An In-Depth Guide to Tax Reliefs in Singapore  

An In-Depth Guide to Tax Reliefs in Singapore  
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Last Updated on by Tree of Wealth

Singapore utilizes a progressive tax system to tax residents, which means that the amount you have to pay for tax rises in tandem with your salary.  The tax season is upon us, and you might be wondering if you qualify for any tax reliefs.

Tax reliefs are given out by the government to recognise citizens’ contributions to the nation’s objectives, such as starting a family.

Here’s all you need to know about the tax relief schemes available in Singapore, and how to qualify for them.

Central Provident Fund (CPF) Cash Top-Up Relief

Singaporeans and Permanent Residents are encouraged to set aside money for the retirement needs of theirs, or their loved ones, via the CPF Cash Top-Up Relief.

The tax relief only applies for cash top-ups, and transferring funds from your CPF account to a family member’s or your own Special Account does not qualify for the relief.

These top-ups have to be made by yourself, or your employer to the Special Account or Retirement Account of yourself, your parents or parents-in-law, grandparents or grandparents-in-law, handicapped spouse or siblings.

You can also qualify for the tax relief if the top-ups were made to your spouse or siblings’ account, and they earned less than $4,000 in the year preceding the year of top-up.

How to qualify

These are the criteria you must fulfill to qualify for the CPF-Cash Top-Up Relief in 2022:

The CPF Cash Top-up Relief is granted automatically to eligible based on records by the CPF Board.

Amount of relief

The maximum relief you can receive each Year of Assessment is S$14,000 – S$7,000 for yourself, and a maximum of S$7,000 for family members.

Central Provident Fund (CPF) Relief for Employees

Similar to the previous relief, the CPF Relief for employees encourages one to set aside funds for retirement.

Amount of relief

Singaporeans and PRs can claim the CPF Relief for CPF contributions on wages that have not exceeded the Ordinary and Additional Wage ceiling.

The Ordinary Wage refers to the wages granted for employment, while the Additional Wage refers to supplements to your base wage, including bonuses.

How to qualify

Qualifying for this relief is slightly different, and can be illustrated by the table below:

Eligible for relief

Not eligible for relief

Employee CPF contributions to a CPF account or approved pension or provident fund made under the CPF Act

Voluntary contributions that exceed the compulsory contributions required under the CPF Act

Voluntary contributions to Medisave Account

CPF contributions made while being posted overseas for work

CPF contributions on additional wages made while being employed by two or more employers

Central Provident Fund (CPF) Relief for self-employed / employee who is also self-employed

A self-employed individual, or employee who is also self-employed, is also eligible for a CPF relief.

How to qualify

To qualify, the individual has to have made 1) employee CPF contributions 2) Medisave contributions in the year preceding the Year of Assessment.

Qualifying as a self-employed person

For self-employed individuals to qualify, you have to be self-employed and make a compulsory Medisave contribution and voluntary CPF contribution in 2020.

For the Year of Assessment 2021, the tax relief for Medisave and voluntary CPF contributions for self-employed individuals will be capped at:

  • 37% of net trade income assessed, or
  • CPF relief cap of S$37,740, or
  • Actual income contributed

There will be no CPF relief for these individuals if their compulsory Medisave or voluntary CPF contributions if they do not have an assessable net trade income for the Year of Assessment 2021.

Qualifying as an employee who is also self-employed

For self-employed employees to qualify, you have to have made these transactions in the same year:

i. Compulsory CPF contributions as an employee

ii. Compulsory Medisave contributions as a self-employed person

iii. Voluntary CPF contributions:

Contributions

Tax Relief
(i) Total compulsory CPF contributions as an employee and (ii) compulsory Medisave contributions as a self-employee person is less than the CPF relief cap Tax relief for (iii) voluntary CPF contributions will be capped at the prevailing CPF contribution rate for the year.
(i) Total compulsory CPF contributions as an employee and (ii) compulsory Medisave contributions as a self-employed person is more than the CPF relief cap

No tax relief will be allowed for (iii) voluntary CPF contributions.

Amount of relief

Year of assessment

2017 – 2021

Net Trade Income Ceiling

$6,000 x 17 months =

$102,000

CPF contribution rate

37%

CPF relief cap

37% x $6,000 x 17 months =

$37,740

Compulsory and Voluntary Medisave Contributions

Self-employed persons must make compulsory Medisave contributions upon receipt of the Notice of Computation (NOC) of CPF Contributions from IRAS. Voluntary Medisave contributions may be claimed as tax reliefs to reduce the amount of tax payable.

This scheme aims to encourage and support Singaporeans who make contributions to Medisave and take charge of their healthcare expenses.

Thus, those who make voluntary contributions to their Medisave account can claim tax reliefs.

How to qualify

Taxpayers are able to claim tax relief on their voluntary Medisave contributions if they fulfill these conditions:

  • Are a Singapore Citizen or Permanent Resident
  • Made voluntary contributions to their Medisave account in the previous year
  • Derived any source of income in the year the contributions were made

Amount of relief

The amount of relief is either: the voluntary cash contribution directed specifically to the Medisave Account, the annual CPF contribution cap for the year (minus the Mandatory Contribution), or the prevailing Basic Healthcare Sum (minus the balance in Medisave Account before the voluntary cash contribution).

The lowest of the three options will be taken.

Course Fees Relief

The Singapore government is constantly trying to encourage its citizens to upgrade their skills and employability, and that’s where the Course Fees Relief comes in.

How to qualify

You are eligible for the Course Fees Relief for YA 2022 if you have attended these:

  • Any course of study, seminar or conference in 2021 for the purpose of gaining an approved academic, professional or vocational qualification
  • Any course, seminar or conference in 2021 that is related for your current profession, trade or employment
  • Any course, seminar or conference in between 1 January 2019 to 31 December 2020 that is related to your new profession, trade or employment

On the other hand, courses that are not eligible for the Course Fees Relief include those for recreation, leisure or hobbies. Courses that focus on general knowledge or skills such as Internet surfing and Microsoft Office are also excluded from the relife.

Lastly, Polytechnic and University courses are excluded if graduates have never exercised any full-time employment, profession or trade.

Amount of relief

You are able to claim the actual course fees, up to a maximum of S$5,500 each year, regardless of the number of courses attended.

If the course spans over a few years and payment was made upfront, you may divide the course fees equally over the years.

Do take note that any amount paid or reimbursed by your employer, or any other organizations including SkillsFuture, cannot be claimed under the Course Fees Relief.

Earned Income Relief

If you are gainfully employed or carrying on a trade, business, profession or vocation, you are likely to be eligible for the Earned Income Relief.

How to qualify

You are eligible for the Earned Income Relief if you have earned a taxable income from these sources – employment, pension, trade, business, profession or vocation.

Those who have a permanent physical or mental disability that severely affects their work will be given a higher Earned Income Relief.

The amount of relief one will receive is based on their age and taxable earned income in the previous year.

Amount of relief

The maximum amount claimable for those below 55 is S$1,000. It is S$6,000 for those aged 55 to 59, and S$8,000 for those above 60.

The amount rises to S$4,000, S$10,000 and S$12,000 respectively for those who have a permanent physical or mental disability.

Foreign Domestic Worker Levy (FDWL) Relief

The Foreign Domestic Worker Levy (FDWL) aims to encourage women to remain in the workforce even after starting families.

How to qualify

To qualify for the FDWL Relief, the taxpayer has to satisfy all these conditions:

  • You or your husband employed a foreign domestic worker in the preceding year
  • In the preceding year, the taxpayer was:
    • Married and living with her husband
    • Married and her husband was not a tax resident in Singapore
    • Separated from her husband (divorced or widowed) and had children who lived with her and on whom she could claim child reliefs

The FDWL Relief can only be used to offset earned income, which refers to income derived from employment, business, profession, trade or vocation.

Amount of relief

The taxpayer can claim twice the total amount of foreign domestic worker levy paid in the previous year on one foreign domestic worker.

Grandparent Caregiver Relief

The Grandparent Caregiver Relief (GCR) was put in place to encourage working mothers to engage the help of their parents, grandparents, parents-in-law, or grandparents-in-law to take care of their children.

Do take note that single or male taxpayers are not eligible for this relief.

Taxpayers may claim S$3,000 in reliefs under this scheme.

How to qualify

One has to satisfy all the conditions listed out below to qualify for the GCR:

  • Be a working mother who is married, divorced or widowed
  • The parent, grandparent, parent-in-law or grandparent-in-law (including that of ex-spouse) that you are claiming the GCR for was:
    • Living in Singapore in 2021
    • Looking after your (i) Singaporean children aged 12 and below (ii) unmarried, handicapped Singaporean child(ren)
    • Not working in 2021
  • The GCR on each caregiver can only be claimed by one person

Handicapped Sibling Relief

The Handicapped Brother/Sister Relief aims to recognise the efforts of individuals supporting their handicapped siblings or siblings-in-law.

Taxpayers may claim S$5,500 in reliefs under this scheme.

How to qualify

One has to satisfy all the conditions listed out below to qualify for the relief:

  • The dependent is physically or mentally disabled
  • The dependent was living in the same household as you in 2021. If the dependent was living in a different household, you must have incurred at least S$2,000 in caring for him/her

Life Insurance Relief

The Life Insurance Relief is given to those who paid annual insurance premiums on their own insurance policies, in order to promote responsible savings and retirement plans.

How to qualify

One has to satisfy all the conditions listed out below to qualify for the relief:

  • Your total contributions for compulsory employee CPF, self-employed Medisave/voluntary CPF and voluntary cash contributions to your Medisave account has to be below S$5,000 in 2021
  • You paid insurance premiums on your personal life insurance policy
  • The insurance company must have a physical office in Singapore if the policies were put in place on, or after, 10 August 1973

Do note that accident or health policies that provide payouts upon death, ElderShield Plans, CareShield Life Plans or Integrated Shield Plans are not eligible for Life Insurance Relief.

Amount of relief

If you meet the criteria to qualify for the relief, you may claim (i) the difference between S$5,000 and your CPF contribution, or up to 7% of the insurance value of your own/your wife’s life, or the amount of insurance premiums paid – whichever is the lowest.

NSman Relief (Self, Wife, Parent)

If you are an operationally ready National Servicemen (NSman), you are entitled to the NSman Relief, which aims to recognise the contributions of NSmen.

The wives and parents of NSmen are also given some relief to recognise the support they give to their husbands and sons.

Information on relief

Here are the various ways to qualify for each relief under the NSman Relief, and the amount of relief given:

NSman Self Relief NSman Wife Relief NSman Parent Relief
How to qualify ●      Completed full-time National Service under the Enlistment Act (Cap. 93); or

●      Deemed to have completed the service by the relevant authorities

●      Are a Singaporean in the preceding year

●      Husband is eligible for NSman Self Relief

●      Are a Singaporean in the preceding year

●      Child is eligible for the NSman Self Relief

●      Child was born to you and your spouse/ex-spouse or your step child, or legally adopted

Amount of relief If NS activities were performed in the preceding year: S$3,000 (NSman) and S$5,000 (NS key command and staff appointment holders)

 

If NS activities were not performed in the preceding year: S$1,500 (NSman) and S$3,500 (NS key command and staff appointment holders)

S$750

S$750 regardless of the amount of children who are NSmen

Parent Relief / Handicapped Parent Relief

Filial piety is supported in Singapore, and the Parent Relief/Handicapped Parent Relief is given to recognise people supporting their parents, grandparents, and in-laws in Singapore.

People who have supported their parents, grandparents, parents-in-law or grandparents-in-law, may claim this relief.

How to qualify

One has to satisfy all the conditions listed out below to qualify for the relief:

  • The dependent was living in the same household as you in Singapore*. If the dependent lived in a different household, you must have incurred at least S$2,000 in supporting them
  • The dependent was at least 55-years-old
  • The dependent did not have an annual income exceeding S$4,000

* “Living in Singapore” refers to the dependant has been living permanently in Singapore. Short vacation trips overseas are fine. Dependants not residing in Singapore (foreign dependants) can be considered as “living in Singapore” as long as they have stayed here for at least a period of 8 months.

In the case of claiming the Handicapped Parent Relief, the dependent does not have to be at least 55 years of age.

The taxpayer may claim the relief for up to two dependents.

Amount of relief

If the taxpayer lives with the dependent, they may claim S$9,000 per dependent, and S$14,000 per handicapped dependent.

If the taxpayer does not live with the dependent, they may claim S$5,500 per dependent, and S$10,000 per dependent.

Qualifying Child Relief / Handicapped Child Relief

Singaporean parents are eligible for the Qualifying Child Relief (QCR) or Handicapped Child Relief (HCR), which aim to support parents in their child-rearing efforts.

How to qualify

One has to satisfy all the conditions listed out below to qualify for the relief:

  • Your child was legally born to you and your spouse or ex-spouse, is a step-child, or is legally adopted
  • Your child was below 16-years-old (in the Year of Assessment); or studying full-time at an education institution
  • Your child did not have an annual income exceeding S$4,000
  • Your child is mentally or physically handicapped (for HCR)

Amount of relief

The reliefs available are S$4,000 per child for the QCR, and S$7,500 per child for the HCR.

If the taxpayer is a working mother who has met the conditions under the Working Mother’s Child Relief, she is able to claim the QCR/HCR and WMCR on the same child, which is capped at S$50,000 per child.

Supplementary Retirement Scheme (SRS) Relief

The Supplementary Retirement Scheme (SRS) is a voluntary scheme that encourages Singaporeans to save for retirement. This is beyond their CPF savings.

To qualify, the taxpayer has to make a contribution to their SRS in the Year of Assessment, and the tax relief will match the amount of contributions made.

However, it is capped at S$15,300 for locals and $35, 700 for foreigners.

Working Mother’s Child Relief

Singapore is experiencing a shrinking workforce and population, and the Working Mother’s Child Relief (WMCR) aims to encourage women to stay in the workforce after having children, while at the same time rewarding families with children who are Singapore citizens.

How to qualify

One has to satisfy all the conditions listed out below to qualify for the relief:

  • Be a working mother who is married, divorced or widowed
  • Have taxable earned income from employment
  • Have a child who is a Singapore citizen as of 31 December 2021, and satisfied the conditions under the Qualifying Child Relief

Amount of relief

The amount of relief available depends on the order of children.

For the first child, the WMCR available is 15% of the mother’s earned income. The percentage increases to 20% for the second child, and 25% for the third child and beyond.

A cap of S$80,000 applies to the total amount of all tax reliefs applied for each year.

Parenthood Tax Rebate

The Parenthood Tax Rebate (PTR) is a one-off rebate of up to S$20,000 per child, and can only be claimed on each qualifying child once.

It is given to Singaporeans to encourage them to have more children.

Amount of rebate

Here is a table on the tax rebates you can receive from each child, according to their order and the year they were born.

Child order Rebate (for child born between 2004 and 2007) Rebate (for child born after 2008)
First S$0 S$5,000
Second S$10,000 S$10,000
Third S$20,000 S$20,000
Fourth S$20,000 S$20,000
Fifth and above S$0 S$20,000 per child

How to qualify

There are various scenarios and ways to qualify for the PTR. First, you have to be a Singapore tax citizen who is married, divorced, or widowed in the relevant year.

Children born or adopted on or after 1 Jan 2008

Condition for qualifying

Relevant year of claim
●     Child is born to you and your spouse/ex-spouse on 1 Jan 2008 or after

●     Child is a Singaporean at the time of birth or within 12 months thereafter

 

Year of birth

●     Child is born to you and your spouse/ex-spouse before you get married, and the marriage is registered before the child reaches six years old

●     Child is a Singaporean at the time of marriage or within 12 months thereafter

 

Year of marriage

 

●     Child is legally adopted on or after 1 Jan 2008, and has not reached six years old

●     Child is a Singaporean at the time of adoption or within 12 months thereafter

 

Year of adoption

Children born or adopted before 1 Jan 2008

(PTR not applicable to first child born or adopted before 1 Jan 2008)

Condition for qualifying

Relevant year of claim

●     Child is born to you and your spouse/ex-spouse (legally married) on 1 Jan 2004 or after

●     Child is a Singaporean at the time of birth or within 12 months thereafter

 

Year of birth

●     Child is born to you and your spouse/ex-spouse before you get married, and the marriage is registered before the child reaches six years old

●     Child is a Singaporean at the time of marriage or within 12 months thereafter

 

Year of marriage

●     Child is legally adopted on or after 1 Jan 2004 but before 1 Jan 2006, and has not reached six years old

●     Child is a Singaporean at the time of adoption or within 12 months thereafter

 

Year of adoption

Conclusion

It is important to know what tax reliefs you are applicable for. Doing things that are beneficial to you – such as topping up your CPF, or getting a life insurance plan can help you to earn a significant amount of tax savings.

It is also a good opportunity for you to look at the various ways you can reduce your chargeable income and get your tax income bill slashed.

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