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Singapore Tax Filing: How to reduce Your Personal income tax bill?

Last modified: November 11, 2020
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Singapore tax fillingThe arrival of a new year signifies that tax season is just a couple of months away. In Singapore jurisdiction, you are required to file your personal tax within the deadline of 15 April (paper filing) and 18 April (e-filing) of every calender year. This is the perfect time to gear up and make a plan for Singapore tax filing. There is no doubt that you would like to pay tax as little as possible. For that, you would have to make a smart plan while adhering to the compliance recommended by IRAS (Inland Revenue Authority of Singapore).

Apart from regular monthly salary, it is worth mentioning that your personal income tax in Singapore is also calculated on your other sources of income such as bonuses, overtime pay, rental income of your property and so on. When you begin the process of gathering information required for filing personal tax, make sure to consider these aspects also.

To keep more disposable income is what every individual yearn for. Singapore accounting services provide you with different ways to reduce your personal tax bill so that you can retain maximum disposable income.


Claim Tax Reliefs and Rebates

Singapore personal tax is fairly progressive in nature and comes with a host of tax reliefs and rebates. The tax rates range between 0% to 20% for annual taxable income above S$320,000. At the time of filing, you can claim the reliefs that are applicable for you. Grandparent Caregiver Relief, Parent Relief, Foreign Maid Levy Relief, Qualifying Child Relief (QCR), Working mother’s child Relief (WMCR) and Course Fee Relief are to name a few.


Top-up Your CPF Accounts

CPF Cash Top-up Relief is an initiative of Singapore government to encourage its citizens and residents to top-up their retirement and special accounts. A Singapore resident can claim CPF cash relief up to S$14,000. This may comprise of your own and family member accounts. For instance, you can claim for S$7,000 on your CPF account and S$7,000 for your family member’s account. It is notable that this relief only applies on cash top-ups.


Contribute to Supplementary Retirement Scheme (SRS)

On top of CPF savings, SRS is a voluntary retirement savings scheme for Singaporean designed to encourage them to save more for retirement. Since contribution to SRS is eligible for tax relief, you can claim the amount that you make. With the effect of 1 Jan 2016, the annual cap on the amount that you can contribute for is S$15,300 for Singapore citizen/ permanent residents and S$35,700 for foreign work pass holders. Earlier it was S$12,750 for local residents and S$29,750 for foreigners. Barring few exceptions, there will be tax penalties if you withdraw the SRS savings before you attained the statutory retirement age.


Donations to Approved Charities and Institutions:

You have the privilege to claim tax relief of 250% on the donation amount made to an approved Institution of a Public Character (IPC). It is worth noting that donations made to non-approved IPCs are not eligible for tax deduction. This amount of tax deduction i.e. 250% had come into force on 1 Jan 2016 and will be applicable up to 2018.

Even a small amount of donation made to an approved IPC can help you retain a fair amount from your taxable income. For instance, for a donation amount of S$200, you will get S$500 in tax deduction. So, whenever possible, make a donation, support the cause and avail the tax benefits.


Cost of Renting Out Your Property:

As per the Inland Revenue Authority of Singapore (IRAS) regulations, the rental income in Singapore is taxable. While you are required to declare and pay tax on income derived from the rental property, you are allowed to claim certain rental expenses incurred in the course of renting it out.

The allowable deductible rental expense includes mortgage interest on the housing loan of the property, property tax, fire insurance, general repair and maintenance cost, agent commission and so on.


Claim Applicable Expense of Your Business:

The earning or profit of sole-proprietorship business owners is taxed as the personal income tax. They are allowed to claim business expense under the scheme of PIC (Productivity and Innovation Credit). You may claim 400% tax deduction or 60% cash payout for expense spent on the qualifying activities of PIC.


Bottom Line

Unless you are very rich and do not mind paying a hefty amount to IRAS, you are likely to search various legitimate ways to reduce your personal income tax bill. This guide will help you in this concern. By keeping these ways in mind, you can make an effective plan for upcoming Singapore tax filing. Be sure to file the tax before due date i.e. 15 April for paper filing and 18 April for e-filing, in order to avoid penalties and experience a smooth tax year ahead!

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