Filing of Personal Income Tax

It is that time of the year for Singapore taxpayers to file income tax again!

Recently, the government announced several Budget inititatives that aim to improve the lives of Singapore citizens. Most of the Budget goodies are targeted at the lower income group and I suppose most of the less well-off households in Singapore will benefit from the 2013 Budget. As I fell into the middle-income bracket, the only Budget goodies that I may be entitled would be the GST Vouchers and the 30% personal tax rebate.

Difference between Income Tax Relief and Income Tax Rebate
In Singapore, citizens are eligible for various applicable tax relief and rebate. It is important that tax payers understand the difference between tax relief and rebate because it can help tax payers to save thousand of dollars. Essentially, reliefs are deductibles which you can claim on your total income taxable while rebates are offsets on your tax payable.

Obviously given the tier system for Singapore’s personal income tax, the latter would have larger effect on your income tax payable. For example, if a tax payer is claiming the $4500 relief for taking care of his/her parents in 2012, he can only offset $4500 from his total taxable income. However, with the recent announced personal income tax rebate, he/she will get a 30% “discount” from his final bill, capped at $1500. If he/she is above 60 years old, the “discount” will be 50%, also capped at $1500.

Parenthood Rebate and Qualifying Child Relief
This year, I can qualify for both the Parenthood Rebate of $5000 and Qualifying Child Relief of $4000 because of my baby girl. Personally, I like the Parenhood Rebate scheme very much because of its flexibility – spouse can choose to transfer the rebate to partner and tax payers can also transfer excess qualifying rebates to the following assessment years.

This scheme can be very helpful to the sandwiched class with young kids because the resulting amount of money saved can be substantial. (Note that the second kid rebate is $10,000). Besides these relief and rebate schemes for personal income tax, there are several more schemes that Singapore citizens can apply.

Note: The above are just my sharing of thoughts. It is not meant to be financial advice to readers. Readers should log on to the IRAS website and carefully look through the eligibility for each scheme before applying for these schemes.

Magically yours,

SG Wealth Builder