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Tax Deductions and Rebates in Singapore
As much as you don’t like it, paying income tax is a part of being an adult. You have to file your income tax every year timely and accurately, and often, this tax takes away a significant chunk of your income. Failing to file income tax can lead to hefty fines and legal penalties. Tax evasion is a serious crime that can incur a lot of legal trouble, including hefty fines and even jail time.
But did you know that you can reduce your income tax legally? The Singapore government offers many such tax deductions and rebates that can help you save thousands of dollars. Hence, here are some of the best tax deductions and rebates that you should take a look at.
If you make donations to certain institutions, then the government warrants you a tax deduction of up to 2.5x the donation amount. This amount is reflected on the donation receipt if the said donation is eligible for tax deductions. Do note that these donations have to be made the year preceding the year of assessment. Here are the types of contributions that can help you with tax deductions.
Donations to Registered Charities
One of the most common types of donations that can help with tax deductions is to charities. This is a win-win situation as you not only save some money for yourself, but you also contribute towards the community. But not all charities are eligible, so you have to look out for Singapore government-approved charities, or those that are approved by the Institution of Public Character (IPC). Such charities span across various categories like animal welfare, arts, religion, children/youth, sports, etc., and you can support the ones you are most passionate about.
Another way of making donations is by giving away any valuable artifact that you have in your possession. This can include historic coins, ornate Peranakan furniture, or other antiques. Such items are first carefully considered and evaluated by the National Heritage Board (NHB), after which you can donate them to any museum that possesses the Official Approved Museum status.
Art Piece Donations
On the other hand, if you are an artist or a sculptor, or you possess a valuable artwork, then you can donate that to the NHB approved museums too, for public display. Though these art pieces have to be of significant artistic value or heritage. Under this category, you can even make cash donations, or you can volunteer yourself for any services.
If you are one of those who have a spare property that is not on rent currently, then you can donate it to the Institution of Public Character (IPS). Your property will then be used for various goodwill initiatives and events. This is a great way to contribute to the community. And in return, you will be offered tax deductions on your income tax.
Top-Ups to Medisave Accounts
The next way to incur tax deductions is by voluntarily topping-up your Medisave accounts. Medisave account funds can be used to offset medical and hospitalization bills, so it is not like you are wasting your money by topping up these accounts. Though such a tax deduction only applies to voluntary contributions, and compulsory contributions are not eligible. So if you have a Medisave account, you can add some extra money, which will then be taken into account when calculating your income tax. However, while claiming for tax deductions with this approach, if you meet the Basic Healthcare Sum (BHS), then you won’t be eligible for any kind of tax deductions.
Similarly, you can even make voluntary contributions to your Supplementary Retirement Scheme (SRS). This voluntary contribution is then taken into account while calculating your tax. However, since this is a retirement scheme, if you are in your 20s or 30s, it is best to use that money elsewhere for immediate goals first. Instead, this scheme is perfect for older folks as a way to maximize their retirement money.
Deductions on Rental Expenses
If you are a landlord, then you can apply for tax deductions on rental expenses. Here, you can claim costs that incur from renting out your property to a third party. These costs include mortgage interest, premiums on fire insurance, and other repair and maintenance costs that you pay out of your pocket. This is a great rebate scheme to minimize not only your tax but also ownership costs.
Parenthood Tax Rebates
The costs of living are rising every year, and it can be tough on the wallet. And the government also understands that. Hence, they offer tax rebates to parents as long as they meet specific criteria. This Parenthood Tax Rebate entitles you to a sum of money per child, which you can use to offset future tax payments, and this amount does not expire on a yearly basis. That is, this sum can be carried forward to the next year subsequently until it runs out.
For your first child, this sum is around S$5000; for the second child, this is S$10,000; and for the third and subsequent child, it is around S$20,000. Moreover, this rebate is also applicable for adopted children, and single parents who are either divorced or widowed.
Do note that in Singapore, personal tax relief has a cap of S$80,000 per year. That is, you cannot claim deductions or rebates over this amount per year. But S$80,000 is still a considerable sum, so you can see how much potential such tax deductions and rebates have for you. The approaches mentioned above to tax deductions and rebates can help you save thousands of dollars that you can use in bettering your financial foundation for the future.
KBB Credit SD Pte Ltd – Licensed Moneylender in Singapore
KBB Credit SD Pte Ltd previously known as KBB Credit is a licensed moneylender in Singapore since 2010. Throughout the years we have assisted many clients and businesses with their financial needs. If you find that you need assistance in making payment for your income tax, you can always apply a personal loan with us. We are able to provide instalment payment plans for our loans.
You can visit our office at 111 North Bridge Road #01-35 Peninsula Plaza Singapore 179098 for a free consultation. Alternatively, you can also drop us an email at email@example.com or call us at 6255 6998. Or send us an enquiry form here.
The nearest MRT to our office is City Hall MRT exit B. Our office is facing the main road beside 7 Eleven.
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