Don’t Kick Yourself for Not Knowing to Claim These Tax Reliefs

It’s time to file our taxes again. Unfortunately, the recent Budget did not give much in terms of tax reliefs or rebates (50% rebate capped at only $200 – applause). Nevertheless there are some often overlooked areas of tax deductions that may apply to us. We examine these in this month’s article. Hurray to saving money!

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Benjamin Franklin once said that there’s nothing more “certain than death and taxes”. Here’s some ways to make our tax season a little more palatable, if you’re an employee. 

 Life Insurance Relief 

Every year I receive queries asking whether insurance premiums can be tax deducted. Yes it can; if one’s total CPF contribution for the previous year was less than $5,000. A married man can claim on his wife’s policy if he paid the premiums on her behalf. The max that can be claimed is the lower of: 

1. The difference between the insurance premiums and $5,000 CPF contribution, or
2. Up to 7% of the insured value of our own/our wife's life or the amount of insurance premiums paid.

This means that most Singaporeans and PRs would not get to enjoy this relief. Expats, on the other hand, can enjoy this fully. Accident and Health insurance premiums are not claimable. Finally, the insurance company must have a branch in Singapore. 

Deductions for Employment Expenses 

We are able to claim if we used our own money to pay for expenses necessary to our employment such as travel expense, entertainment expense (we need to exclude our share of the expenses), and subscriptions (paid to professional bodies or society for professional updates, knowledge and networking, etc). The following conditions must be satisfied: 

1. The expense was incurred while carrying out our official duties;
2. The expense was not reimbursed by our employer; and
3. The expense was not capital (e.g. renovation costs, startup expenses etc) or private in nature.

It may be a bit of a hassle but we have to keep complete and proper records of all expenses incurred for 5 years. For example, expenses incurred in 2018 for YA 2019 must be kept and retained until 31 Dec 2023. 

Deductions for Rental Expenses 

Rental Income is taxable but the expenses incurred for producing the rental income can be deducted. Some items that can be deducted include, the interest paid on the mortgage, property tax incurred during the rental period, premiums paid for fire insurance, repairs and maintenance (e.g. painting, pest control, management corp fees, replacement of furniture/ fittings etc), costs of securing tenants (e.g. agents’ commissions), and even internet and utility charges paid on behalf of tenants. The above applies only to the property that is rented out and not left vacant. 

Course Fees Relief 

We are always encouraged to upgrade our skills and enhance employability. Fees for courses, seminars and conferences can be claimed as relief if: 

1. It leads to an approved academic and professional qualification. The skills learnt should be able to be applied in a particular vocation, and the course provider must be registered with ACRA.
2. It is relevant to our current employment, trade, business, profession or vocation; or
3. It was undergone up to two years prior to our current employment and is relevant to it.

The maximum that can be claimed is $5,500 each year regardless of the number of courses, seminars and conferences attended. 

Parenthood Tax Rebate 

Singapore tax residents who are married, divorced or widowed, may claim tax rebate up to $20,000 per child. The child may be adopted but must be a Singapore citizen within 12 months of birth or adoption. The tax rebate claimant must have registered marriage at the time of birth/ adoption or before the child reaches 6 years old. Both parents can share the PTR based on an apportionment agreed by both. If the percentage of PTR claimed does not add up to 100% or both are unable to agree on the apportionment, IRAS will apportion the PTR equally between the both parents. 

There are other rebates and reliefs that may be applicable to you. Furthermore, different profiles (such as sole proprietors, business owners etc) would have special tax concessions. Do speak to your Financial Services Consultant for more details.