Ah, tax season – that dreaded time of the year for many professionals like yourself, and looking for ways to maximise taxes reliefs and rebates to optimise your financial standing for the year. Here are some of the leverages you can use to your advantage:
Personal Tax Rebate
Announced in Budget 2024, the 50% Personal Tax rebate offers an unprecedented opportunity to reduce your tax liability. The rebate is calculated based on 50% of the tax payable, subject to a maximum cap of $200.
Qualifying Criteria:
- Must be Singapore tax residents.
- The amount of tax payable after double taxation relief and other credits.
- The amount of tax payable before offsetting the Parenthood Tax Rebate.
Parenthood Tax Rebate
If you are a Singapore tax residents who is married, divorced, or widowed, the Parenthood Tax Rebate (PTR) can be utilised for tax rebate as per the following:
- For 1st child, eligible PTR = $5,000
For 2nd child, eligible PTR = $10,000 - For subsequent child, eligible PTR = $20,000/child
Qualifying Criteria:
- Must be Singapore tax residents who are married, divorced, or widowed in the relevant year.
Course Fees Relief
You can apply for deductions on expenses incurred on approved courses. Eligible individuals must have attended courses, seminars, or conferences for the purpose of gaining academic, professional, or vocational qualifications. You can claim actual course fees incurred, subject to a maximum of $5,500 per year regardless of the number of courses, seminars or conferences you have attended.
Qualifying Criteria:
- Any course of study, seminar or conference for the purpose of gaining an approved academic, professional or vocational qualification.
- Any course, seminar or conference that is relevant to your current employment, trade, business, profession or vocation.
- Any course, seminar or conference between 1 Jan 2021 to 31 Dec 2022 that is relevant to your new employment, trade, business, profession or vocation in 2023.
CPF Cash Top-Up Relief
To qualify for this, you must be Singapore Citizens or Permanent Residents who have made cash top-ups under the CPF Retirement Sum Topping-Up Scheme. Automatic eligibility is determined based on records provided by the CPF Board. The maximum relief per assessment year is $16,000 (a cap of $8,000 for self and $8,000 for family members).
Qualifying Criteria:
- Be a Singapore Citizen/Permanent Resident.
- Have made cash top-ups in 2023 under the CPF Retirement Sum Topping-Up Scheme.
Working Mother’s Child Relief
WMCR recognizes the contributions of working mothers and supports their efforts in providing for their families. The amount of WMCR that you may claim for each child is based on the child order. This is then matched to a percentage of your earned income. WMCR percentages are added together if you claim for more than one child and the total is capped at 100% of the mother’s earned income.
Qualifying Criteria:
- You are a working mother who is married, divorced or widowed.
- You have taxable earned income from employment or through pensions, trade or business, or through a profession or vocation. (Your taxable earned income is your total earned income less allowable expenses)
- You have maintained a child who is a Singapore Citizen as at 31 Dec 2023 and has satisfied all conditions under the Qualifying Child Relief (QCR)/Handicapped Child Relief (HCR).
Grandparent Caregiver Relief
For many families, grandparents play a pivotal role in providing care and support to young children. Recognizing the invaluable contributions of grandparents in childcare, GCR offers tax relief for eligible working mothers, ensuring financial support for intergenerational caregiving.
By easing the financial burden associated with childcare expenses, GCR enables working mothers to pursue their careers while ensuring that their children receive the care and attention they need. As Singapore continues to promote family-friendly policies, GCR stands as a testament to the government’s commitment to supporting families and fostering social cohesion across generations.
Qualifying Criteria:
- You are a working mother who is married, divorced or widowed.
- In 2023, your parent/ grandparent/ parent-in-law/grandparent-in-law (including that of ex-spouse) was residing and living in Singapore or looking after any of your children who is a Singapore citizen aged 12 and below in 2023; or unmarried handicapped children who is a Singapore Citizen in 2023 and not earning annual income exceeding $4,000 from any trade, business, profession, vocation and/ or employment in 2023.
- 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).
Life Insurance Relief
Safeguarding one’s financial future is paramount in today’s uncertain world. With Life Insurance Relief, taxpayers can enjoy tax benefits on insurance premiums paid for their own life insurance policies. By providing tax relief on insurance premiums, this initiative encourages individuals to take proactive steps towards protecting themselves and their loved ones against unforeseen circumstances. Whether it’s providing financial security for loved ones, planning for retirement, or leaving a legacy for future generations, Life Insurance Relief empowers individuals to take control of their financial destiny and secure a brighter future for themselves and their families.
Qualifying Criteria:
- You paid insurance premiums on your own life insurance policy.
- The insurance company must have an office or branch in Singapore if your policies are taken on or after 10 August 1973.
- The total CPF contribution was less than $5,000 in the year.
Tax Relief on SRS Contributions
As a Singaporean, planning for retirement is crucial, and the Supplementary Retirement Scheme (SRS) presents a powerful tool to help you secure your financial future. When you contribute to your SRS account, you’re not only setting aside funds for retirement but also enjoying tax benefits. Contributions to your SRS account are eligible for tax relief, reducing your taxable income and consequently, your tax payable for the year.
Qualifying Criteria:
- SRS contributions for each calendar year must typically be made before the end of that year to be eligible for tax relief in the following year’s tax assessment.
Now, to maximize the benefits of SRS contributions, consider utilizing your SRS savings to invest. By investing through your SRS account, you can potentially earn additional returns on your savings while still enjoying the tax benefits. Singaporeans have a range of investment options available through SRS, including guaranteed percentage endowment plans or investment-based instruments. Guaranteed Percentage Endowment Plans that offer steady returns typically ranging from 3.5% to 5% per annum, providing stability and predictability.
Explore options such as unit trusts, stocks, bonds, and ETFs for potentially higher returns exceeding 10% per annum over the long term.
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By strategically utilizing your SRS savings to invest in these options, you not only maximize your tax benefits but also potentially grow your retirement nest egg more effectively. It’s essential to assess your risk tolerance, investment goals, and time horizon before selecting the most suitable investment strategy for your SRS funds. As always, consulting with a financial advisor can provide personalized guidance tailored to your specific circumstances and goals, ensuring you make informed decisions that align with your long-term financial objectives.
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