18 Mar 2024
SOURCE: CPF Board
If you are a tax resident in Singapore with an annual income of over $20,000, you have to pay income tax.
The total tax bill you have to pay is determined by deducting tax reliefs from your total income. This makes it wise to learn more about the different tax relief and rebates to lower your total tax payable.
Your payable tax is based on the income earned in the previous calendar year. This means that the tax you pay in 2024 is based on what you have earned in 2023. This also applies to the types of tax reliefs eligible.
While it is a good idea to maximise your tax relief, take note that a personal income tax relief cap of $80,000 applies each year.
CPF-related tax reliefs
Central Provident Fund (CPF) Relief for Employees
Your monthly CPF contributions help support your housing, healthcare, and retirement needs. Aside from that, your CPF contributions are eligible for tax relief under the Central Provident Fund (CPF) Relief for employees.
Take note that your wages are classified as either Ordinary Wage (monthly salary) or Additional Wage (performance bonus). This classification might also affect your total CPF contribution as there is an Ordinary Wage salary cap of $6,300 a month.
Here’s an example of how one’s CPF relief can look like for the Year of Assessment in 2024:
CPF Relief for the Year of Assessment (YA) 2024 is computed as follows:
*Assuming employee CPF contribution rate is 20%
Central Provident Fund (CPF) cash top-up relief
With the CPF cash top-up relief, you can also actively reduce your tax bill and increase your and your loved ones’ CPF savings in the Special or Retirement account by making a CPF top-up under the CPF retirement sum topping-scheme (RSTU). On top of that, your CPF savings can continue to grow over time with the power of compound interest!
By making a cash top-up under the CPF retirement sum topping-up scheme (RSTU), you can enjoy tax relief of up to $16,000 (a maximum of $8,000 for yourself and a maximum of $8,000 for family members). Do take note that the relief amount is only applicable for top-ups up to the Full Retirement Sum (FRS). Terms and conditions apply.
Visit the cash top-ups and CPF transfers for retirement page to start making a cash top-up to your Special or Retirement Account via GIRO or PayNow.
Tax relief for parents and families
A wide range of tax reliefs is also available for parents and those caring for their families.
Parents
The Qualifying Child Relief (QCR) offers parents $4,000 in tax relief for each qualifying child who is a Singapore citizen and financially dependent on them. The child has to be below 16 years old or engaged in full-time studies such as at a university, college, or other educational institution. This relief can be claimed by both or either parent as long as the total claim amount does not exceed $4,000 per child.
On top of that, both parents receive a Parenthood Tax Rebate (PTR) that provides up to $20,000 per child. The tax rebates can be carried forward to offset their future income tax payable.
As a working mother, you're entitled to additional tax relief via the Working Mother's Child Relief. This relief offers a 15% reduction on the mother's earned income for the first child, 20% for the second child, and 25% for the third child and subsequent children. These percentages accumulate when you claim for multiple children, but the total relief is capped at 100% of the mother's earned income.
Caring for family
If you live with your parents, parents-in-law, grandparents, or grandparents-in-law, you can claim up to $9,000 for each dependent living with you or $5,500 for each dependent not living with you under the Parent Relief. To qualify, dependents must be at least 55 years old and have an annual income not exceeding $4,000.
If more than one individual is maintaining the same dependant and meets the qualifying conditions, the Parent Relief may be shared between the claimants based on an agreed apportionment.
Other forms of tax relief and deduction
NS-Men reliefs
Operationally Ready National Serviceman (NSmen) are entitled to the NSman Relief as a gesture of appreciation for their National Service contributions. This relief, which ranges from $1,500 to $5,000 depending on NS activity and NS appointment, is provided based on the national service carried out in the last work year, which spans from April 1st to March 31st.
Additionally, NSman Wife and NSman Parent Reliefs are awarded to the wives and parents of NSmen, respectively, in recognition of the support they provide to their husbands and sons.
Donations
You can also stand to benefit from tax deductions of up to 2.5 times the amount of your qualifying donation by contributing to the Community Chest or any sanctioned Institution of a Public Character (IPC) before the end of the year.
View the IRAS page on tax donation for the full list of donations that are eligible for tax deduction.
Course fee
Being committed to lifelong learning also helps you to shave off your tax bill. If you've invested in courses to enhance your skills and increase your employability, you might be eligible for tax relief through the Course Fee Tax Relief scheme.
For detailed information on eligible courses and criteria for eligibility, check the IRAS page dedicated to course fee tax relief.
Checking your tax bill for tax relief
If you are enrolled in the “no-filing service”, your tax reliefs from the previous year will be automatically carried over to your tax return for the current year. However, it's still important to review it to update your tax relief claims and include any new reliefs which might be eligible for you.
For those not under the “no-filing service”, you will receive a notification to e-file your taxes. Be sure to take this opportunity to review the tax reliefs that can minimise your tax bill and declare your employment income for the year.
Reduce your tax bills by maximising tax relief
Income tax reliefs such as the CPF Relief For Employees, CPF Cash Top-up Relief, and Course Fees Relief, can help to lower your taxable income.
To ensure you're taking full advantage of these tax reliefs, visit the IRAS tax relief page for the full list of personal reliefs and rebates. Don’t forget to use the handy filter button on the page to learn more about the reliefs that apply to you too!
Information in this article is accurate as at the date of publication.
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