Tax Reliefs in Singapore: 6 Ways to Reduce Your Personal Income Tax
If you live and work in Singapore, there’s a good chance you’ll need to file and pay income tax here. The filing process is simple and straightforward - head to myTax Portal and declare your income, deductions, and tax reliefs. If you’re an employee whose company is participating in the Auto-Inclusion Scheme, you simply need to check the salary information provided by your employer and click submit.
How much income tax you pay depends on your chargeable income, which is based on your total employment income such as annual salary and bonuses. If you are a landlord, you will also get taxed on your rental income. Income such as interest from approved banks or capital gains aren’t taxed in Singapore. To make sure you’re calculating your chargeable income correctly, refer to IRAS’s list of what is taxable and what is not.
Singapore uses progressive rates to tax its tax residents, which simply means that you get taxed more the higher your income is. You can refer to this table to get an idea of how much income tax you need to pay in 2021.
|Chargeable Income||Income Tax Rate||Gross Tax Payable|
In excess of $320,000
Tax reliefs are given by the government to recognise your contributions to Singapore’s most important social objectives, such as starting a family and saving for your own retirement.most important social objectives, such as starting a family and saving for your own retirement. They are deducted from your chargeable assessable income, which means you can end up paying less income tax. Do note that a personal income tax relief cap of $80,000 applies to the total amount of all tax reliefs claimed for each year of assessment.
There’s a few months left until the next tax season, which gives you plenty of time to learn how to make the most of your tax reliefs in Singapore.
Tax Reliefs for Parents
There are many challenges that come with starting a family, but the tax reliefs/rebates available to Singapore tax resident parents make it a little easier to cover their material needs. There are a number of schemes that you might qualify for, so be sure to explore the full list of tax reliefs for married couples and families.
|Tax Reliefs for Parents who are Singapore tax residents|
|Tax Relief||For Whom^||Amount|
|Qualifying Child Relief (QCR)||Mothers and fathers (to be shared based on agreed apportionment)||Maximum $4,000 per child|
|Parenthood Tax Rebate§||Mothers and fathers (to be shared based on agreed apportionment)||$5,000 for the first child
$10,000 for the second child
$20,000 for third and each subsequent child
This is a one-time claim that must be made the year following your child’s birth
|Handicapped Child Relief (HCR)||Mothers and fathers (to be shared based on agreed apportionment)||$7,500 per child|
|Working Mother’s Child Relief (WMCR)#||Working mothers||As a percentage of mother’s earned income:
15% for the first child
20% for the second child
25% for the third and each subsequent child
|Grandparent caregiver relief||Working mothers||$3,000 on only one caregiver|
|Foreign Domestic Worker Levy Relief||Working mothers||2X the amount of levy paid for 1 foreign domestic worker
^ Each relief/rebate has its own qualifying conditions, which must be satisfied for the relief/rebate to be applied.
§ This is a rebate not a relief.
# Note that the total cap for QCR plus WMCR is $50,000 per child.
The government recognises the high cost of elderly care, and encourages Singaporeans to look after their aged parents. That is why Parent Relief lets you claim tax relief if you have supported your parents, as well as your grandparents or parents- and grandparents-in-law in the previous year.
To qualify, your parent needs to be at least 55 years of age and have an annual income of not more than $4,000 (or be physically or mentally disabled, in which case age and income criteria do not apply), and if your parent was living in a separate household you must have incurred at least $2,000 in supporting him or her that year.
|Handicapped Parent Relief||Parent Relief
(Dependant ≥ 55 Years Old)
|Parent lives with you||$14,000 per dependant||$9,000 per dependant|
|Parent does not live with you||$10,000 per dependant||$5,500 per dependant|
Note that you can only claim for 2 dependent parents maximum, and that your spouse cannot make a tax relief claim for supporting the dependent parents. Parent Relief may also be shared.
Tax Reliefs for Course Fees
If you’ve been upskilling or reskilling, there’s a good chance you can claim tax reliefs for them.
Fees for any course, seminar or conference resulting in an approved academic, professional or vocational qualification, or that is relevant to your current work, qualifies for tax relief. You can also claim for any exam, test or registration fees incurred. Tax relief for course fees is capped at $5,500 a year.
You may not, however, make claims for holiday jobs or internships, even if they did contribute to your graduation from a course of study. You also can’t enjoy tax relief for courses related to a hobby, leisure or general skills like basic website building.
Check the IRAS website to find out if your course qualifies for relief.
Tax Reliefs for Donations
If you’re passionate about animal welfare, environmental conservation, or serving the community, tax reliefs are another great reason to donate to your favourite cause. Donations to organisations classified as Institutions of a Public Character (IPC) or to the Singapore government for causes that benefit the local community qualify for a tax deduction of 250%.
Let’s say you donate $1,000 to the Cat Welfare Society, and your income for the year is $36,000.
That makes you eligible for a tax deduction of $2,500 ($1,000 x 250%). Your assessable income for the year will be $33,500 ($36,000 - $2,500). Tax deductions for qualifying donations will be automatically reflected in your tax assessment, based on the information from IPC, and requires no action on your part.
You do not need to declare the donation amount in your income tax return. Tax deductions for qualifying donations will be automatically reflected in your tax assessments based on the information from the IPC (such as the donor's name, date and amount of donation on the tax deduction receipt). Note that IRAS will no longer accept claims for tax deduction based on donation receipts.
Besides cash, individual donors can also get tax reliefs for these donations:
|Tax Reliefs for Donations|
|Item Donated||To Whom||Value of Donation|
|Cash||Approved IPCs or the Singapore government||250% of the donated amount (until 31 December 2021)|
|Public shares listed on the Singapore Exchange (SGX) or units in unit trusts traded in Singapore||Approved IPCs||The IPC will determine the value of the donated shares or units. It will be based on the price of the same type of shares or units in the open market, at the last transaction of the shares or units on the date they were donated.|
|Artefacts||National Heritage Board (NHB) or museums with Approved Museum Status||The museum or NHB will assess the worth of the donated artefact|
|Sculptures or works of art||National Heritage Board (NHB)||The NHB will assess value of the donated sculpture or work of art|
|Land or buildings||Approved IPCs||The donors or the approved IPC should meet with a property valuer to get a market value appraisal of the donated property. The amount of the donation will be based on the property’s market value endorsed by the IRAS.
The cost of property valuation is not tax deductible.
Life Insurance Relief
There are many benefits to getting a life insurance policy. Besides making sure your family can meet their day-to-day expenses in case you pass away unexpectedly, you might be able to claim life insurance relief too.
How to qualify for life insurance relief
To qualify for this relief, your compulsory employee CPF contribution or voluntary self-employed Medisave/ voluntary CPF contributions and Medisave contributions must be less than $5,000.
For a salaried employees (that make CPF contributions) under the age of 35, that means you won’t qualify for this tax relief if you earn an annual salary of $25,000 a year or more.
Additionally, the premiums paid should be for your own life insurance policy. Premiums made for policies under your spouse’s or parents’ name will not qualify. Premiums for ElderShield, CareShield Life or Integrated Shield Plans also do not qualify for life insurance relief.
Amount of relief
If you qualify for life insurance relief, you can claim the lower of the following tax relief amounts:
- $5,000 minus your CPF contribution; or
- Up to 7% of the insured value of you or your wife’s life, or the premium amounts paid
To take advantage of this type of tax relief, buy a life insurance policy such as Income’s iTerm or Star Secure plans easily online. Such policies protect you and your family in the event of death, terminal illness or total and permanent disability (TPD before the age of 70).
Or, if you're not sure which life insurance plan is best for your needs, connect with one of our advisors for personalised advice.
Tax Reliefs for Retirement Savings
Tax reliefs are another great reason to start saving for retirement, if you haven’t done so yet. Topping up your CPF and Supplementary Retirement Scheme (SRS) accounts is one of the simplest things you can do to lower your chargeable income. Here are the tax reliefs that you might qualify for.
|Tax Reliefs for CPF and SRS Cash Top Ups|
|Tax Relief^||Relief Amount|
|CPF Cash Top Up Relief (own SA or RA)||Up to $7,000|
|CPF Cash Top Up Relief (family member’s SA or RA)||Up to $7,000|
|SRS Tax Relief||Up to $15,300 for Singapore Citizens and PRs.
Up to $35,700 for Foreigners.
^ Each relief/rebate has its own qualifying conditions, which must be satisfied for the relief/rebate to be applied.
CPF cash top-up reliefs
If you’re a Singaporean or Permanent Resident who’s made voluntary CPF cash top-ups in the preceding year, under the CPF Retirement Sum Topping-Up Scheme, to your own Special Account (if you’re below 55) or Retirement Account (if you’re 55 and above), you’re eligible for a CPF cash top-up relief of up to $7,000.
You can also claim up to an additional $7,000 in tax relief for topping up the CPF accounts, under the CPF Retirement Sum Topping-Up Scheme, of your parents, in-laws, grandparents or grandparents-in-law. If your spouse or sibling fell on hard times last year, you can get tax relief by topping up their accounts, provided their annual income was $4,000 or less in the previous year.
Note that the maximum tax relief you can claim under this category is $14,000—namely, $7,000 for topping up your own account and up to $7,000 for topping up a family member’s. CPF cash top-up relief is automatically granted to those who are eligible, based on the records sent to IRAS by the CPF Board.
SRS tax relief
Did you know that every dollar you contribute to your SRS account reduces your taxable income by a dollar? Of course, there’s a limit to how much you can contribute to your SRS (and therefore, the tax relief you can get). For Singaporeans and PRs, this amount is $15,300.
You can also consider investing your SRS savings into a savings plan or retirement plan to keep up with inflation. A retirement plan you might consider is Income’s Gro Retire Flex. This plan gives you flexibility in terms of when to start receiving cash payouts as well as how long you want to receive your payouts at your chosen age. At the same time, you’ll be protected against terminal illness, accidental death and disability.
It pays to know your tax reliefs
Paying taxes make Singapore a comfortable place to live in, but it’s not the only way to contribute to the country. By doing things like topping up your CPF, joining the SRS scheme, donating to an approved IPC, or getting a life insurance plan, you can earn a significant amount of tax savings. Just remember to do these things before the end of the year to qualify for the tax reliefs.
This article is meant purely for informational purposes and should not be relied upon as financial advice. The precise terms, conditions and exclusions of any Income products mentioned are specified in their respective policy contracts. For customised advice to suit your specific needs, consult an Income insurance advisor.
This advertisement has not been reviewed by the Monetary Authority of Singapore.