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8 Ways to Pay Less Income Tax in Singapore

Boost your savings with these eight legitimate – and commonly overlooked – ways to cut down your bills.

 

Don’t forget to claim your employment expenses

So you bought your client lunch but your boss won’t reimburse you for it. If you incurred such expenses while carrying out your job – just make sure the expenses are not capital or private in nature – you should keep your receipts and claim them under your allowable expenses. According to the Inland Revenue Authority of Singapore (Iras), apart from entertainment expenses for your clients, you can also claim for transport expenses on public transport, subscriptions paid to professional bodies or societies, and even religious dues such as for a mosque-building fund.

 

Milk your Course Fees Relief

Singapore is big on productivity and encourages continual training and learning. So, if you’ve signed up for courses to upgrade your skills, Iras will give you props for enhancing your employability by letting you claim Course Fees Relief. This benefit is only for those currently, or previously, working and who are attending long- or short-term courses that lead to an approved academic or professional qualification. It doesn’t apply to those who are studying for a diploma or university degree and have not worked previously. So, if you are studying for your masters, which easily costs anything from $15,000 to more than $30,000, consider spreading out your course fees payment over different years, so that you can claim the maximum $5,500 a year. If you took several courses, you can claim for all of them, capped at a maximum of $5,500 a year.

 

Top up your CPF accounts

Many people already know about the CPF cash top-up relief, an incentive to encourage Singaporean citizens and Permanent Residents to top up their Retirement or Special Account with cash. You also enjoy the same relief if you top up your family members’ accounts. For most people who are employees in a company, you already get monthly contributions to your CPF accounts. Thus, you also automatically enjoy the CPF contribution relief. Any CPF contribution you make will receive tax relief, which helps to lower your net taxable income. As a self-employed person, you can voluntarily contribute to your Ordinary Account. This comes in handy if you’re servicing a housing loan. If you’re currently paying for your property with cash, consider topping up your Ordinary Account and using that to pay for your property instead. That way, you’ll get to enjoy the CPF cash top-up relief!

 

Claim tax relief for being filial

If you’ve supported dependants by spending or giving an allowance of at least $2,000 in 2014, you can enjoy this tax relief as a pat on your back for your filial piety. The dependant has to be living in Singapore in 2014, aged 55 years or above (this rule is waived if the dependant is physically or mentally disabled) and he or she made no more than $4,000 in 2014. Do note: If you have several siblings all supporting your parent, only one sibling can make the claim or you can split the Parent Relief. If your parent is living with you, you can claim $9,000 for each dependant ($14,000 if your parent is handicapped). If your parent is not, you can still claim $5,500 for each dependant ($10,000 for a handicapped parent).

 

Claim Grandparent Caregiver Relief

This is a goodie just for working mums. If you’ve roped in a parent or grandparent to help care for your children, don’t forget to file your tax claim! As long as your parent, grandparent, parent-in-law or grandparent-in-law was living in Singapore in 2014, did not work or carry out any trade, business, profession or vocation and had looked after any of your kids who are Singaporeans and 12 years old or younger last year, you can claim a relief of $3,000 on one of them.

 

Claim Qualifying Child Relief – even if your child has earned some money.

As long as your child – even those above 16 years – is studying full-time at an educational institution such as a secondary school, polytechnic, junior college or university at any time in 2014, you can enjoy some tax relief. Can you still claim tax relief if your child works part-time for pocket money? You can, if your child’s income did not exceed $4,000 in 2014. What if your child did well in school and received scholarships, bursaries or other allowances? Don’t worry, these are not considered as part of your child’s income and will not affect the $4,000 cap.

 

Claim Foreign Maid Levy Relief

You’re eligible as long as you are married and live with your husband, and you or your spouse employed a foreign domestic worker. Or, you’re married but your husband is not a tax resident in Singapore. It also applies to you if you are separated from your husband, divorced or widowed and have children who live with you; as long as you can claim child relief on your kids, you can claim the Foreign Maid Levy Relief. It doesn’t matter if it’s your hubby or you who paid the levy. For households with at least one kid under 12, you’d have paid $120 a month or $1,440 for a year. You can claim double that, or $2,880. And if you’re paying the full levy of $265 a month, you can claim a whopping $6,360 in relief!

 

Freelancers and self-employed folks, don’t forget to take advantage of government schemes

If you’re self-employed or a sole proprietor, your income is wholly taxable. But since freelancers don’t usually contribute to CPF accounts monthly (unless you make voluntary contributions), most can’t claim CPF contribution reliefs against their taxable income. So don’t miss out on other opportunities to claim tax reliefs. Claim all allowable business expenses, including public transport costs, stationary and postage, laptop repairs and bad debts. If you run your own business and have employed at least three local employees, don’t forget to check out the Productivity and Innovation Credit (PIC) scheme. And if you bought or leased Information Technology (IT) and automation equipment – such as computers, printers and software – or hired a web designer to build you a website for your business, you can claim 400% tax deduction on up to $400,000 spending a year. Visit http://picgrant.com.sg for more information.

As it stands, Singapore’s income tax rates are already among the lowest in the world. Your first $20,000 of chargeable income is tax-free, and the maximum that top-tier earners ($320,000 and above) pay is 20% of their annual income – which is what an average earner pays in, say, Australia. Still, most of us would rather pay less tax, of course. So don’t get lazy about claiming those tax reliefs – check with Iras (www.iras.gov.sg), your accountant or do some research on your own to see if you qualify. You could be saving yourself a pretty penny!

 

By Stella Thng, Simply Her, April 2015

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