Once again, the tax season has arrived and if you have not filed your taxes yet, here are some key ways you can save on taxes, simply by maximising and allocating your tax reliefs.
Part 1: Upon tax reporting in March / April 2023:
(1) Course fee tax relief $5,500: Any course of study, seminar or conference in 2022 for the purpose of gaining an approved academic, professional or vocational qualification
(2) Life Insurance tax relief: $5,000: If your CPF contribution is < $5,000, you may claim the lower of:
a. the difference between $5,000 and your CPF contribution; or
b. up to 7% of the insured value of your own/your wife’s life, or the amount of insurance premiums paid
New! The voluntary cash contribution to your Medisave account is not considered for the $5,000 limit for the total CPF contribution for YA 2023 onwards.
(3) Parents relief $9,000: You may claim this relief if you have supported the following dependants:
a. Parents / Parents-in-law / Grandparents / Grandparents-in-law
b. Stay with dependent $9000 / Don’t stay with dependent $5,500
TIP! You may also discuss with your siblings on how to share the parents relief.
(4) Qualifying Child Relief $4000: For parents, you may claim tax relief of $4,000 per child.
TIP! Depending on your income, it may be better for QCR to be claimed under fathers, as mothers have Working Mother Child Relief
(5) Working Mother Child Relief: Percentage of income. For working mothers, you may claim up to 60% of your income depending on the number of children as below, and your child did not have an annual income exceeding $4,000. 1st Child: 15%, 2nd Child: 20%, 3rd Child: 25% of income.
Tip! if your child worked part-time before tertiary education, your WMCR will be automatically removed. But you may write to IRAS to request to re-instate the WMCR once your child is back to full-time studies.
NEW! Budget 2023 – From YA 2025, there will be changes to WMCR from a percentage of income to a fixed amount. Budget 2023: Child relief for working mothers to be fixed from 2024
Click here for full list of reliefs. Do also note that there is an overall tax reliefs cap at $80,000
a tax is a fine for doing well a fine is a tax for doing wrong
Part 2: By end of the year 2023. Reliefs & deductions to reduce tax for 2024 NOA (to be done before 31/12/2023):
(1) Do good and save on taxes at the same time! Donations to approved Institution of a Public Character (IPC) enjoy tax deductions of 2.5 times the qualifying donation amount.
(2) CPF Cash Top Up Contribution Up $16,000: This is applicable if you top up to the CPF SA account if you have not reached the Full Retirement Sum.
TIP! You can enjoy tax relief of up to $16,000 for cash top-ups made in each calendar year. Get up to $8,000 tax relief when you top up for yourself and up to $8,000 when you help your loved ones build their retirement savings.
For self-employed: Max contribution $37,740. You may contribute the maximum CPF contribution of $37,740 to reduce your taxable income
Tip! You should top up as early as possible to benefit from the power of compound interest over the years.
(3) Supplementary Retirement Scheme $15,300: SRS is a tax deferment scheme. Every dollar contributed to your SRS account is eligible for SRS Tax relief the next year.
Tip! You are able to invest the monies in your SRS, or put into saving vehicles like SSB, making it a great retirement accumulation tool.
Hop the above information is useful!
If you are still unsure about the tax reliefs or have any queries, drop me a WhatsApp
Cheers and happy saving taxes!
CFP, representing Financial Alliance 