The best way to scale back your revenue tax in 2024


A number of months in the past, I used to be interviewed by Channel Information Asia (CNA) for recommendation on the right way to scale back one’s revenue tax invoice, which I penned right into a weblog publish right here as effectively. With tax season right here, lots of you could have requested if there’s a particular one for working dad and mom like myself, so this text is for you – might this provide help to to cut back your revenue taxes!

There are 18 methods you should use to cut back your revenue taxes, aptly summed up within the visible (by IRAS) above. For these of you who’re confused about why sure schemes are named as “aid” vs “rebates”, right here’s the definition offered by IRAS:

  • Reliefs – scale back the chargeable revenue that you just’ll get charged taxes on i.e. earlier than the invoice.
  • Rebates = used to offset your tax legal responsibility after the invoice has been ascertained, so if it wasn’t used totally on this 12 months, will probably be carried over to your following tax payments till it’s used up.

Earlier than we dive into particulars, right here’s a fast overview of the totally different reliefs/rebates that working dad and mom can use to cut back your revenue tax:

  • Parenthood Tax Rebate (one-off)
  • Qualifying Baby Aid – $4,000 per baby
  • Guardian Aid – for non-working dad and mom whom you’re supporting
  • Partner Aid – for a non-working partner whom you’re supporting
  • Grandparent Caregiver Aid – for working moms who have interaction their dad and mom/in-laws to take care of their baby whereas they return to work
  • Overseas Home Employee Levy Aid – for working moms who rent a home helper to take care of the family whereas they return to work
  • CPF Money High-Up Aid – for voluntary top-ups made to your / your family members’ CPF
  • Course Payment Aid – for related upgrading programs taken within the 12 months
  • Supplementary Retirement Scheme – for individuals who voluntarily top-up your SRS account
  • Donate to charity – get 250% tax deduction whenever you donate to IPCs

There are some that may solely be claimed by working moms vs. working fathers, so right here’s one other simple abstract desk:

Parenthood Tax Rebate (PTR)

That is solely one-off, within the 12 months that your baby is born. For those who didn’t dissipate the entitlement, it should carry ahead and you should use it to offset your subsequent years tax payments till the rebate has been totally used up.

So in case your baby is older than 1 12 months outdated, then you possibly can overlook about this rebate…till you could have one other baby, that’s.

Qualifying Baby Aid (QCR)

That is robotically given by IRAS in a 50-50 equal break up per dad or mum as soon as the kid is born, the place you too can declare QCR of $4,000 per baby or $7,500 HCR per baby so long as your baby just isn’t incomes an revenue.

This may be break up between you and your partner, if want be.

Tip: As confirmed by IRAS, it might be a financially smarter determination to present the QCR to the upper revenue partner.

Guardian Aid

At the very least 55 years outdated and earns not more than $4,000 in a 12 months. For those who’re staying along with your dad or mum, you possibly can declare as much as $9,000 – however that is shared between siblings. The identical dependent can’t be used to concurrently declare for Partner Aid both.

Partner Aid

If one partner is staying dwelling and never working, you possibly can declare a most of S$2,000 for Partner Aid. Nonetheless, take observe that this aid can’t be claimed along side the Guardian Aid. Right here’s an instance:

e.g. Dad desires to assert for Partner Aid as a result of his spouse just isn’t working, however on the similar time the siblings wish to declare the Guardian Aid on the mom as effectively, then each reliefs can’t be claimed on the similar time on the identical dependent. On this case, the household might want to focus on who will get to assert what!

Financially, the smarter approach can be to assert the upper aid i.e. the kids claiming for Guardian Aid on their non-working mom would get $9,000 vs. the dad claiming $2,000 through Partner Aid.

Grandparent Caregiver Aid

Solely claimable by married girls, and designed for conditions the place the mom asks the grandparents to assist handle their younger children in order that they’ll return to work.

And even when your baby has greater than 1 caregiver (e.g. each your mother and pop are retired and serving to to take care of your children), you possibly can nonetheless solely declare for a most of $3,000 on one associated caregiver beneath GCR.

Prior to now, you couldn’t declare this if the grandparent was nonetheless doing a little salaried work (e.g. part-time roles) and incomes an revenue. However ranging from YA2024, this might be modified to cowl grandparents whose annual revenue not exceeding $4,000 you possibly can nonetheless declare.

Overseas Home Employee Levy Aid

That is additionally solely claimable by working moms, for conditions the place they rent a home employee to assist take care of the family whereas they work. Doesn’t matter for those who don’t have a baby.

You possibly can declare as much as 2 occasions the quantity of levy that you just paid within the earlier 12 months on 1 home employee.

For those who’re wealthy sufficient to afford and make use of greater than 1 home helper, please learn right here for the way a lot aid you possibly can declare.

CPF Money High-Up Aid

Whenever you make voluntary money contributions to your CPF account or that of your family members, you possibly can declare for tax reliefs on these. The utmost CPF Money High-up Aid per 12 months of Evaluation has additionally just lately been raised to $16,000 (most $8,000 for self, and most $8,000 for relations) as of final 12 months.

This implies you possibly can declare for the utmost by doing the next strikes:

  • Make a voluntary money high as much as your Particular/Retirement/MediSave Account
  • High up your family members Particular/Retirement/MediSave Account

Word: Family members refer to oldsters, parents-in-law, grandparents, grandparents-in-law, partner and siblings. Nonetheless, you possibly can solely get tax reliefs for top-ups to your partner or siblings’ if they’ve an annual revenue lower than $4,000 within the 12 months prior (wage, financial institution curiosity, dividends and/or pension) or they’re handicapped.

The tax aid is simply as much as the Full Retirement Sum (FRS), so it’s a good suggestion to examine whether or not you and/or your family members are approaching the FRS in your CPF account(s) earlier than you make the contribution.

Take a look at extra data and eligibility standards right here.

Course Payment Aid

Consistent with lifelong studying, so long as you could have attended a course or convention that may result in the next qualification related to your employment or vocation, then you too can declare as much as a most of $5,500 in course charges reliefs annually.

Word: You can not declare for programs which might be for leisure functions or basic expertise (e.g. baking / social media / fundamental web site constructing). Neither are you able to declare for programs that had been paid through SkillsFuture credit or your employer. I do know, as a result of I attempted and needed to name in to make clear!

Nonetheless, IRAS has stated that this may lapse for YA2026 onwards 🙁
(Supply: IRAS Deputy Director, Particular person Earnings Tax Division, Sau Hing Chin)

Supplementary Retirement Scheme (SRS)

One other simple hack is to open an SRS account with any of the three native banks and contribute money into the account, which can assist you to get pleasure from as much as $15,300 of tax reliefs ($35,700 for foreigners).

The one draw back of that is that deposits in your SRS account earn solely 0.05% p.a. curiosity, so that you may wish to contemplate investing it as an alternative. Learn this for some concepts on what you possibly can make investments your SRS monies in!

If you would like an easier, fuss-free methodology of investing your SRS funds that doesn’t want a lot monitoring, take a look at ETFs as an alternative – listed below are a few of the hottest ones that fellow SRS buyers are going for.

NSman Aid (self, spouse and dad or mum)

All eligible operationally prepared Nationwide Servicemen (NSmen) are entitled to NSman tax aid, together with their spouse and oldsters in recognition of the assist given.

In case your husband is an NSman, you too can declare $750 beneath the NSman Spouse Aid. Consider it because the nation thanking you for supporting your husband in his service to the nation.

And if you’re a dad or mum whose son is an NSman, every dad or mum can declare $750 whatever the variety of youngsters who’re NSmen. Sure, so meaning regardless that I’ve two boys, I received’t have the ability to declare 2 x the reliefs on every of them sooner or later.

Properly, what if you’re a mom the place each your husband and son are NSmen? In that case, you possibly can solely get EITHER the Spouse OR Guardian aid of $750 (and never $750 x 2). Not honest? Yeah, I feel so too 🙁

Whenever you donate to any charity that’s an authorized Establishment of a Public Character (IPC), you possibly can get pleasure from a 250% tax deduction based mostly in your donation quantity.

That is often robotically calculated and utilized in your tax invoice – offered that your donation went to a registered IPC.

For example, for those who donated $1k to an authorized charity, $2.5k might be deducted out of your complete revenue to be assessed. And if that brings you all the way down to the decrease revenue tax bracket tier, it’ll positively deliver you much more pleasure than the gratification you felt from doing a very good deed. Discuss killing two birds with one stone!

Reliefs with probably the most monetary influence

Essentially the most important tax aid that I get is certainly the WMCR, adopted by my strikes in topping up money to my CPF, my dad’s CPF and in addition to my very own SRS account.

The opposite reliefs barely transfer the needle, however assist to inch nearer to the utmost revenue reliefs cap of $80,000. And every time I discover myself on the sting of 1 revenue tax bracket, I’ll resort to Methodology #4 (donate to charity) to attempt to see if I can deliver myself down one tier.

For those who’re in a family the place the husband is the higher-income partner, then it could be value giving your entire QCR, GCR and Guardian Aid to them in order that your complete family revenue taxes payable will change into a lot decrease.

What different revenue tax hacks do you employ?

Share for those who discovered this text useful!

With love,
Price range Babe



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