Tax Relief Singapore: How to Reduce Your Tax Burden in the Lion City

Are you a resident of Singapore looking to reduce your tax burden? If so, you may be eligible for tax relief. Tax relief is a deduction or credit given to taxpayers to reduce the amount of tax they owe. In Singapore, there are several tax relief schemes available to individuals and families.

Understanding tax relief in Singapore can be confusing, but it’s important to take advantage of the relief schemes available to you. By doing so, you can reduce your tax liability and keep more of your hard-earned money. Some of the most common tax relief schemes in Singapore include personal reliefs, earned income relief, and CPF relief.

In this article, we’ll take a closer look at tax relief in Singapore and the specific relief schemes available to individuals and families. We’ll also answer some frequently asked questions about tax relief and provide tips for maximizing your tax savings. So, let’s get started!

Key Takeaways

• Tax relief is a deduction or credit given to taxpayers to reduce the amount of tax they owe.
• There are several tax relief schemes available to individuals and families in Singapore, including personal reliefs, earned income relief, and CPF relief.
• By understanding and taking advantage of tax relief schemes, you can reduce your tax liability and keep more of your hard-earned money.

Understanding Tax Relief in Singapore

If you are a taxpayer in Singapore, you can reduce your tax payable by taking advantage of tax reliefs. Tax reliefs are deductions that reduce your taxable income, thereby lowering your tax bill. In this section, we will look at the types of tax reliefs available in Singapore, the eligibility criteria for taxpayers, and how you can maximise your tax deductions.

Types of Tax Reliefs

There are several types of tax reliefs available to taxpayers in Singapore. These include:

• Personal reliefs: These are deductions that you can claim for yourself or your dependants. They include the Earned Income Relief, the NSman Self-Employed Relief, the CPF Relief, and the Course Fees Relief, among others.
• Business reliefs: These are deductions that you can claim if you are self-employed or a business owner. They include the Rental Expenses, the Business and IPC Donations, and the Productivity and Innovation Credit (PIC) Scheme, among others.
• Other reliefs: These include reliefs for contributions to your Medisave account, Supplementary Retirement Scheme (SRS), and donations to approved institutions and charities.

Eligibility Criteria for Taxpayers

To be eligible for tax reliefs in Singapore, you must be a tax resident in the country. This means that you must have worked or lived in Singapore for at least 183 days in a calendar year. Additionally, you must have fulfilled the qualifying conditions for the reliefs you are claiming.

Maximising Tax Deductions

To maximise your tax deductions, you should keep track of your taxable income and expenses throughout the year. You can also make cash top-ups to your CPF accounts to claim CPF Relief, which can help to reduce your tax payable. If you are an employee, you can also make voluntary CPF contributions to enjoy tax savings.

It is important to note that tax reliefs are capped at $80,000 per year of assessment. Additionally, the personal income tax relief cap was reduced from $80,000 to $75,000 in Budget 2024. To calculate your tax payable, you can use the income tax calculator provided by the Inland Revenue Authority of Singapore (IRAS).

In conclusion, tax relief schemes in Singapore are designed to help taxpayers reduce their tax burden. By understanding the types of tax reliefs available, the eligibility criteria for taxpayers, and how to maximise your tax deductions, you can lower your tax payable and save money.

Specific Relief Schemes for Individuals and Families

If you are a Singapore tax resident and meet the qualifying conditions, you may be eligible for various tax relief schemes that can help reduce your tax burden. In this section, we will look at some of the specific relief schemes available for individuals and families.

Reliefs for Families and Working Parents

The Singapore government recognizes the importance of family and offers several tax reliefs to support families and working parents. For instance, if you have a child who is a Singapore citizen and below the age of 16, you may be eligible for Qualifying Child Relief (QCR) or Handicapped Child Relief (HCR). Additionally, if you are a working mother, you may be eligible for Working Mother’s Child Relief (WMCR).

Support for Retirement and Medical Savings

Saving for retirement and medical expenses is important, and the Singapore government offers tax relief schemes to help individuals and families save for these expenses. For example, you can enjoy tax relief on contributions made to your Central Provident Fund (CPF) account, which is a mandatory savings scheme for Singaporeans and Permanent Residents. You can also enjoy tax relief on contributions made to your Medisave account, which is a medical savings account.

Additional Reliefs for Special Circumstances

If you are in special circumstances, such as caring for a handicapped loved one or a grandparent, you may be eligible for additional tax relief schemes. For example, you can enjoy tax relief on the foreign domestic worker levy if you employ a foreign domestic worker to care for your loved one. You can also enjoy tax relief on the Grandparent Caregiver Relief if you are caring for your grandchild while the child’s parents are working.

Overall, the Singapore government offers a range of tax relief schemes to support families, retirement savings, and special circumstances. By taking advantage of these schemes, you can reduce your chargeable income and enjoy a more progressive tax system.

Frequently Asked Questions

How can I determine if I’m eligible for tax relief in Singapore?

To determine if you are eligible for tax relief in Singapore, you can answer a few simple questions on the IRAS website. Only a tax resident (including non-Singapore Citizens who are in Singapore for more than 183 days in a year) can claim for tax relief. Please make sure you have met the qualifying conditions of the reliefs before making a claim for them.

What are the steps to apply for tax relief in Singapore?

To apply for tax relief in Singapore, you need to file your income tax return and claim the relevant tax reliefs. You can do this online through the IRAS website. Make sure you have all the necessary documents and information before filing your tax return.

In what ways can I reduce my income tax in Singapore?

There are several ways to reduce your income tax in Singapore. You can claim tax reliefs, make voluntary contributions to your CPF account, and donate to approved charities. You can also take advantage of deductions for expenses such as medical expenses, childcare expenses, and rental expenses.

What tax reliefs are available for CPF top-ups?

There are several tax reliefs available for CPF top-ups in Singapore. These include the CPF Retirement Sum Top-Up Relief, the CPF Relief for self-employed persons, and the Supplementary Retirement Scheme (SRS) Relief. Make sure you meet the qualifying conditions before making a claim for these reliefs.

How does making donations affect my tax relief?

Making donations to approved charities can help you reduce your income tax in Singapore. You can claim tax relief on the amount of your donation, subject to certain limits and conditions. Make sure you keep all the necessary documents and receipts to support your claim.

Can I claim tax relief for supporting my parents in Singapore?

Yes, you can claim tax relief for supporting your parents in Singapore. The Parent Relief scheme allows you to claim tax relief for supporting your parents, grandparents, or parents-in-law. Make sure you meet the qualifying conditions before making a claim for this relief.