How to save money on your tax bill in 2024
Source: Freepik
A few important events mark the start of each year – New Year, Lunar New Year and Tax Season (unique to the Singapore calendar). After the celebrations and festive spending, families will do well with proper financial planning to ensure adequate cash flow to manage their tax payment for Tax Season 2024.
Let us take a look at how a Singaporean, Mr Tan, earning a median monthly salary of $5,197 (Source: Labour Force in Singapore, Ministry of Manpower) or annual income of $62,364 can reduce his tax bill in Year of Assessment 2024, legitimately. For a picture of a happy Singaporean family, add a home-maker wife and two young children under one roof.
Mr Tan’s tax bill for Year of Assessment 2024:
Total Income | $62,364 |
Less Personal Relief | |
- Earned Income Relief - Spouse Relief - Child Relief | $ 1,000 $ 2,000 $ 8,000* |
- CPF Relief | $12,473 - $23,473 |
Chargeable Income | $38,891 |
Tax first $30,000 | $200.00 |
Balance of $8,891 at 3.5% | $311.19 |
Tax payable before rebate | $511.19 |
Personal Income Tax Rebate of 50% (capped at $200) | $200.00** |
Total tax payable | $311.19 |
* $4,000 per child
** The Personal Income Tax Rebate of 50% is for YA2024 as announced in Budget 2024
His chargeable income is $38,891 and the first $20,000 is not taxable. The tax payable will be $311.19 which translates to 0.5 per cent of his gross income. This leaves him with his pay packet relatively intact for his family’s expenses, including saving for future needs.
As families come in all shapes and sizes, we flag out useful tax tips which can shave that extra dollar off your tax bill:
18 reliefs for individuals
Singaporean tax residents enjoy a total of 18 tax reliefs. If you are a Singaporean, Singapore Permanent Resident or a foreigner who has stayed and worked in Singapore for more than 183 days in the past year, find out whether you are eligible for the reliefs.. The total amount of reliefs which taxpayers can claim is capped at $80,000.
Do you need to file your taxes?
Find out whether you need to file an income tax return by using the Filing Checker. The Relief Checker also helps you determine which reliefs you may be able to claim for.
5 reliefs and rebate for mums and dads
Singapore, like other developed countries, is seeing a societal trend of later-age marriages and fewer children. To nudge couples to have more children, our tax policies are pro-children.
Married couples and families enjoy certain reliefs which help to defray the cost of starting and raising their families. But do remember, only mums can tap on these reliefs: Working Mother’s Child Relief, Foreign Domestic Worker Levy Relief (FDWL)^ and Grandparent Caregiver Relief. These are meant to support working mums as they juggle work and taking care of their families.
^ The FDWL Relief will lapse for all taxpayers from Year of Assessment 2025.
One-time Parenthood Rebate
Unlike reliefs which can be tapped on yearly, the Parenthood Rebate is a one-time rebate of up to $20,000 claimable for each child based on child order. Both mums and dads can use the rebate to offset income tax payable. The rebate can be shared by the couple and any unutilised amount will automatically be carried forward to offset your future income tax payable. Alternatively, any unutilised amount by one spouse can be transferred to the other spouse.
2.5 times tax deduction for donations
Looking after the underprivileged will foster a culture of giving and sharing in Singapore. To encourage more people to open up their hearts and wallets, enjoy tax deductions of 2.5 times the qualifying donation amount during the next tax season when you donate to Community Chest or any approved Institution of a Public Character before the year ends.
Tax deduction is made for donations made in the preceding year. If you had donated in 2023, your deductions will be allowed for Year of Assessment 2024.
How do you know if your donation is tax deductible?
Enjoying the tax deduction from donations is easy as charities you donate to will submit the information to IRAS. However, not all goodwill giving enjoy tax deductions. Only donations to Community Chest or approved Institution of a Public Character qualify for tax deduction. 250% tax deduction for qualifying donations has been extended till 31 December 2026.
3 claimable work-from-home expenses
Hybrid working arrangements result in win-win solutions for employers and employees. If you had worked from home and chalked up higher electricity, telecommunications and wi-fi bills due to the home office operations, you can claim these expenses as a deduction against your employment income. Only claim these expenses if your employer did not reimburse you.
Do remember to keep the receipts of these expenses and file them away for 5 years for proper record keeping. Estimates are not acceptable for tax declaration.
What are allowable employment expenses?
Besides work-from-home expenses, you can claim other allowable expenses to lower your tax bill:
- Entertainment expenses when entertaining clients.
- Your share of the entertainment must be excluded from the claim.
- Mosque building fund, zakat fitrah or other religious dues authorised by law.
- Subscriptions paid to professional bodies/societies for knowledge-building and networking.
- Travel expenses on public transport (buses, MRT and taxis).