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6 ways to reduce income tax in Singapore (2023)
The different types of income tax relief in Singapore.
By Harold Yap
SINGAPORE – Income tax season 2023 began on 1 March, and the e-filing deadline for the Year of Assessment (YA) 2022 will be on 18 April.
Amid an increase in GST from seven to eight per cent – which kicked in this January – you'll want to maximise your savings. One way to do so is by claiming income tax relief, which is subjected to a limit of S$80,000.
In Singapore, residents are taxed according to their salary, paying progressively higher taxes as this increases. Taxable income includes bonuses as well as rental income for landlords but excludes CPF contributions.
Though tax residents' personal income tax rates have remained the same since 2017, it is important to note that Singapore will be raising taxes for some of the country's highest earners to 23 to 24 per cent in YA2024.
Here are the different types of income tax relief in Singapore – find out whether you are eligible for them using the IRAS Personal Reliefs Eligibility Tool.
1. Top up your CPF and retirement fund
Topping up your retirement accounts is a great way to kill two birds with one stone. This translates to S$1 deducted from your chargeable income for every S$1 you put in these accounts. The latter include your Special Account (SA), your parents' or grandparents' SA and Retirement Accounts (RA), your MediSave Account (MA), your family members' MA and your Supplementary Retirement Scheme (SRS). It is important to note that supplementing family members' MA was recently allowed in YA2023, though self-employed recipients with outstanding MediSave liabilities are not eligible for this scheme.
The maximum amount that can be placed in the SRS account, which can only be withdrawn after retirement, is S$15,300 for Singaporeans and S$37,500 for foreigners. The maximum sums that can be deducted from your chargeable income for CPF top-ups of your SA and your parents' or grandparents' CPF SA/RA are S$8,000 respectively.
2. Donate to charity
Paying it forward does pay off after all. Donating to Community Chest or any IPC (Institutions of a Public Character) is a well-known way to whittle down your personal income tax. This is especially attractive to taxpayers as until 2026, they can continue enjoying a 250 per cent tax deduction for qualifying donations – an initiative introduced in Budget 2021. However, the deduction is only applied the following year. You may perform a search of IPCs at the Charity Portal. The following donations are tax deductible:
Cash donations with benefits: Only outright cash donations that do not give material benefit to the donor are fully tax-deductible. For donations that involve benefits, tax deduction is granted on the difference between the donation and the value of the benefit.
Shares donations: These are limited to public shares listed on the Singapore Exchange or of units in unit trusts traded in Singapore to approved IPC.
Land and building donations: Donors or the approved IPC must arrange a market value appraisal of the gifted property with a property valuer, followed by an application to IRAS for an endorsement of the market value.
Also read: Where to find cheapest food and drink in Singapore: IPS Makan Index 2.0
Also read: 6 things to note when filing Singapore income tax
Also read: Singapore Tax: How to pay your income tax
3. Upgrade your skills for the win
Under the Course Fees Relief scheme, you can claim the actual course fees incurred by yourself, up to a maximum of S$5,500 each year with no cap on the number of courses, seminars or conferences attended. The courses should be relevant to your employment or attended with the purpose of helping you make a career switch. However, they can only be claimed once you have transitioned to your new job.
4. Cosy up to your loved ones
Working mothers, take heart. Engaging the help of your parents, grandparents, parents-in-law or grandparents-in-law (including those of ex-spouses) to look after your children qualifies you for a maximum relief of S$3,000.
Filial piety is also rewarded. You may claim relief for supporting your parents, grandparents, parents-in-law or grandparents-in-law in Singapore above the age of 55 who do not have an annual income exceeding S$4,000. This is regardless of whether you live in the same household. However, if the dependant has been living in a separate household in Singapore, you must have incurred S$2,000 or more in supporting him/her to qualify for this. Below are the types of relief under this scheme:
Type of Parent Relief | Parent Relief | Handicapped Parent Relief |
Taxpayer stays with dependant | $9,000 per dependant | $14,000 per dependant |
Taxpayer does not stay with dependant | $5,500 per dependant | $10,000 per dependant |
Separately, those supporting their spouses and siblings (handicapped or otherwise) may also claim between S$2,000 and S$5,500 per dependant.
5. Claim NSman relief for the family
Here's a token of appreciation from the government for donning your army fatigues to serve the nation. Depending on whether you performed your National Service (NS) duties in 2022, as well as your NS appointment, you can claim between S$1,500 and S$5,000. Wives and parents of NSmen are eligible for tax relief of S$750 each.
6. Check your earned income expenses
Whether you're gainfully employed or run a business, you can deduct incurred expenses from your chargeable income. These include things like travel and entertainment costs you footed, R&D and renovation costs for businesses, as well as depreciation of fixed assets. Landlords can claim expenses incurred in obtaining rental income, including agent fees and maintenance costs.
Private-hire car and taxi drivers are allowed to claim expenses that exceed 60 per cent of their driving income. This includes things such as service fees paid to booking service operators, licence renewal fees, mobile phone data plans and bills, vehicle rental fees, fuel, road tax, car insurance, car wash charges, parking charges, interest expenses incurred on car loans, car repairs and maintenance expenses.
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