This blog post will discuss 10 of the best ways to do so.
Keep in mind tax laws may change, so consult a professional or the Government’s website for specific conditions. With that said, let’s get started!
What Is Taxable Income in Singapore?
You can rest easy knowing that some forms of income in Singapore are not taxable. Non-taxable earnings include gains from investments but not your rental income.
Thus, there’s less to worry about when filing taxes next year.
In Singapore, the Government wants to maintain a low-tax culture and doesn’t want people to work for tax breaks rather than earn an honest living.
There is some good news though! You might be eligible for several tax reliefs, which will reduce your taxable income and help you pay less next year.
You should also find out what is taxable in Singapore and what isn’t before proceeding.
What Are the Income Tax Rates in 2022?
Singapore is a very fair state when it comes to taxes, taking care not to tax its citizens too highly.
The personal income tax rates for the Year of Assessment 2022 (YA2022) are as follows:
- 0% on the first $20,000 of chargeable income
- 2% on the next $10,000 if you’re earning $30,000/year, adding up to $200
- 2% on $10,000 + 3.5% on $10,000 if you’re earning $40,000/year, adding up to $550
- 2% on $10,000 + 3.5% on $10,000 + 7% on the rest of your income, if you’re earning $50,000-$89,999/year. So, for a $60,000 salary, that sum is 2% on $10,000 + 3.5% on $10,000 + 7% on $20,000, totaling $1,950. For a $100,000 income, the total tax is 2% on $10,000 + 3.5% on $10,000 + 7% on $40,000 + 11.5% on $20,000 = $5,650.
10 Best Ways to Lower Your Personal Income Tax
Now that you’ve seen how personal income tax works in Singapore, let’s look at how you can reduce your taxable income.
Do take note that:
- The maximum income tax relief cap is $80,000.
- Before applying the methods below, check the IRAS Personal Reliefs Eligibility Tool to ensure you qualify.
1. CPF Top Up
You can increase your savings and enjoy tax relief of up to $8,000 by topping up:
- Your SA account
- Your loved ones’ Special Accounts (SAs) or Retirement Accounts (RAs)
For every $1 that you put in these accounts, you get $1 deducted from your chargeable income.
You don’t have to declare these top-ups. Your CPF and the three local banks that offer SRS accounts will report your activities to IRAS. Make sure that your contributions are reflected on your tax documents, though.
2. CPF Top Up (your Medisave)
Another solution to cut back on some taxes is topping up your Medisave account. You should top your account to the Basic Healthcare Sum – $66,000 in March 2022.
On the downside, this money is locked up.
But unlike the CPF SA account, you can use Medisave to pay for medical costs or buy better health insurance.
3. SRS Account Top Up
The SRS account is a voluntary savings scheme that can also help you save your personal income tax.
The maximum cap is $15,300 (Singaporean) or $35,700 (foreigner). That’s a lot of money, but remember:
- You can only withdraw funds from your SRS account after you retire.
- You have to invest the money in this account or, otherwise, inflation will steal all your savings.
4. Parenthood
Personal income tax relief is as valid a reason to have babies as any other. This comes in handy if your child is still in kindergarten or schooling.
| Tax reliefs | Who Gets It | Sum |
| Qualifying Child Relief | Both parents | $4,000/ child ($7,500 if handicapped) |
| Working Mother’s Child Relief | Working mothers | · 15%: one child · 20%: child no.2 · 25%: children no. 3, 4, and more |
| Grandparent Caregiver Relief | Working mothers | $3,000 |
| Foreign Maid Levy Relief | Mothers | Twice the total foreign domestic worker levy paid in the previous year on one foreign domestic worker |
| Parenthood Tax Rebate | Parents | · $5,000: first child · $10,000: second child · $20,000: for all subsequent children |
To claim this tax relief, update your information the next time you fill in your taxes from the “Edit My Tax Form Section.” All you have to do is add the relevant details requested in that section.
If you’ve already used this tax relief the last year, the new document updates automatically to include these details.
5. Parent Relief
The Singapore Government has always strived to help its elderly population. And what better way to do that than get their children/grandchildren to help?
Apart from doing something good, you’ll also lower your personal income tax:
| Tax reliefs | Sum/person (max. 2) |
| Parent Relief (stay together) | $9,000 |
| Parent Relief (stay apart) | $5,500 |
| Handicapped Parent Relief (stay together) | $14,000 |
| Handicapped Parent Relief (stay apart) | $10,000 |
Thus, you will get $18,000 if you move with your elderly parents who live together. If you move in with your parents and grandparents, the tax relief is also $18,000.
Remember to update your info from the “Edit My Tax Form” to claim these deductions.
6. Upskilling
The Government rewards upskilling with tax reliefs reaching $5,500.
The catch is this course has to be relevant for your current job. In this case, you can deduct the sum spent on your classes and any exams within $5,500.
Didn’t take a relevant course?
Don’t worry; you can claim it for personal income tax deduction when you change jobs if this course is relevant for your new work.
7. Employee expenses
You can’t obtain tax deductions for taking the taxi to work every day or your daily Starbucks latte.
However, you can claim a tax deduction for expenses your employer made you take, such as:
- Travel costs to somewhere other than your job
- Dining with company clients
- Subscriptions for work-related tools/software
8. Business Expenses
This personal income tax deduction applies to self-employed people or those just starting a business. You can claim:
- Ongoing business costs
- R&D charges
- Renovation costs
- Costs related to your fixed assets depreciating in value
9. Rental Expenses
You can claim certain tax deductions for costs related to renting your property, such as:
- Maintenance expenses
- Agent fees
- Renovation costs
- Advertising
The relief you get is 15% of your rental income plus the interest on your mortgage during that year.
Luckily, you don’t have to type all these expenses when you’re filling in your tax form. You’ll get the standard 15% deduction automatically.
Still, you can add the expenses that exceed this value.
10. Donations
Donating to IPCs gets you a whopping 250% tax deduction. For example, donating $500 gets $1250 written off your personal income tax the following year.
There are over 650 charities to choose from. Even better, you don’t even have to donate in cash to be eligible for this scheme. You can also give your:
- SGX-listed shares
- Unit trusts
- Antiques
- Artwork
- Land
- Property
These donations get registered automatically, so you don’t have to add these details in your tax form.
However, we should all adhere to Singapore’s laws no matter the situation.
You must be logged in to post a comment.