Apart from certain types of income sources, income earned in Singapore generally is taxable. Income from employment, business, property, investment, and annuity are some of the types of income sources you may have received. Before you learn how you can reduce your personal income tax, it is very important as an individual to understand, accurately declare and know the tax percentage of your taxable income. 

WHAT IS SINGAPORE RESIDENT INCOME TAX RATES YA2020?

Chargeable Income Income Tax Rate (%) Gross 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

If your spouse and you belong to income earner of at least $80,000 per annual, then congratulations. This means you are earning above the national average household income. In year 2020, the average household income in Singapore apparently is $9,189. On the other hand, this also means your spouse and you will need to incur 11.5% tax rate for the amount you received above $80,000. Fortunately, the government provides different tax relief schemes that you could tap onto.

HOW CAN YOU REDUCE YOUR PERSONAL INCOME TAX?

Voluntary Contribution to CPF Special Account

You can lower your chargeable income by a maximum of $14,000 when you cash top up amounting to $7000 to yours and your loved one’s CPF SA Account.

Voluntary Contribution to Medisave Account

It depends on whether you are self-employed or employed person, your tax relief for your Medisave and voluntary CPF contributions for the year will be capped at the lower of:

  • 37% of your net trade income assessed; or
  • CPF relief cap of $37,740; or
  • Actual amount contributed by you
Parents Relief

As long as your parents or grandparents are not earning more than $4,000 per year, you can get a minimum of $5,500 and up to $20,000 for tax relief.

Course Fee Relief

A tax relief up to $5,500 will be given to you if you went for a course that is relevant to your current employment. Alternatively, you can also claim for the course fee tax relief in the future should you take a course to prepare yourself for your new employment.

Donations Relief

A contribution to a tax-deductible charity will give you 250% tax deduction. The donation is not only limited to cash but also other forms such as SGX-listed shares, units in unit trusts, land, building and even artefacts.

Summary

Apart from the above, there are definitely many more tax reliefs designed by the government to cater to a different group of individuals. These tax relief schemes are designed for different needs. For example, contribution to CPF Special Account helps you with your retirement and Medisave allows you to offset your medical insurance and bills. With the right knowledge, you can definitely benefit more while reducing your taxable income. Do email us at support@forbis.com.sg if you have more questions or go to our Forbis Accounting website and we will be glad to share more with you.

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