If you are good at making a lot of money, from trade or employment, this is one area that you should pay attention to. It will be a double win for you if you earn a lot and is able to save a lot on taxes. Ask someone who has just spent more than $20K to decouple their matrimonial home to buy a second property. Why will anyone pay so much to decouple? The reason is simple. The couple will save even more when they avoid paying Additional Buyer Stamp Duty on their “second” property.
Before I suggest on ways to save taxes and to err on the side of caution, kindly go to IRAS website to know what’s taxable. https://www.iras.gov.sg/irashome/Individuals/Locals/Working-Out-Your-Taxes/What-is-Taxable--What-is-Not/
Top up CPF account – You can top up to a max of $14,000 CPF SA in a year. ($7K for self and $7K for family members). Since you are also going to use CPF MA to pay for your hospitalization insurance, you can also do CPF OA top up.
Top up SRS account – This is the most overlooked and simple-to-execute way of saving your personal income tax. Open a SRS account with any of the 3 local banks via internet banking instantly. Deposit up to $15,300 every year (or $35,700 if you are a foreigner) and you reduce the amount in your taxable income. Then you need to invest the sum. If you leave it lying in your SRS account, it will be “eaten away” by inflation at 0.05% interest. I used to tell my clients that 0.05% is 50c interest on $1,000 for a year. The only “person” that is happy that you don’t do anything about it is your bank’s deposit department managers. Don’t let your SRS rot. Call us for varies ways to grow this sum. A regular investment of $15,300 a year can grow a big and comfortable retirement bed.
Working Mother’s Child and Qualifying Child Relief – If you are parent or working Mother, you have more than these 2 reliefs to claim from. Visit IRAS website to know the extensive list. https://www.iras.gov.sg/irashome/Individuals/Locals/Working-Out-Your-Taxes/Deductions-for-Individuals--Reliefs--Expenses--Donations-/
Course Fee Relief – Many are going back to school to take up new courses. You can claim the amount that you spent to better yourself. Check with your school for eligibility.
Claim for expenses – In the course of earning your income, you may incur certain expenses. For sales roles or self-employed personals, you can claim for entertainment and travel expenses. However, not that you cannot claim for expenses relating to your personal car like petrol, parking or loan repayments. If you have rented out a property, you can also claim for expenses incurred like agent fees, MCST cost, renovation and maintenance, and replacement of white goods and furniture. Point to note is that you need to keep all the receipts that you have spent so that you can explain to IRAS when they call you for kopi. (meaning your claims are doubtful and IRAS is calling you to bring down your receipts to check on you)
Donations – If you have more than enough for yourself, why not share? Do note that only approved institutions are recognized. IRAS will reduce your tax payable you when you donate cash or assets (Unit Trusts, Artifacts, Artworks, Land, or Buildings).
With proper planning, it is possible to pay less on taxes. Point 2 above is one that people do not save up for it and at the end of the year, the individual will tell himself that he don’t have enough and procrastinate to do it next year. The story just repeats every year. Call us now and we will help you kick start this saving journey for your SRS.
Finally, tax savings have to be done legally. Section 96 of the Singapore Income Tax Act penalizes tax evader 300% of the tax undercharged, and/or $10,000 fine and/or 3 years imprisonment if convicted. Section 96A of the Act reinforces the seriousness of tax evasion especially on the falsification of documents by increasing the penalty for serious tax evasion to 400% of the tax undercharged with a fine of up to $50,000 and/or imprisonment of up to 5 years if convicted. Interestingly, IRAS even maintains a library of tax crimes in their website to provide us with enough bedtime stories since 2009. How nice of IRAS!
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