-Contributions/
https://www.cpf.gov.sg/Members/schemes/schemes/other-matters/cpf-contribution-for-employees
https://www.cpf.gov.sg/Members/FAQ/schemes/healthcare/medisave#faq16126

Life Insurance Relief
- Insurance should be insured of yourself.
- You total annual contribution to CPF is less than $5,000
- Insurance should be insured of yourself. Have your insurance policies details (policy number and premium amount etc) when you do your filing.
Source: https://www.iras.gov.sg/IRASHome/Individuals/Locals/Working-Out-Your-Taxes/Deductions-for-Individuals/Life-Insurance-Relief/
 
Parents Relief (as of 2014)
- up to $9,000 per parent or $14,000 for handicapped parent
- Parent must be staying with you if not staying with you $5,500 or handicapped parents $10,000
- parent is not working and no others is claiming the relief
Source:
https://www.iras.gov.sg/IRASHome/Individuals/Locals/Working-Out-Your-Taxes/Deductions-for-Individuals/Parent-Relief-/-Handicapped-Parent-Relief/
The relief amount may also be found at http://www.singaporebudget.gov.sg/budget_2014/Families1.aspx (New higher parent relief for YA2015)

Less expense
- keep your receipts for amount paid by you for work in terms of public transport and mobile and record of your transaction which a planner can be downloaded from the link below (typically applicable for those getting an allowance.  Need to keep the receipt for audit purpose.)
Source: https://www.iras.gov.sg/IRASHome/Individuals/Locals/Working-Out-Your-Taxes/Deductions-for-Individuals/Deductions-on-Employment-Expenses/

Open a Supplementary Retirement Scheme account from local banks with top up a maximum of 12,750 or 29,750 for Local and foreigner respectively.
Source:
https://www.iras.gov.sg/IRASHome/Individuals/Locals/Working-Out-Your-Taxes/Deductions-for-Individuals/Supplementary-Retirement-scheme--SRS--Relief/

Update: From 2016 onwards, the contribution allowed for Singaporean and PR is $15,300.
https://www.iras.gov.sg/irashome/Individuals/Locals/Working-Out-Your-Taxes/Special-tax-schemes/Supplementary-Retirement-Scheme--SRS-/SRS-contributions/


Donations to registered bodies
- 2.5 times (3 times from 2015) the amount donated less your assessed taxable income
Source:
https://www.iras.gov.sg/IRASHome/Individuals/Locals/Working-Out-Your-Taxes/Deductions-for-Individuals/Donations/
- Giving made simple by going to SG Gives, https://www.sggives.org/Public/5/Content_fordonors.aspx
- By providing your NRIC number to the Institute of Public Character (IPC), and you will enjoy the convenience of tax deductions automatically reflected on your tax assessment.  You can find out if a charity organization is under IPC here.

Lastly there is also Earned Income Relief
This is automatically included in your tax relief however the normal range is for indivudal below 55 year old is $1,000.  Occasionally this can be higher depending from Financial Announcement made.
Source:
https://www.iras.gov.sg/IRASHome/Individuals/Locals/Working-Out-Your-Taxes/Deductions-for-Individuals/Earned-Income-Relief/

There is also NSman Relief for guys serving reservist which you can read more about it here.  This is also an automatic relief nothing to do on your part.

Lastly, there is maximum income relief allowed per person per year up to $80,000 for FY2018.


Update 16th Oct 2017
Update link to reflect latest.

Update 12th Nov 2015
IRAS site have been updated and links above are updated to reflect the new site.

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