Tax Relief in Singapore: Ways to Reduce Your Income Tax
CPF
By Beansprout • 30 Mar 2024
Why trust Beansprout? We’re licensed by the Monetary Authority of Singapore (MAS).
With the deadline for personal income tax submission looming, we find out how we can use tax relief to lower our income tax payable.
What happened?
Nothing can be said to be certain, except death, taxes, and sweating buckets when you leave your house.
So it wasn't a surprise that the Beansprout community started discussing about ways to reduce our income tax recently.
After all, the deadline for your personal income tax submission in Singapore will be 18 April 2024 for e-filing.
Many wanted to find out how we can get to the maximum of $80,000 in tax relief.
Some of the suggestions offered include Matched Retirement Savings Scheme, working mother child relief, CPF top up and Supplementary Retirement Scheme (SRS).
If you are like our younger colleague filing taxes for the first time and find these ways to enjoy tax relief foreign, read on to find out more.
Personal Income Tax in Singapore
For the Year of Assessment (YA) 2024, the assessment is done for the income that you have earned in the preceding calendar year.
If this is your first time filing for taxes, this means that the assessment will be on the income you have earned from 1 January 2023 to 31 December 2023.
Not sure if you need to file an income tax return?
You can use the filing checker provided by IRAS or simply access myTax Portal on your Singpass app.
What counts as taxable income?
According to IRAS,” income earned in or derived from Singapore is chargeable to income tax, while overseas income received in Singapore is not taxable, except in certain circumstances”.
When it comes to employment income, you should note that this includes any benefits-in-kind which will be computed by your employer.
Generally speaking, this includes any salary, bonus, director’s fee, gains from the exercise of stock options, or retrenchment benefits.
As a quick primer, here are some examples of what is taxable and what is not.
Taxable Income | Non-Taxable Income |
| Employment Income | Windfalls, e.g. lottery prize |
| Variable bonus | Capital gains from stocks |
| Director’s fee | Pensions |
| Rental income | CPF Life payouts |
| Self-employed income | |
| Source: IRAS | |
How much taxes do I need to pay?
Income taxes are calculated based on which income bracket you fall into.
Singapore employs a progressive income tax rate model for resident taxpayers—the higher your income, the higher your tax rate.
The income tax rate begins at 0% and is capped at 24% for chargeable income above $1,000,000.
To make things easier, IRAS has provided a Personal Tax Calculator for your convenience.
You may also refer to the table below for the resident tax rates from YA2024 onwards.
Chargeable Income | Income Tax Rate (%) | Gross Tax Payable ($) |
First $20,000 Next $10,000 | 0 2 | 0 200 |
First $30,000 Next $10,000 | - 3.50 | 200 350 |
First $40,000 Next $40,000 | - 7 | 550 2,800 |
First $80,000 Next $40,000 | - 11.5 | 3,350 4,600 |
First $120,000 Next $40,000 | - 15 | 7,950 6,000 |
First $160,000 Next $40,000 | - 18 | 13,950 7,200 |
First $200,000 Next $40,000 | - 19 | 21,150 7,600 |
First $240,000 Next $40,000 | - 19.5 | 28,750 7,800 |
First $280,000 Next $40,000 | - 20 | 36,550 8,000 |
First $320,000 Next $180,000 | - 22 | 44,550 39,600 |
First $500,000 Next $500,000 | - 23 | 84,150 115,000 |
First $1,000,000 In excess of $1,000,000 | - 24 | 199,150 |
| Source: IRAS | ||
Tax reliefs, rebates and deductions: What you need to know
Tax reliefs and rebates
Tax reliefs and rebates are granted for tax paying citizens who support certain government initiatives that help “to promote specific and social economic objectives”.
This brings us to an important question: what are the tax reliefs and how can I qualify for them?
Well, IRAS has a full breakdown of qualifying reliefs, expenses, and donations.
The tax reliefs and rebates have been categorised into:
- Tax reliefs
- Tax savings for married couples and families
- Personal tax rebate
- Parenthood Tax Rebate (PTR)
But to save you time, we will highlight some of the tax reliefs available.
It is important to remember that there is a maximum cap to the amount of tax relief that you can claim—the ceiling for YA 2024 is currently set at $80,000.
General tax reliefs | Tax relief amount |
| NSman Relief (Self, Wife, and Parent) | Self: $1,500 to $5,000 Wife: $750 Parent With NSman child: $750 |
| Course Fees Relief | Up to $5,500 for approved qualification |
| Life Insurance Relief | Difference between $5,000 and your CPF contribution OR Up to 7% of the insured value of your own/your wife's life or the amount of insurance premiums paid (whichever is lower) |
| Parent Relief | If taxpayer resides with dependant: $9,000 per dependant If taxpayer does not reside with dependant: $5,500 per dependant |
| Handicapped Parent Relief | If taxpayer resides with dependant: $14,000 per dependant If taxpayer does not resides with dependant: $10,000 per dependant |
| Earned Income Relief | Below 55 years old: $1,000 55 to 59 years old: $6,000 60 years old and above: $8,000 |
| Earned Income Relief (for handicapped persons) | Below 55 years old: $4,000 55 to 59 years old: $10,000 60 years old and above: $12,000 |
Foreign Domestic Worker Levy (FDWL) Relief (for women only) | Normal: $7,200 or $10,800 Concessionary: $1,440 |
| Source: IRAS | |
Next, there are also tax reliefs that taxpayers can qualify for by voluntarily making contributions.
CPF/SRS tax reliefs available | Tax relief amount |
(For special/retirement/medisave accounts; includes you and your family member) | Up to $16,000 ($8,000 for yourself, $8,000 for family members) |
| CPF Relief for Self-Employed | Tax relief for your compulsory Medisave and voluntary CPF contributions will be capped at whichever is lower among the following:
|
| Supplementary Retirement Scheme (SRS) Relief | Singapore Citizens/Permanent Residents: actual contribution OR $15,300 (whichever is lower) Foreigners: actual contribution OR $35,700 (whichever is lower) |
| Source: IRAS | |
Lastly, there are also other tax reliefs that are available to both male and female taxpayers.
Other reliefs for married or separated (divorced/widowed) taxpayers | |
| Available to both male and female taxpayers | Available only to female taxpayers |
| Qualifying/ Handicapped Child Relief | Foreign Domestic Worker Levy (FDWL) Relief |
| Spouse/ Handicapped Spouse Relief | Grandparent Caregiver Relief (GCR) |
| Parenthood Tax Rebate (PTR) | Working Mother's Child Relief (WMCR) |
| Source: IRAS | |
CPF Cash Top-Up
Topping up your CPF SA account offers a fuss-free way to boost your retirement savings by allowing you to earn a relatively high return in a low-risk way.
It also offers you a tax relief of up to $16,000 if you perform a cash top-up to both your SA and your loved one’s SA/RA.
However, we would make sure that we have sufficient funds set aside for emergencies and unexpected life circumstances, as funds from your CPF SA account are practically non-withdrawable till at least the age of 55 years old.
Learn more about what we would consider before making a CPF cash top-up here.
Supplementary Retirement Scheme (SRS)
The Supplementary Retirement Scheme, or SRS, is a voluntary savings scheme that encourages you to save for retirement while reducing taxable income.
The voluntary contributions made to your SRS account are eligible for tax relief, and the funds within your SRS account can be invested in a wide range of financial instruments such as stocks, unit trusts, and exchange-traded funds (ETFs).
Learn more about what we would consider before contributing to the SRS here.
Tax deductions
In addition, it is also good to know about the various expenses that may be claimed as tax deductions.
Tax deductions are applicable to any allowable expenses you incurred or any approved donations that you made in the preceding year.
We will not go into too much detail for the examples of allowable expenses but the IRAS webpage does provide more details on the deductions.
Some examples of eligible deductions include:
- Deductions on rental expenses
- Deductions on donations to approved Institutions of Public Character (IPCs)
- Deductions for employment expenses
- Deductions for self-employed individuals
What would Beansprout do?
If you haven’t already done so, you should definitely figure out how much income tax you need to pay.
For first timers, you can simply access the IRAS shortcut inside your Singpass app.
Once you have figured out how much you need to pay, you can begin to look at which tax reliefs you qualify for.
Remember that the claim for these expenses have to be done in the preceding year (ie January to December 2023).
If you do not qualify for certain tax reliefs this round, you may wish to make plans for the next year of assessment.
For a start, we would explore using the Supplementary Retirement Scheme (SRS) to save for retirement while reducing taxable income.
Use our SRS Tax Savings Calculator to find out how much you can save on taxes by topping up your SRS account.
After topping up our SRS account, we would explore investment options for our SRS funds to earn a potentially higher return.
Also, we can also consider a CPF cash top up to earn a relatively high return while enjoying tax relief.
Do share with the Beansprout community if you have other tips to reduce our income tax bill. Happy tax filing!
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