6 tax savings tips for working adults in Singapore.

It’s hard to see a large portion of your hard-earned money being whisked away in taxes. Fortunately, the Singapore government offers easy and legitimate ways to deflate your chargeable income. Effective use of these tax breaks can help you reach your personal finance goals, such as wealth accumulation, early retirement, and investing in self.

Let’s take a look at some simple steps that could help reduce the amount of cash you hand over to the taxman next year.

In this article, learn about:

• Tax savings through building your retirement fund.
  
  
• Have access to a significant amount of tax relief as a parent.
  
  
• Tax relief through donations, topping-up your Medisave, supporting your parent/grandparents and taking up a course.
  
  
• The maximum tax relief possible to obtain in a year is capped at $80,000.

Take care of your ageing parents

A recent study showed that 9 out 10 individuals aged between 25 & 34 wish to financially support their ageing parents. To further encourage this, the government has also introduced the ‘Parent Relief’ scheme that offers tax deduction to Singaporeans that care for their elderly parents. The benefits of the Parent Relief scheme are as follows:

There is a total cap for QCR/HCR plus WMCR at $50,000 per child. The total tax relief that working mothers can claim under WCMR is capped at 100 percent of the income earned in the last financial year.

If you are a working mother whose parent/parent-in-law, grandparent/grandparent-in-law is looking after any of your children aged 12 years and below, you are eligible for a Grandparent Caregiver Relief (GCR) of $3,000.

Remember that the Parenthood Tax Rebate is not a tax deduction; it is a direct refund on your income tax.

PTR can be claimed one time for each child in the year following their birth.

Maximize your retirement savings through CPF and SRS

The easiest way to enjoy deductions on your taxable income is to top-off all your retirement accounts. You can get a dollar-for-dollar deduction on your taxable income for all the money you tuck away in your CPF and SRS (Supplementary Retirement Scheme) accounts.

Topping-up your CPF account:

CPF top-ups on your Special Account allow you equal deductions on your chargeable income, up to a maximum limit of $7,000 per year. You can enjoy further deductions of $7,000 by topping-up the CPF SA/RA accounts of your family members (parents, in-laws, siblings, spouse, etc.) as well.

Invest in the Supplementary Retirement Scheme: 

You can think of SRS as a voluntary CPF. It is a savings program that allows you to tuck away funds for your retirement and grow your money over time. Any contributions made to the Supplementary Retirement Scheme can help you unlock equal deduction on your chargeable income. Once you turn 62, you can start making withdrawals from your SRS fund. The best part is that 50% of these withdrawal amounts will be exempt from taxation.

Giving to charities can get you tax relief

Any cash donations made to an approved Institution of a Public Character (IPC) or the Singapore Government will warrant tax deductions of 2.5 times the donation amount. Therefore, if you have donated $1000 last year, your tax assessable income for the year is reduced by S$2500.

The tax filing season may be months away, but you know what they say about the early bird! So start calculating and planning today and ensure smooth savings on your tax bill. Lastly, remember the maximum tax relief you can claim in a year is capped at $80,000 - so plan investments, savings, and other tax-saving measures accordingly 

We hope this has been helpful, good luck, and happy savings.