16 Mar 2021

Tax Savings At A Glance

Are you eligible for tax reliefs? Do you know you can potentially claim expenses arising from working from home?

In the light of the ongoing Covid-19 situation, learn how you can lower your 2021 personal income tax bill by making use of tax reliefs and deductions to enhance your cash flow. In collaboration with the Inland Revenue Authority of Singapore, here are some common tax reliefs.

GENERAL RELIEFS - FOR ALL TAXPAYERS

	Earned Income Relief For individuals who are gainfully employed or are carrying on a trade, business, profession or vocation
	Parent/Handicapped Parent Relief Given to individuals who supported their parents, grandparents, parents-in-law and grandparents-in-law in 2020
	Handicapped Brother/Sister Relief Given to individuals who supported their handicapped siblings or siblings-in-law in 2020
	CPF Relief For employees and the self-employed who made qualifying contributions to their CPF and Medisave accounts in 2020
	Life Insurance Relief For individuals who paid insurance premiums in 2020 on their own life insurance policy
	Supplementary Retirement Scheme (SRS) For individuals who made SRS contributions in 2020
	CPF Cash Top-Up Relief For individuals who topped up their CPF Special/Retirement Account or those of their family members in 2020
	Course Fees Relief For individuals who attended approved courses, seminars or conferences in 2020
	NSman Relief Given to all eligible operationally-ready National Servicemen (NSmen)

ADDITIONAL RELIEFS

FOR MARRIED/ DIVORCED/WIDOWED TAXPAYERS

MALE AND FEMALE TAXPAYERS

FEMALE TAXPAYERS

Spouse Relief /

Handicapped Spouse Relief
Given to individuals who supported their spouse in 2020

Working Mother's Child Relief (WMCR)

Given to working mothers who had taxable earned income and maintained a child in 2020

Qualifying Child Relief (QCR)/Handicapped Child Relief (HCR)

Given to parents who are raising and/or maintaining children

Grandparent Caregiver Relief
For working mothers who engage the help of their parents/ grandparents (including in-laws) to take care of their children

NSman Parent Relief

Given to parents of eligible operationally-ready National Servicemen

Foreign Maid Levy Relief
Foreign Domestic worker Levy Relief For married women (including divorcees widows with children eligible for child relief) who had taxable earned income and employed a foreign domestic worker in 2020

NSman Wife Relief

Given to wives of eligible operationally-ready National Servicemen

AVAILABLE DEDUCTIONS

Deductions on Employment Expenses

Claim deductions on employment expenses incurred while carrying out official duties which were not reimbursed by your employer

For those who were required by your employer to work from home with resulting home office expenses that are not reimbursed by your employer, you can claim these expenses as a tax deduction. Supporting documents must be kept and submitted if requested.

Deductions on Business Expenses

For the self-employed, claim deductions on allowable business expenses incurred in the course of carrying on a trade

Deductions on Rental Expenses

Claim tax deduction on actual expenses incurred or 15% deemed rental expenses in producing the rental income on your property

Deductions on Donations

Tax deductions of 2.5 times the amount of donations made in 2020

PARENTHOOD TAX REBATE (PTR)

Given to eligible parents as credit to offset the income tax payable. PTR can be shared with your spouse based on an agreed apportionment. Any unutilised balance will automatically be carried forward to offset your and your spouse’s future income tax payable.

Which tax reliefs are you eligible for?

For individuals and families, here’s a quick look at the key reliefs in Singapore that will help to boost savings on your final tax bill for Year of Assessment (YA) 2021. Doing so will help to enhance your cashflows, particularly during this challenging period of Covid-19 outbreak. In collaboration with the Inland Revenue Authority of Singapore, we highlight two worked examples.

For Individuals

Lisa is supporting her handicapped father and her mother who is a housewife, even though her mother is not living with her. She also topped up $4,200 and $4,500 to her grandmother’s and grandfather’s CPF accounts in 2020. In 2020, she attended an $8,800 course relating to her profession that she self-funded.

Lisa is a Singaporean and earned $70,000 in 2020.

Personal Tax Reliefs applicable to Lisa
- Earned Income Relief	$1,000 (auto-included)
- Handicapped Parent Relief (for father)	$14,000
- Parent Relief (for mother)	$5,500
- CPF Relief	$14,000
- CPF Cash Top Up Relief	$7,000 (auto-included, and capped at max $7k)
- Course Fee Relief	$5,500 (capped at max of $5.500)
Total Reliefs	$47,000
Total Chargeable Income	$23,000 ($70,000 - $47,000)
Tax Payable on Chargeable Income
Tax on the first $20,000	$0
Tax on the remaining $3,000 (income tax rate of 2%)	$60
Lisa’s Net Tax Payable for Year of Assessment 2021	$60

How it works out

Lisa can claim Parent Relief ($14,000) on her handicapped father. Though her mother is not living with her, she can claim Parent Relief ($5,500) on her mother if she incurred $2,000 or more in supporting her in 2020.

As Lisa made cash CPF top-ups for her grandparents in 2020, she can claim CPF Cash Top Up Relief capped at a maximum of $7,000.

In addition, she will be able to claim the maximum Course Fees Relief of $5,500.

For Families

Mr and Mrs Tan both work full time. They live with Mr Tan’s parents, who look after the children, aged 8 and 11 years old, with the help of a foreign domestic worker. Mrs Tan also contributed $5,000 to the Supplementary Retirement Scheme (SRS) in 2020.

Mrs Tan is a Singaporean and earned $125,000 in 2020.

Personal Tax Reliefs applicable to Mrs Tan
- Earned Income Relief	$1,000 (auto-included)
- Qualifying Child Relief	$2,000
- CPF Relief	$20,400
- NSman Relief (for wife)	$750 (auto-included)
- Working Mother’s Child Relief (1^st child)	$18,750 (15% x $125,000)
- Working Mother’s Child Relief (2^nd child)	$25,000 (20% x $125,000)
- Foreign Domestic Worker Levy Relief	$1,440
- Grandparent Caregiver Relief	$3,000
- Supplementary Retirement Scheme (SRS) Relief	$5,000
Total Reliefs	$77,340
Total Chargeable Income	$47,660 ($125,000 - $77,340)
Tax Payable on Chargeable Income
Tax on the first $40,000	$550
Tax on the remaining $7,660 (income tax rate of 7%)	$536.20
Mrs Tan’s Net Tax Payable for Year of Assessment 2021	$1,086.20

How it works out

As her children are below 16 years of age, she can claim Qualifying Child Relief (QCR) of $4,000 per child. Mrs Tan decides to share this relief with her husband at an agreed apportionment of 1:3 and makes a claim of $2,000.

In addition, she can claim Working Mother’s Child Relief calculated based on 15% and 20% of her earned income for her first and second child respectively.

She also enjoys Foreign Domestic Worker Levy Relief of $1,440 ($60 x 12 months x 2 times), which is twice the total foreign domestic worker levy she paid in 2020.

As her children were below 12 years of age in 2020, she can claim Grandparent Caregiver Relief of $3,000.

Mrs Tan will also be entitled to a Supplementary Retirement Scheme (SRS) Relief of $5,000.

When claiming tax reliefs, do bear in mind that there is a total personal income tax relief cap of $80,000.

Claiming Personal Reliefs Incorrectly May Lead to Penalties

IRAS reminds taxpayers to claim personal reliefs only if they meet the qualifying conditions for the reliefs.

If you are e-Filing, personal reliefs that you claimed and were granted last year would usually be automatically included in your tax return. Please check and remove the relief claims if you are no longer eligible for them. Penalties may be imposed for any incorrect claim of relief.

Tips on Claiming Personal Reliefs

Avoid wrongful claims of personal reliefs. Check if you meet the qualifying conditions for each relief by visiting go.gov.sg/taxreliefs.
To facilitate your checking, use the Personal Relief Checker on the IRAS website.

Find out more about Tax Season 2021 here.

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Disclaimers and Important Notice
This article is meant for information only and should not be relied upon as financial advice. Before making any decision to buy, sell or hold any investment or insurance product, you should seek advice from a financial adviser regarding its suitability.