7 Ways To Reduce Personal Income Tax In Singapore

Singapore is an ideal country to work or grow your business. Whether in any country, not just Singapore, taxes are an inevitable part. So, if you are going to work in Singapore, you should plan to reduce your tax rates as much as possible.

The following article will first help you distinguish between the two basic types of income of Singapore is assessable income and chargeable income and then recommend with you the best ways to reduce your Singapore income tax bill.

Assessable income in Singapore

The assessable income is the total income minus business expenses, employment expenses, and donations.

Taxable Income

Non – Taxable Income

Salary from employment

Lottery Winnings (e.g. 4D, Toto)

Bonuses

Capital Gains

Rental Income* / Stock Income

Dividends and profits from overseas branches

Part-time Job / Contracting Work / Freelancer

Profits from the transfer of equity investments

Royalties* / Premiums

Government Pensions, CPF Life Income For The Elderly Payouts

Withdrawal From Supplementary Retirement

Alimony and Maintenance Payments

*Rental & Royalties income is taxable only if it is derived in Singapore. 

Chargeable income in Singapore

Chargeable income is your assessable tax minus personal relief.

The following individual income tax rate in Singapore

Chargeable Income

Income Tax Rate (%)

Total Tax Payable ($)

First $20,000

Next $10,000

0

2

0

200

First $30,000

Next $10,000

3.50

200

350

First $40,000
Next $40,000

7

550
2,800

First $80,000
Next $40,000


11.5

3,350
4,600

First $120,000
Next $40,000


15

7,950
6,000

First $160,000
Next $40,000


18

13,950
7,200

First $200,000
Next $40,000


19

21,150
7,600

First $240,000
Next $40,000


19.5

28,750
7,800

First $280,000
Next $40,000


20

36,550
8,000

First $320,000
In excess of $320,000


22

44,550

Based on the table above, there are too many taxes to pay. Thus, here are ways to help you reduce a lot of taxes to pay.

Education

The Singaporean government always appreciates the education for their residents, so IRAS has set a tax reduction policy for those who wish to study and improve professional skills. If you sign up for a professional course, you can get tax reliefs of up to $ 5,500 per year. Thus, you can both get the knowledge and save a small amount of money.

Have a family

In order to encourage Singaporeans to have a more stable and happy family life, the Government of Singapore has introduced a number of policies to reduce the financial burden on families, depending on the following circumstances.

Family Tax Relief Scheme For Amount Per Year
Qualifying Child Relief Both parents $4,000 per child ($7,500 if the child is handicapped)
Working Mother’s Child Relief Working mothers 15% for the first child, 20% for the second child, 25% for third or more
Grandparent Caregiver Relief Working mothers $3,000
Foreign Maid Levy Relief       Mothers Twice of maid levy paid (maximum 1 maid)

Donate to a Tax-Deductible Registered Charity

Donating to charitable funds is meaningful work and should be encouraged. Therefore, with each donation to a charitable fund organization registered with the Singapore government, the sponsor will apply a 250% tax reduction on that donation. However, make sure you do not receive any benefits from the donation.

Invest in the Supplementary Retirement Scheme

A Supplementary Retirement Scheme (SRS) was established in 2001 to help Singaporeans prepare for future retirement. The highest tax reduction is $ 15,300 for Singapore citizens and permanent residents, $ 35,700 for foreigners.

Note: Personal income tax reduction is only applied if it does not exceed $ 80,000 per year. When individuals reach the age of 62, they can withdraw money from their SRS funds with a 50% tax reduction.

Make Voluntary CPF Special Account Payments

CPF (Central Provident Fund) is a fund contributed by employees to make sure them from reaching retirement age or unable to work.

Each CPF account is limited at $ 7,000 extra payment per year, and if calculated per household / per couple will be $ 14,000 tax-deductible. In addition, reducing your income will reduce the amount of tax that you incur compared to the table above, saving you more money when paying taxes.

Make Deduction for a rental property

If you have existing assets for rent, you can claim tax relief on some of the costs of your tenants such as insurance, repair, and maintenance, etc.

Transfer money to your parents

If you have to transfer money to your parents or other relatives, the Singapore government has a Parent Relief Scheme, the rates will differ depending on the situation.

Note: This method will not apply to everyone.

For more information, contact us to get a free consultation!

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