Budget 2015 - how does it impact my financial planning?‏

This year’s national Budget takes major steps in four areas: investing in skills of the future, restructuring our economy by promoting innovation and internationalisation, investing in economic and social infrastructure, and strengthening assurance in retirement and enhance support for middle-income families. All these sound like nice slogans. The question remains; do any of these help us in our personal financial planning? This month we examine some parts of Budget 2015 and how it may be relevant to our individual planning.

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We've chosen some parts of Budget 2015 that are more relevant to discuss. Here they are:

Savings & Contributions:

1. Foreign Domestic Workers concessionary levy has been halved to $60 per month. More households will benefit as the qualifying criteria has been revised to Singaporeans having children or grandchildren age 16 and below.

The yearly savings of $720 should not be lightly dismissed. We must be careful not to increase expenditure; but instead put aside this amount as savings or better still, invest it in a higher yielding account.

2. The CPF salary ceiling will be raised to $6,000. Employees above age 50 will also have to contribute more into their CPF.

This means that those earning more than $5,000 per month, and those above 50, will see a decrease in their discretionary income. If you fall into either category, it is time to take another look at your monthly expenditure and prepare a new budget if necessary.

Tax Increases:

1. Increase in the marginal tax rate by 1% for those with chargeable income from $160,000 to $360,000. For those above, the increase is 2%.

Should you fall into the above categories, it’s time to sit down with your Financial Consultant to explore ways to reduce your tax liability. Strategies may include, donating to charity, and starting an SRS account etc.

2. Increase in petrol duty rates by 15 or 20 cents per litre.

For those who drive, perhaps it’s time to pay more attention to cutting down on motor expenses. One way is to get less expensive motor insurance. Speak to your Financial Consultant about this.

Onetime Benefits:

1. 20% to 100% onetime road tax rebate

2. 50% income tax rebate capped at $1,000

3. Cash injection of $300 to $600 into the Child Development Account of every child up to the age of 6. Post-secondary accounts of Singaporeans aged 17 to 20 will also be topped-up.

4. Increase in GST vouchers and S&CC rebates for lower and middle income households.

In my opinion, these measures are not very significant to our personal financial planning. These are probably meant to be “sweeteners” to soothe over the other more important changes.

These measures are simply the tip of the iceberg. For a more comprehensive overview of Budget 2015 visit: http://www.straitstimes.com/budget-2015. Also feel free to contact your Financial Consultant to discuss more. Or you can write to me as well.