Income Tax: Saving through Tax Reliefs


– The end of the financial year is almost upon us and the taxman cometh. Singapore has one of the best income taxation system in the world. It isn’t perfect and it could be a lot worst, especially when compared to countries with high social welfare. Nevertheless, not knowing the various tax reliefs can mean hundreds of dollars lost.

Taxes quote
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In the famous gospel of Matthew, the pharisees questioned Jesus on whether it is lawful to give tribute unto Caesar (equivalent to today’s taxes). His reply: “Render therefore unto Caesar the things which are Caesar’s; and unto God the things that are God’s. Whatever your beliefs are, one thing holds certain: Taxes.

I have a colleague who exclaimed, “this year I’ll have to pay a lot of taxes!” I replied, “Unfortunately, I pay too little taxes”.  😥  Two truths are implied simultaneously:

  1. I don’t earn a high salary
  2. I know how to utilise reliefs

In the US, legally avoiding paying tax is an art and Robert Kiyosaki accurately said,  “The poor say that hiring advisors is too expensive. The rich know that not hiring advisors is what makes you poor”. Clearly, ignorance isn’t bliss in this case.

Before I go into the few reliefs that one absolutely must be aware of, here’s what Singapore’s resident income tax structure looks like:

2017 income tax

Screen Shot 2018-03-16 at 4.10.33 PM
Info taken from IRAS

The median income of a Singaporean in 2017 is around ~$3,600 (Not including employer CPF contribution of 17%)  ($4232 / 117% x 100% = $3617). Click here to see the statistics from MOM. let’s do some basic calculations based on this salary.

Let’s assume average “Joe” earns $43,200 a year in Singapore

$3,600 x 12 Months = $43,200

Based on the 3rd tax bracket, he should be paying:

Screen Shot 2018-03-16 at 11.44.59 AM

$550  (on the first $40,000)  + $224 (7% on the next $3,200)

$550 + $224 = $774

That quite a chunk except that we counted in his own CPF contribution (20%) which should not be part of the equation. In this respect, personal CPF contribution has not been given the love that it deserves.

Let’s start over:

Salary without personal CPF contribution (20%):  $43,200 x 0.8 = $34,560

Immediately, his income bracket falls to the tier before:

Screen Shot 2018-03-16 at 11.44.15 AM

$200 (on the first $30,000) + $159 (3.5% on the next $4,560)

$200 + $159 = $359

$359 is what Joe pays if he does not utilise any tax reliefs.

What is tax relief? Simply put, it relieves you of a portion of your income so that you don’t pay income tax on that portion, possibly meaning you get downgraded to a lower tier like in the previous example.

These are the few reliefs that most people can utilise:

  • Earned income relief (AUTO): $1,000 (below 55 years)
  • NS Men (AUTO): $3,000 to $5,000 (Key appointment holder)
  • Parent Care relief: $9,000 per parent (If your parents doesn’t earn more than $4000 a year/ they’re retired) & (you stay with them in the same house)

Things do get sightly more complicated if you have a sibling who is making similar claims, but for simplicity, let’s assume Joe is a single child who served NS, with one parent who has retired.

$34,560 (after personal CPF deducted) – $1000 (earned income relief) – $3000 (NS relief) – $9,000 (Parent care relief) =

$21,560 (after deducting reliefs)

Screen Shot 2018-03-16 at 12.12.06 PM
Joe pays nothing on the first $20k and $31.2 on the next $10k

This leaves him with $31.2 of taxes to pay.

Other reliefs include:

  • Course Fee Relief: $5,500 (up to)
  • CPF cash top up relief: Click here for more
  • Life Insurance Relief: Click here for more
  • Spouse relief: $2,000 (If spouse not working)
  • Qualifying/Handicapped child relief: click here for more
  • Handicap bro/sis relief: Click here for more
  • Supplementary Retirement Scheme (SRS): This is a HUGE topic that deserve a post of its own.

Married/Divorced/Widowed Females only

  • Foreign Maid Levy: up to $6360 
  • Grandparent Care relief: $3,000 (If your parents take care of your child).
  • Working Mother relief: click here for more


I know that not everyone is able to utilise the reliefs due to various circumstances. Perhaps you earn a high enough income that these reliefs hardly make a dent in the taxes you pay. In that case, we call that a “happy problem”. I would love to be in your shoes.

Hope this article has been helpful for some! 🙂



Disclaimer: This post does not represent the government or any other institutions, and is for educational purposes only. While attempts have been made to be as accurate as possible with the numbers, there might be mistakes in calculations or updates with the current tax system. Please notify me so that I can make changes, if any.

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