As we are approaching year end, you may want to do some income tax planning, so that you can save some taxes come next year's filing season.
You may claim expenses, donations and tax reliefs as deductions to reduce your tax liabilities for the Year of Assessment ("YA") 2015. In Singapore, your total income less deductions will be subject to tax at progressive rates ranging from 0% to 20%.
Employment Expenses
If you are an employee, employment expenses incurred in earning your employment income, for example, travelling expenses incurred on public transport, entertainment expenses incurred in entertaining clients, subscriptions paid to professional bodies or society in year 2014.
Donations
To encourage greater charitable giving in Singapore as the economy recovered, the Minister for Finance announced in Budget 2011 that tax deduction of 2.5 times will be extended for another 5 years to donations made from 1 January 2011 to 31 December 2015. Donations to name Institutions of a Public Character (IPC), IPC facilities, events or programmes are eligible. However if the donations or gifts are for a "foreign charitable purpose", they are not tax deductible even though they are made to an approved Institution of a Public Character (IPC). For example, donations made to some overseas relief funds managed by an approved IPC are not tax deductible.
Course fees relief
You can claim actual course fees incurred up to a maximum of $5,500 in year 2014 and should only include registration or enrolment fees, examination fees, tuition fees and aptitude test fees (for computer courses). The course or seminar / conference should be related to your current employment, trade, business, profession or vocation. If you started a new employment, trade, business, profession or vocation related to any course, seminar / conference that you have completed in the prior 2 years, you are able to claim this relief as well.
CPF cash top-up relief
The relief is automatically given to you if your employer has made cash top-ups to your own Special Accounts or Retirement Accounts in year 2014. Additional relief will be automatically given to you for cash top-ups made by you to your family member's (Parents or Parents-in-law, Grandparents or Grandparents-in-law, Spouse, Siblings) Special Account or Retirement Account. To qualify for the tax relief, your spouse and siblings must not have an annual income exceeding $4,000 in the year preceding the year of top-up.
CPF relief : For employees only
You may claim relief on compulsory employee CPF contributions (not exceeding the Ordinary Wage Ceiling and Additional Wage Ceiling) and voluntary contributions to your Medisave Account in the year 2014.
Earned income relief
IRAS will automatically grant this relief when processing your tax return. You do not need to claim this.
Handicapped brother / sister relief
You can claim this relief if you have supported your physically or mentally handicapped siblings or siblings-in-law who lived in Singapore. To qualify for the relief, your sibling or sibling-in-law must have lived with you in the same household or you must have incurred $2,000 or more in supporting him in the year 2014. You cannot claim this relief if someone else has claimed other reliefs on the same sibling. For YA 2014 and before, $3,500 for each handicapped sibling or sibling-in-law. From YA 2015 onwards, this will be increased to $5,500.
Life insurance relief
Life insurance relief is given on annual insurance premiums paid in year 2014 on the life assurance policies bought on your life or the life of your wife. You may claim if your total compulsory employee CPF contribution or self-employed Medisave/Voluntary CPF contribution or both is less than $5,000. If you are a married female, you can only claim on your own life assurance policies. You can claim the lower of the difference between $5,000 and your CPF contribution or up to 7% of the insured value of your own/your wife's life or the amount of insurance premiums paid, whichever is lower.
NSman (self/parent) relief
NSman self relief
$3,000 for those who performed NS activities in the year 2014 or $1,500 for those who did not. If you and your son are both NSmen, you will eligible for either the NSman self relief or the NSman parent relief, whichever is higher.
NSman wife relief - $750
NSman parent relief - $750 is the maximum relief regardless of the number of children who are NSmen.
Parent / Handicapped Parent Relief (for maintenance of parents, grandparents & great-grandparents including in-laws)
The dependent must be living in Singapore in the year 2014, either in your household or if in a separate household, you must incur $2,000 or more supporting him/her. The dependent is 55 years of age or above in the year 2014 and does not have an annual income exceeding $4,000 in the year 2014. If not, he/she must be physically or mentally disabled.
If you have claimed Parent Relief on both your parents, you will not be able to claim the relief on your parents-in-law. You can still claim the full amount of this relief even if the dependent passed away in the year 2014.
If you are a working mother who is married, divorced or widowed, you can claim Parent / Handicapped Parent Relief and Grandparent Caregiver Relief on the same dependent, provided that you meet the qualifying conditions.
From YA 2015, if you have supported the same parent or handicapped parent with other people, all of you can share this relief based on an agreed apportionment. If at least one of you stays with the dependent, the amount of the parent relief to be shared is $9,000 or $14,000 respectively. The claimants must agree on the basis of apportionment. Otherwise, the Comptroller of Income Tax would apportion the relief equally among all claimants.
Type of relief Staying with Not staying with
dependent dependent
Parent relief $9,000 per $5,500 per
dependent dependent
Handicapped parent $14,000 per $10,000 per
relief dependent dependent
Supplementary Retirement Scheme (SRS)
You are entitled to SRS tax relief in the Year of Assessment following the year of contribution provided you are a tax resident. The maximum SRS contribution for a Singaporean/Singapore permanent resident and foreigner are $12,750 and $29,750 respectively. This will be allowed automatically based on information provided by the SRS operator.
SRS is a voluntary scheme to encourage individuals to save for retirement, over and above their CPF savings. The SRS offers attractive tax benefits. Contributions to SRS are eligible for tax relief. Investment returns will also be tax-free before withdrawal and only 50% of the withdrawals from SRS are taxable at retirement.
You can open an SRS account at the participating branches of any of the three SRS operators:
1. DBS Group Holdings Ltd
2. Overseas-Chinese Banking Corporation (OCBC) Ltd
3. United Overseas Bank (UOB) Ltd
So, to claim for tax relief next year, do make the contributions before the end of this year to qualify. The banks are offering perks to encourage tax payers to open SRS accounts with them by offering cash and vouchers. You can find the latest SRS promotions here.
Additional Reliefs/Rebates available to married/divorced/widowed taxpayers
For both Male and Female Taxpayers
Qualifying / handicapped child relief (QCR/HCR)
You can claim relief if you are maintaining an unmarried child who is a legitimate child/step-child/legally adopted child who is below 16 years old or studying full-time at any university, college or other educational institution and does not earn an annual income exceeding $4,000 in the year 2014. Scholarships, bursaries and similar allowances are not considered your child's income OR is mentally or physically handicapped.
| From YA 2010 to YA 2014 | From YA 2015 | ||
|---|---|---|---|
| QCR | HCR | QCR | HCR |
| $4,000 per child | $5,500 per child | $4,000 per child | $7,500 per child |
| QCR/HCR + WMCR is capped at $50,000 per child# | QCR/HCR + WMCR is capped at $50,000 per child# | ||
Spouse/handicapped spouse relief
You may claim this relief if your spouse was living with you or supported by you AND does not have an annual income exceeding $4,000 in the year 2014 OR is mentally or physically handicapped. If you are legally separated from your spouse and are making maintenance payments under a Court Order or Deed of Separation, you may also claim this relief.
Parenthood tax rebate
You may claim Parenthood Tax Rebate if you are a married, divorced or widowed Singapore tax resident in the relevant year* and the qualifying child is a legitimate child, illegitimate child or an adopted child.
* This refers to the year of birth (for a legitimate child), year of marriage (for an illegitimate child) or year of adoption (for an adopted child) where applicable.
You may claim the relief in Year of Assessment immediately following the relevant year defined above. Any unutilised amount will be automatically carried forward and used to offset your income tax payable. Hence, it is not necessary to submit a fresh claim for subsequent years.
From YA 2009 onwards, the following parenthood tax rebate may be claimed for each qualifying child.
Child order PTR PTR
(YA2008 and before) (From YA 2009 onwards)
1st $0 $5,000
2nd $10,000 $10,000
3rd $20,000 $20,000
4th $20,000 $20,000
5th and beyond $0 $20,000 per child
This relief may be shared with your spouse based on the basis of apportionment agreed by both of you.
For Female Taxpayers only
Foreign maid levy relief
You can claim this relief if you or your spouse have employed a foreign domestic worker and you are married and lived with your husband or married and your husband is not a tax resident in Singapore or separated from your husband, divorced or widowed and had children who lived with you and on whom you could claim child reliefs.
You can claim twice the total foreign domestic worker levy paid in the previous year, on one foreign domestic worker This is regardless of whether you or your husband has paid the levy.
Grandparent caregiver relief
You can claim this relief if you are a working mother who is married, divorced or widowed. Your parent, grandparent, parent-in-law or grandparent-in-law (including that of ex-spouse) is living in Singapore in the year 2014; looking after any of your children who is a citizen of Singapore and is 12 years old or younger in the year; and not working or carrying on any trade, business, profession, vocation in the year. No one else has claimed GCR on the same caregiver. The caregiver may be the subject of relief claims, other than GCR (e.g. Parent Relief, Spouse Relief).
Working mother's child relief
You can claim WMCR in the Year of Assessment 2015 if you meet all the following conditions in the year 2014. You are a working mother who is married, divorced or widowed and have earned income. (Earned income = Taxable earned income from employment, pension, trade, business, profession or vocation less allowable expenses) You have a child who is Singapore citizen as at 31 Dec 2013* and have satisfied all conditions under Qualifying Child Relief (QCR) or Handicapped Child Relief (HCR). You can claim WMCR on the same child even if you and / or your husband / ex-husband has already claimed Qualifying Child Relief (QCR) or Handicapped Child Relief (HCR).
After you have made a claim in your tax return, IRAS will automatically compute the amount of WMCR that you can claim, based on your eligibility, when IRAS process your tax return. The amount of WMCR that you can claim for each child is based on the child order and the corresponding percentage of your earned income.
| Child order |
WMCR Amount
|
|---|---|
| 1st |
15% of mother's earned income
|
| 2nd |
20% of mother's earned income
|
| 3rd |
25% of mother's earned income
|
| 4th |
25% of mother's earned income
|
| 5th and beyond |
25% of mother's earned income
|
| Maximum claim allowable* |
|
Final Step
Once you use the tax calculator to estimate your chargeable income and tax payable, you can then try to see if it is possible for you to achieve more tax savings by moving down to the next lower tier of chargeable income by, say contributing to your SRS account / making more donations to your favourite charity or simply by allowing the higher income earners in the family to claim for parent relief, for example.
As an illustrative example, we can look at YA 2014 tiered tax rates. If you are a tax resident in Singapore, the rates of tax chargeable are as follows:
Chargeable
Income |
Rate
|
Gross Tax
Payable
| |
$
|
(%)
|
$
| |
On the first
|
20,000
|
0
|
0
|
On the next
|
10,000
|
2.0
|
200
|
On the first
|
30,000
|
200
| |
On the next
|
10,000
|
3.5
|
350
|
On the first
|
40,000
|
550
| |
On the next
|
40,000
|
7.0
|
2,800
|
On the first
|
80,000
|
3,350
| |
On the next
|
40,000
|
11.5
|
4,600
|
On the first
|
120,000
|
7,950
| |
On the next
|
40,000
|
15
|
6,000
|
On the first
|
160,000
|
13,950
| |
On the next
|
40,000
|
17
|
6,800
|
On the first
|
200,000
|
20,750
| |
On the next
|
120,000
|
18
|
21,600
|
On the first
|
320,000
|
42,350
| |
Above
|
320,000
|
20
|
For a tax resident with chargeable income of $95,000 (assuming no parenthood tax rebate), is able to reduce his chargeable income to $80,000 by contributing $12,750 (max for Singapore tax residents) and donating $900 to approved charities and at the same time, achieve tax savings of $1,725 (11.5%*$15,000).
Of course, you can try out different possibilities unique to your personal circumstances. Please do let us know if you have anything to contribute regarding this topic. Hope you find this post useful!
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