While taxes need only be submitted by the end of the first quarter of every year, it’s never too early to start planning for it. And if you want to minimise your taxable income, it’s best to begin employing strategies early.
Fortunately, there are plenty of ethical and legally approved means of reducing personal income tax in Singapore. The country offers a range of initiatives for tax relief that you can use to your advantage. Here are just some of the most effective ways to do so:
1. Tax deductibles for business expenses
Any business owner knows that no matter the nature or size of your company, there will always be additional operational expenditures. It’s a good thing you are allowed to claim these as
business expenses. For instance, accounting fees, CPF contributions, advertisements, skills development levies, and renovations all fall under tax-deductible business expenses. Just be sure to have clear bank statements for easy tax filing.
2. Courses for upgrading your skills
Many Singaporeans remain oblivious to the fact that attending courses and improving themselves in areas relevant to their field of employment qualifies them for tax relief. Of course, this is with the caveat that you prove that you paid for it yourself. If you attend enough courses, this relief could go up to SGD 5500. Additionally, if the course you’ve undertaken allows you to make a career switch, it’s still tax deductible. For example, if you want to switch from the financial field to a more administrative job, you can still claim the amount.
3. Make a donation
While making charitable donations has the effect of helping those less fortunate, there is also an added benefit to this good deed. Donating to any charity registered under the IPC (Institute of a Public Character) allows you to get tax relief for the following year. You can get up to 250% in tax deductions respective to what you gave – this particular scheme will last until the end of 2023.
4. Make top-ups to your CPF
It might surprise you that adding to your funds and paying lesser taxes simultaneously is possible. Topping up money to your CPF Special Account is the best way to go about this. Once you’ve deposited the sufficient amount, your tax will automatically be deducted. Do note that the most amount of money you can top up at once is SGD 7000. If you can, insert funds in your parents’ CPF accounts as well. The cap will remain the same, but you’ll be able to receive tax relief from that too. This means that the maximum tax relief you will get from doing this each year is SGD 14 000.
5. Rental relief
Finally, if you’re a landlord, you will receive tax relief pertaining to the expenditures made while earning your rental income. This includes maintenance fees, housing agent costs, etcetera. The tax relief will be calculated as 15% of your income in addition to the interest incurred while paying your mortgage for the year.
Conclusion:
People tend to dread tax season for a multitude of reasons. But with these tips, paired with neat and prudent documentation, you will be saving unprecedented amounts of money on your income tax. However, everybody needs a little guidance sometimes. We at Express Corporate Services, the highest rated
accounting firm in Singapore, provide exemplary financial advisor services for those who need them. Contact us today to learn more about how we can help you!
