Filing your taxes can be cumbersome but if you know the different ways in which you can get tax relief, it’ll ease half the burden. Besides, planning and tax-saving ahead is important to managing your finances. There are multiple areas in which you can claim tax relief and having a clear idea will help make it easier for you. Here are 14 ways to lower your tax bill.
Taxable Income Relief
An income tax relief of between $1,000 and $8,000 is available for those with a taxable income from employment, a pension, trade or business. Those who are between 55-59 years can claim up to $6,000 while those who are over 60 can claim $8,000. Exemption amounts can be between $4,000 and $12,000 for those with physical or mental disability.
Related Read: Filing your Singapore company tax returns options
Tax Relief for Filial Duties
If your spouse earns less than $4,000 you can claim spouse relief up to $2,000. If the spouse has disability, a relief amount of $5,500 is available. Once spouse relief is applied, children cannot claim parent relief.
For an unmarried child below 16 years of age, with an annual income of less than $4,000, a qualifying child relief fund can be applied. If the child is disabled, the exemption limit is $7,500. As long as your child – even those above 16 years – is studying full-time at an educational institution such as secondary school, polytechnic, junior college or university, you can apply for some tax relief. To encourage working mothers, a tax relief starting at 15% of the mother’s income is applicable which can be increased by 5% for each new child. It is known as working mother’s child relief and the upper limit is 25% for three or more children.
Singaporeans who support parents, grandparents, in-laws can apply for parent relief provided the dependent is 55yrs of age or have a disability. Depending on where the dependant stays, tax exemption can vary from $5,500 to $9,000. If the dependant has a disability, minimum and maximum exemption limits can vary between $10,000 and $14,000.
A claim of up to $3,000 is allowed under Grandparent Caregiver Relief if working mothers engage the help of grandparents, parents or in-laws for the care of a child who is not more than 12 years of age and is a Singapore resident. The caregiver should be a resident as well and should not be employed or running a business.
There is the handicapped brother/sister relief applicable for the support of a sister/brother or sister/brother-in law who has some disability. The maximum exemption allowed is $5,500 for each sibling.
Tax Relief from Central Provident Fund (CPF) Accounts
Central Provident Fund (CPF) is for employees who are Singapore citizens or permanent residents and helps save for retirement. The maximum CPF top-up relief you can make every year is S$14,000.
Parenthood Tax Rebate (PTR)
Parenthood Tax Rebate (PTR) allows for a maximum tax relief of $5,000 and $10,000 for the first and second child, born after 2008. A maximum of $20,000 can be claimed for the third child and any child born thereafter.
Life Insurance Relief
You are eligible for Life Insurance Relief if you’ve made a total compulsory employee CPF contribution or self-employed Medisave/Voluntary CPF contribution or both of less than $5,000 total in one year. Also, 7% of your own or your spouse’s insured value or the insurance premium paid, whichever is lower, can also be claimed as relief.
Course Fees Relief
Those who want to upgrade their skills or learn new skills to increase employability chances. The scheme can be availed by those who are currently or were previously employed on a full-time basis. A maximum claim amount of $5,500 is available under this scheme. If the assessable income is less than or equal to $22,000, then a deferred claim can be made within 2 years of taking the course.
Supplementary Retirement Scheme
A Singapore citizen or resident can make a maximum contribution of $15,300 per year, to encourage savings and make tax savings. For foreigners, contributions are capped at $35,700 per year.
Singapore citizens or permanent residents can make voluntary contributions to their MediSave Account and claim tax relief. You are qualified for tax relief if – you made contributions the previous year and if you earned income in the year you made the VC-MA contribution. The relief amount is determined by IRAS regulations.
Another way to get tax relief is to make charitable donations. Cash, computer, land/building, and public shares donations to approved Institutions of a Public Character (IPCs), works-of-art donations to the National Heritage Board (NHB) and artefact donations to the organisations with the Approved Museum Status are tax-deductible. You can check whether an organisation falls under IPC at the ‘Charity Portal’ online. There is a 250% tax deduction for donations made from January 1, 2016, till December 31st 2018.
Claim Exemptions from Stock Options Gains
If you have Employee Share Options (ESOPs) Or Employee Share Ownership (ESOWs) plans on your income, you are eligible for tax savings under the Qualified Employee Equity-based Remuneration Scheme. You can defer tax payments on stock gains for up to 5 years. Under Equity Remuneration Incentive Scheme you can enjoy full exemption on the first $2,000 of gains from your employee share options. 25% of the remaining amount of gains from the above plans will also be considered exempt.
Tax Relief for Rental Property
You can claim tax deductions on rental property as well as costs incurred during a rental period. The types of expenses are housing loans, property tax, fire insurance, repairs, utility expenses among others. These costs have to be incurred exclusively in the process of producing your rental income.
Expenses that you incurred while carrying out official duties can be claimed under qualifying expenses if not reimbursed by employer. All the receipts should be saved and claimed under allowable expenses. IRAS states, apart from entertainment expenses for clients, transport expenses, subscription amounts paid to professional bodies or societies and even religious dues such as building funds can be claimed under this scheme. The expenses should not be private or capital in nature.
Related Read: Taxation in Singapore
Foreign Maid Levy Relief
Foreign Maid Levy Relief will add to your reliefs to lower the taxable income. This scheme is allowed to encourage women to stay in the workforce. It can be applied for if you live with your spouse and have hired a foreign domestic worker or if your husband is not a tax resident in Singapore. You can also apply for this if you are separated, divorced or widowed and have children living with you. Twice the total amount paid for levy can be claimed by the wife and it is not applicable to husbands even if they paid the levy.
Freelancers or Self-Employed Workers
Your income is taxable even if you are self-employed or a sole proprietor, freelancer, hawker or private tutor or associate lecturer. So tax reliefs can be obtained from expenses such as transport, stationery and postage fees etc. Advertisements for your services, repairs, and maintenance for assets used for business, bad debts incurred during accounting year are all eligible for tax relief.
Singapore has one of the lowest income tax rates in the world. Still, many schemes are provided by the Government for tax relief and claiming them can ease the burden of tax and help you save quite a bit. More details can be found on the IRAS website. A little research will go a long way in helping you chart out a tax strategy.