Tax season is upon us again. For the first time since I started working, I was informed by IRAS that I was not eligible for No Filing Service and had to e-File my taxes this year. I blame this on my honesty for declaring my P2P lending interest in my taxes last year ?
I’ve written extensively on tax planning during tax season last year, so I thought I’ll give you some reminders instead. Here are my 4 tax planning tips to consider when filing your taxes for YA2019.
Claim all your due personal reliefs
No Filing Service has made it extremely convenient for Singaporeans to file their taxes. However, it potentially creates a careless attitude amongst Singaporeans towards their taxes.
Do educate yourself on the various personal reliefs available to you and claim those that apply to you. Not claiming them is just you creating an unnecessary cost to yourself. Some potential reliefs you may be missing out on are the Parent Relief, Grandparent caregiver relief and Course fee relief.
Check out part 1 of my tax planning guide for more information on personal reliefs.
Plan your taxes as a family
Certain reliefs I call “Family support reliefs” like Parent relief, Handicapped sibling relief and Qualifying child relief can be potentially claimed by multiple people (your siblings and spouse for eg). However, IRAS only allows each person to only be claimed once.
This opens up a tax planning opportunity for your family. From a utilitarian perspective, it is generally best to let the family member who has the highest incremental tax rate to claim as much of the reliefs as possible. This is because each dollar of relief saves the family member the most amount of tax. To illustrate this, here’s a graphic from part 4 of my tax planning guide:
That being said, I do realise that the wealthiest family member may not be the one actually supporting the parent / child. You should sit down as a family to come to a amicable decision.
Defer your Course fee relief if you are not paying high taxes
Course fee relief is the only relief that allows you to defer your relief if you are not earning $22,000 or more assessable income during the YA that is incurred. Do defer it to later year if you qualify so that you get the most bang for your buck.
Do remember that you can defer up to 2 years. Also, do take into account the 50% income tax rebate capped at $200 in your calculations.
Learn from your mistakes
After reviewing your tax computation for YA2019, ask yourself if you are satisfied with the amount of tax you are paying. Is there more you could have done (CPF Cash Top / SRS relief for example) before the end of 2018 to mitigate your tax burden?
Learn from this experience and take action in 2019 so that you won’t be disappointed again when filing taxes in 2020.
Final thoughts
Everyone should educate themselves on the possible things you can actively do to mitigate your tax bill. While everyone should contribute to nation building, one should only contribute their fair share.
My Additional Resources
Personal tax planning 1: Tax reliefs
Personal tax planning 2: CPF Cash Top Up
Personal tax planning 3: SRS
Personal tax planning 4: Bringing it all together
I’ve also developed my own personal tax calculator for your free use. The cool thing about it is that you simply fill it out like a questionnaire and the calculator automatically determines if you are eligible for the relief or not.
Happy Hunting,
KK
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