You qualify for tax relief when you top-up your CPF, thanks to the CPF Minimum Sum Topping-Up Scheme. You also qualify for tax relief if you top up a family member’s CPF, or if your employer tops up your CPF on your behalf.

If you or your employer make a CPF top-up below $7,000, you qualify for a tax relief equal to the amount added – for instance, if you top-up by $3,000, you can claim $3,000 in tax relief. If the top-up amount exceeds $7,000, the tax relief is capped at the maximum $7,000 amount.

Top-ups made on behalf of family members also qualify you for a tax relief of equivalent top-up amounts, but it is capped at $7,000 – the family member whose CPF you are topping up should have an annual income of less than $4,000. Parents, grandparents, and disabled spouses and siblings do not qualify for this top-up tax relief scheme.

You can save on taxes while simultaneously adding to your healthcare services by making a voluntary contribution to your Medisave account. This should be on top of the mandatory CPF savings.

According to regulation, you will qualify for a tax relief of an account equivalent to a lowest value of any of the following:

• Annual CPF cap less the compulsory contribution required from you and your employer
• The minimum amount that you voluntarily contribute to your Medisave account
• The prevailing Basic Healthcare Sum (BHS) of $54,500, less the balance you had in your Medisave account before you made the voluntary contribution

This is one of the best tax-saving schemes as it contributes to one of the most vital aspects of your life: your health.

The SRS is a more flexible version of the CPF. It is a government-sponsored retirement program. It offers the option of saving up for your retirement at amounts above your set mandatory CPF. However, while you can exceed your CPF cap, the SRS also has limits. The set limit for permanent residents and citizens is $15,300, while foreign work visa holders can contribute up to $35,700. Another difference between the two programs is that the SRS does not offer a fixed interest rate, unlike the CPF’s 2.5%.

While you will not enjoy interest on your contributions, you can take advantage of the program’s tax relief benefits. Every dollar you contribute can be claimed as tax relief, so you can save thousands of dollars. And, as is the case with Medisave, you get to benefit in the long-run when you are too old to work.

One of the reasons why major corporations donate to charity is for the tax relief benefits that come with the charitable gesture. In Singapore, donations by individuals can also earn tax relief benefits. Specifically, donations made to any Institution of Public Character or a philanthropic organization that qualifies for grant-making.

Being charitable is one of the best ways to reduce your taxes. While the government would let you claim a tax relief twice the amount donated, you can now claim reliefs up to 2.5 times to donation amount.

Not all donations qualify for tax relief. Your donation must fall in one of the following categories:

1. Cash donations
2. Shares donations
3. Land and building donations
4. Computer donations
5. Artefact donations
6. Public art tax incentive scheme

Be generous to needy Singaporeans and the government will be generous back to you!

Singapore’s personal tax returns system is progressive to be fair to income earners across the spectrum. It starts at 0% and ends at 22% for annual incomes ranging from $0 to $320,000. Besides this standardized rebate system, the authorities also have various forms of tax reliefs and rebates based on the government’s social policies.

The government has several social policies that it relies on you to implement. If you can prove that you fulfill these policies, you qualify for tax relief. For example, upgrading your professional skills is a social policy, and so is taking care of aged parents. Basic things such as family formation and parenting are also social policies. Depending on the underlying social policies, common tax reliefs include parent relief, child relief, spouse relief, and earned income relief.

You should find out which types of social policy tax relief schemes you qualify for and apply. However, you should remember that these reliefs are subject to certain conditions.

Income from rental property is taxable under Singapore’s laws, but taxation exempts any expenses you may have incurred managing and running the property. Some of the expenses considered for exemption include property tax, which you are required to pay as the property’s owner. Other expenses include mortgage interests, maintenance costs, general repairs, maintenance fees paid to the managing body, and fire insurance. You should check with your lawyer to find out which other expenses qualify for tax exemption.

However, there are two conditions that have to be met when applying for these tax deductibles. First: the expenses should have been incurred for the sole purpose of generating rental income. Second: the expenses must have been incurred during the period of tenancy.

Thinking of buying a house?

Learn the newest changes in CPF and how they affect you as a home buyer!

There are two conditions that must be met to qualify for the NOR scheme. First: You should not have been in Singapore for three Years of Assessment prior to the current YA. Second: You should be a tax resident for the current YA for which you are applying for the NOR scheme.

This program also has very attractive and favorable tax relief benefits. For instance, you can get your employment income apportioned and get reliefs for contributions to overseas pension funds.

Every dollar you save on taxes on your income is a dollar that can benefit you personally. Along with an effective budget plan, take advantage of these tax saving schemes and you will be surprised by how much you can save!

Timcole is one of the leading company incorporation and accounting firm based in Singapore. Our wide range of professional services serve as a one-stop solution for your business, offering you the most affordable price for services conducted with the highest level of excellency.

Contact us to find out more on how we can help you with your company today.

Before the new changes took effect on May 10 2019, most home buyers did not prefer buying apartments that had been previously leased for over 40 years. This is because the CPF rules were hostile towards old apartments, and it would become harder to get access to sufficient CPF. This implies that buyers would have to use more of their own cash to lease older apartments. Their access to HDB loans would also be restricted, and there were limitations to how much of their CPF money they could use to finance these loans.

The new rules will make it possible to lease houses with 59 years or less of lease remaining. Under the old rules, homebuyers could use a maximum of 49% of their CPF money to pay for the lease amount. Under the new rules, homebuyers can use their CPF funds to pay for up to 78% of the lease amount.

Additionally, the amount of money required to be paid out of pocket gas been reduced from 51% to 22%. For a flat valued at $300,000, the cash savings would translate to as much as $87,000. Under the old rules, homeowners would opt to buy apartments with longer and more expensive leases just to get the most out of their CPF and HDB money.

Sellers also have a lot to benefit from the new changes. Those with flats that have been lease for over 40 years will now get more offers than before. They also do not have to redevelop their flats pre-maturely to get them leased, which will also save them a lot of money, time, and other resources.

Ideally, young homebuyers should lease houses that can shelter them for up to the age of 95 – Singapore has one of the highest life expectancy rates of about 85 years of age. The new rules have been designed to see to this by imposing restrictions on leases that do not cover the buyer until the age of 95.

If the lease does not cover the buyer until the age of 95, CPF usage is restricted to only 67% compared to the previous rate of 75%. Additionally, the buyer will be restricted from withdrawing CPF savings higher than the set Basic Retirement Sum once he reaches the age of 55.

This is meant to benefit young home buyers as it would be difficult to lease a new house when elderly if the current lease runs out early. Additionally, the buyer will get access to more CPF savings – CPF savings and other retirement funds are necessary for retirement adequacy for most individuals with average incomes. Essentially, the government is trying to instil financial prudence in young home buyers.

Older buyers are also guaranteed a generous deal under the new rules. Buyers over 45 years of age can use their CPF money to pay for up to 100% of a flat’s lease amount as long as the lease will last them until the recommended age of 95. Previously, the set limit was 80%.

The new CPF changes spell good news for home buyers and sellers, but it will be some time before they can be felt by a majority of the markets.

For starters, the new changes are not expected to save the Housing Development Board resale market. The market has been ailing and failing for some time now, and the benefits of the new CPF changes are just not substantial enough.

Additionally, a majority of CPF transactions will not be impacted for the near-future. This is because many homeowners – 98% of the Housing Development Board and 99% of private property households – already have leases that cover them for up to the age of 95. Additionally, many old apartments – those that have already been leased for over 40 years – were redeveloped to renew the lease period before the changes went into effect.

In the end, it is home buyers who rely on public housing who will reap the most from the new CPF changes. These home buyers are usually strapped for cash, so they need more financial aid – they will get the financial aid needed with the new CPF rules.

At the end of the day, the circumstances facing you should determine whether you should buy a house with a lease that will not cover you to the full age of 95. Limitations such as budget may force you to buy out a shorter lease. Sometimes it may be location, and in other cases, the trade-off of buying a shorter lease may outweigh the need to buy a full one. After all, the terms are friendlier and the prices cheaper now.

However, it is recommended to lease a home that will cover you to the age of 95. A home is one of the most important investments you can make, so it should last you for a lifetime. Besides, there may be a lot of uncertainties in the future, so it helps to know that you are covered. And, good foresight should deter you from the thought of hunting for a new home in your old age.

Are you a foreigner wanting to work in Singapore?

Read our complete Singapore Working Visa guide on the type of work visa you need to do so!

The government is trying to ease Singaporeans’ access to affordable housing. The changes made to the Central Provident Fund are one of the government’s latest measures to do this. They will give home buyers access to more CPF money and lower the amount required to be paid out of pocket. They will also make HDB transactions smoother. It is a win-win deal for both buyers and sellers.

Timcole is one of the leading company incorporation and accounting firm based in Singapore. Our wide range of professional services serve as a one-stop solution for your business, offering you the most affordable price for services conducted with the highest level of excellency.

Contact us to find out more on how we can help you with your company today.