Tuesday, June 6, 2017

How to minimise individual income tax for a working couple

Although Singapore’s tax rate is one of the lowest in the world, mummy hold the belief that one should aim to pay his/her fair share of tax and claim all the reliefs that one is entitled to. As a working couple, mummy always need to take into account of her hubby’s income and reliefs as well as hers when preparing the individual income tax filing as to minimise the tax payable for them as a couple.

Here are her workings in computing the prefect combination of reliefs to be split between the couple to achieve the lowest tax payable possible:


  • Step 1: List down the income of both couples as well as the tax reliefs available. This can be easily extracted from the draft form B1 when you log in the IRAS tax portal. 
  • Step 2: Identify the “non-shareable” reliefs and the “shareable” reliefs. Non-shareable reliefs are those that are only allowable to a particular person, for example, working mother child relief is allowed to the mother (i.e. the wife), while earned income relief, CPF relief, etc are only allow to that particular individual (i.e. the husband or the wife). While shareable relief can be split and share amongst the couple. 
  • Step 3: Compute the chargeable income net of non-shareable reliefs
  • Step 4: Split the shareable reliefs according to the highest marginal tax rates



Here is an example for illustration of how the above work:
Assuming both husband and wife are working and they have one child. The wife would be entitled to the working mother relief which is 15% of her total income. 

INCOME Husband Wife
Employment income  100,000  100,000
Other income  -    -  
TOTAL INCOME  100,000  100,000
DEDUCTIONS AND RELIEFS
Non-shareable reliefs
Approved Donations  68  65
Earned income relief  1,000  1,000
Working mother's child relief  NA  14,990
Grandparent caregiver relief  NA  3,000
CPF/provident Fund relief  17,000  16,000
Course fees relief  -    -  
Foreign maid levy relief  NA  -  
CPF cash top-up relief  -    -  
Supplementary Retirement Scheme (SRS) relief  -    -  
NSman(Self/wife/parent) relief  1,500  750
TOTAL NON-SHAREABLE RELIEFS  19,568  35,805
Shareable reliefs
Qualifying child relief  4,000
Parent relief  0
Net chargeable income net of non-shareable reliefs  80,432  64,195
Husband tax rate Amount Tax rate
20,000 0%
10,000 2%
10,000 3.50%
40,000 7%
432 11.50%
80,432
Wife tax rate Amount Tax rate
20,000 0%
10,000 2%
10,000 3.50%
24,195 7%
64,195

As in this example, the amount of $432 of husband attracts the highest tax rate of 11.50%, follows by the $40,000 (Husband) and $24,195 (wife) attracting the second highest rate of 7%. The couple has a few choices of split the child relief: 

  1. S$432 to husband and balance to wife, 
  1. All $4,000 to husband


Wednesday, May 31, 2017

Updates for May 2017


Another harvesting month again, the total dividends received is S$2,503.12 due to a number of bonds and preference shares issued out its coupon payout in this month.  笨mummy also made a small profit of S$400+ from the sales of 5,000 units of ST Eng at S$3.75 and subsequent re-purchase of them back at S$3.65. 



Dividend / interest for month of May 17:  
Oxley Bond - S$123.97
ST Engineering  - S$ 600.00
Keppel Corporation - S$ 360.00
Comfortdelgro - S$ 60.50
DBS Pref Share - S$ 233.07
FCL Treasury - S$ 181.00
Acendas India Trust - S$ 296.00
Mapletree GCC - S$ 37.31
Nera Tel - S$ 25.00
Kingsmen - S$75
Suntec REIT- S$242.50
SPH - S$120
Hyflux Pref share - S$148.77



Dividend received in Year 2014
$ 8,241.99
Dividend received in Year 2015
$ 8,978.59
Dividend received in Year 2016 
$ 12,145.15
Dividend received in May 2017
$ 2,503.12
Dividend received in Year 2017 to date
$ 5,767.67


Monday, May 1, 2017

Updates for Apr 2017

As mummy was clearing her leave from middle of the month and she had spent some time doing spring cleaning. She also caught the Carousell bug and started selling pre-loved baby clothes, home appliance that she bought but not used and items that she got from lucky draws. In total she had made about $200+ from the sales. 

Finance wise, mummy received quite substantial amount of dividend / coupon payout in April. She also received the result for her Ascott right issue and she was glad that she received her full entitlement as well as the excess rights that she applied. In total, she now have 11,000 units of Ascott Trust.  

As now she is not going to receive a salary crediting in May, she made a move to open a UOB One account and applied for a UOB One card and lady card. She planned to move her money if $50,000 in OCBC 360 account to UOB One card for better interest as without the salary crediting, the interest from 360 account would be only 0.60%. This also mean that 
mummy needs to monitor and make sure that her spending for the calendar month would be at least $500. 

As for the balance amount, it would be moving to the esaver account for a better interest of 1.15%. Then it is time to close the 360 account.

Dividend / interest for month of Apr 17:  
Genting Corporate Bond - S$255.55
M1  - S$590.00
Hyflux Pref Share - S$89.75
Perennial Bond - S$139.12



Dividend received in Year 2014
$ 8,241.99
Dividend received in Year 2015
$ 8,978.59 
Dividend received in Year 2016 
$ 12,145.15
Dividend received in Apr 2017
$ 1,074.42
Dividend received in Year 2017 to date
$ 3,264.55

Wednesday, April 19, 2017

Family conflict part 1

mummy has her fair share of dealing with unreasonable people especially coming from a 2 years stint as a customer service operator. Dealing with difficult colleagues, customers, friends and even suppliers are never much a problem as we can always end the relationship if thing get bad (i.e. we can quit our job, stop buying stuffs from that particular supplier).  The most difficult is dealing with family members. Family members are linked by blood ties and it is never by choice, unlike a friend that we choose to befriend.

mummy has a first-hand encounter with difficult and unreasonable family members. This is also the cause of her decision to be a SAHM and not enlist the help of her mother anymore to take care of her Child 1 and Child 2 and move back to her own place. Family member A and B are both not in full time employment and they experience great deal of unhappiness withmummy continuing to stay with them in the same household for reason, yet again unknown tomummy. Maybemummy has annoyed them in ways that she is not aware of.

Profile of these difficult and unreasonable family members
Family member A is like a phantom living in the household. mummy never really got to see him during her stay at the household. He was out early in the morning between 5-6am for his regular morning walk beforemummy wakes up (which is normally around 6am to feed Child 2 and eat her breakfast and prepare for work).  mummy is left the household around 7.15am for work and in most days, Family member A has not yet return from his morning walk when she left the household. In those days when Family member A is back beforemummy left the house, there is little chance of interaction at all, as he went straight to the toilet for “big business” (i.e. pooing) and this normally take a while for him. By the timemummy came back from work, Family member A is gone and he would only be back to the household after 10pm, and at that time, mummy is already in her room sleeping.

Family member B operates like he is living in the Europe time zone, i.e. he wakes up at 3-4pm in the afternoon and went to bed at 5-6 am in the morning. His meal times also have uncanny similarity to a person living and breathing in the Europe time zone. Breakfast for him start at 3-4pm (i.e. UK time 8-9am), he would then have lunch around 7pm (that UK time 12noon), dinner at 2-3am and on some days, supper at 5am. Family member B stay at home most of the time, with short intervals during the days where he would be out of the household to have a smoking break and buy lottery (toto,4D) or at middle of the night to get food.

What are their grievances?
Grievance number 1 -mummy does not help out in the household or selfish by taking day off to do her own stuff and not helping out with household chores.
The common complaint thatmummy heard from them is that she does not help out in the household or taking day off to do her own stuff. Hmm that is in a way true when she is hardly around or she is busy with stuff on her leave day. Let her details how a typical weekday is like  –

6-6.30am
Wake up, clean up, enjoy her breakfast – her own me-time of the day.
6.30 -7am
Feed Child 2
7-7.15am
Get dress for work. If time permits, she does some basic chores –tidying up her bed, clean up the mess created by Child 1, if any, the night before
7.15am-6.30pm
Commuting to and from work and working in office
6.30-8.30pm
Bath Child 2, has her dinner, bathe, feed Child 2, wash and sterilize Child 2’s bottles, coax Child 2 to sleep. Entertain Child 1 when required depending on his mood.
8.30-9.30pm
Ifmummy is not the choose one to play with Child 1, she would have a bit of time to catch a breather.
10pm to 1am
By 10pm, mummy prepared for hit the bed with 3-5 occasional disturbance from Child 2 who co-sleep where she needs to rock or carry Child 2 to settle her back to sleep.
1am to 1.30am
Child 2’s midnight feed at 1am. This vary depending on Child 2. Sometime she can be up as early as 11pm or even as late as 3.30am for the feed

While her typical weekend schedule is
Sat
mummy returns to her own house with Child 1 and 2. This includes feeding, diaper changing, playing, bathing, entertaining both Child 1 and 2. If time permits, she could have a breather to have a coffee break at 3pm.
Sun morning
Laundry is scheduled on Sunday
Sun 4pm
mummy returns to the household around 4pm in the afternoon with Child 2. Child 1 is temporary out-sourced to the other set of grandparents till dinner time. Normally, mummy will go out for a short trip to the mall (from 4pm to 5.30pm) leaving Child 2 with her mum since 4-5pm is the napping time of Child 2.
She will try to be back by 5.30 pm to start the evening cycle started again (see above 6.30 to 10pm of the weekday schedule above). 

Let’s talk about days where she is on leave. The morning cycle and evening cycle are identical to a weekday, except the time in office is replaced with the following:

7-8am
Entertain Child 1 and bring Child 1 to school
8-9am
Commuting to her house. Yes, it will take about an hour or so to reach
9-11.30am
Sweeping & mopping, washing of bedsheets, etc (Depending on the scheduled tasks of the month)
11.30am to 2pm
Lunch and grocery shopping (i.e. veg, fish and meat for cooking Child 1 lunch and dinner on weekend and stock up any items that need to be replenished) – including commuting time
2-2.30pm
Back home. Unpack the grocery purchases
2.30-3.30pm
Commuting back to household. Sometimes if mummy settled her chores earlier, she would be back to the household at 2pm.
3.30-5.30pm
Once she is back to the household, she would be busy with Child 2 – i.e. feeding, diaper changing and playing.
After 5.30pm
The evening cycle begins.

Looking at the schedules, mummy wonders where are the empty slots that she could find time to help out with the household chores. mummy did offer a number of ways to lighten the household chores of her mum – ordering of tingkat (so no need for cooking of dinner), her family members’ clothing can be wash once/twice a week using the washing machine since office wear are not that dirty (so no need to handwash everyday) 

Grievance number 2 – Complain too much or nag too much on the way Child 1 and Child 2 are managed.
Another common grievance that mummy heard is that she complain /nag too much. mummy wonders which mummy does not complain/nag on the way their own children are being care for, whether they care for by grandparents, maid or childcare. She knows a number of mummies that set restrictions for their child’s caregiver, i.e. no TV/iPad, no sleeping in摇篮, no use of walker, daily morning stroll to get the morning sun (they said this helps babies to vitamin D which is good for calcium absorption and bone development).  And childcare centers also enforced rules in toddles to help them in their social development and keep communication with parents on the child's progress in childcare. 

One of the highlight that created most grievance in B is her complaint of the use of iPad during bedtime or close to bedtime given by B to Child 1. mummy does not set any rule for her mum caring for her Child 1, although she has a no iPad rule at her own place, she understand that iPad could, in some way occupied a child for a while and freeing up some time. Child 1 started using iPad after moving to the household (he only moved there after 18 months). mummy witnessed constant temper tantrum from Child 1 due to the use of iPad at the household. Sleep time is affected, with Child 1 not wanting to sleep and hope to continue with the iPad. Screaming, yelling, hitting of adult are all common sight. mummy has told her mum to stop the usage of iPad at night so that such episodes of temper tantrum can be reduced and iPad usage is still okay anytime before bedtime. Nowadays, mummy is no longer see temper tantrum at bedtime though Child 1 still not wanting to sleep at bedtime and find excuse to delay bedtime, but there is no screaming, telling or hitting of adults in his attempt to delay bedtime.

Other causes of complaints from mummy is the differing view between the old wives tales and the scientific facts. mummy is a more of a supporter of the scientific facts and disagree with some old traditional that has no basis– like newborn babies should drink some water cause formula milk is heaty and cause constipation, introducing solid early would help babies sleep through the night, shaving newborn’s hair will make it grow better, etc. Sometimes these comments come from Family member A who has no experience caring for a baby or child at all. Imaging a person who does not drive, sitting next to the driver in a car, giving instruction to the driver on how to drive. 

If they do not like to hear mummy complaining or nagging, that is going to be hard. She, as a parent, is naturally concerned with her children’s well-being, and there is no way she would keep silent when it impacts the well-being of her children. They do not get it cause they have never been a parent before. 


Thursday, April 6, 2017

New role wef 1 May 2017 - CFO of the house

As a stay at home mum, mummy has also assumed the role of the CFO (Chief Finance Officer) of the household. From a double income household moving to a single income household will, of course, has an impact on the finance of the household. As agreed with hubby, starting from May 2017,mummy has agreed on a monthly sum of $1,000 a month to manage the daily expenses of the family (excluding mortgage repayment of $1,690.92 per month) based on the following estimated breakdown:

Household expenses (per month)
Home Broadband (actual)
$29.00
Town Council conservancy charges (actual)
$55.50
Utilities charges (Estimated)
$120.00
Groceries (Estimated)
$500.00


Child 1’s Nursery School Fee1 (Actual)
$171.20
Child 1’s Diaper2 / Milk3 (Estimated)
$62.00


Child 2’s Diaper4 / Milk5 (Estimated)
$310.00
Total
1,247.70

Yes, you are not seeing wrong, the total household expenses is more than the budget given by hubby. It is up tomummy to manage the budget given with the estimated expenses by achieving saving in the following areas:

> bulk purchases during sales or in-store discount
> credit card rebates from purchases
> government grant or subsidy for utilities or conservancy charge 

> reduce cost due to change of events, e.g. Child 2 is coming to 6 months in a few weeks and the milk powder expense would also expect to come down significantly as Child 2 starts weaning and the cost of stage 2 milk powder is always cheaper than stage 1 or Child 1 “upgrade” to a diaper-less
> Alsomummy has stockpiled some diapers during the 12 Dec Qoolife store promotion and NTUC baby fair in end Feb 2017. The diapers bought, ranging from M size to L size, should last for a while for Child 2.

Reference
1 Child 1 is now studying at Sparkletots nursery program which run for 3 hours with a monthly school fee of S$171.20. However there are also some miscellaneous costs involved at the start of the year or end of each school term  – insurance, material cost, school outing, etc. Although there is no school during school holiday in Jun and Dec period, school fee is still applicable.
2 Child 1 has not mastered the skill of night time toilet training, hence he still required a diaper per day at bedtime, and this works out to be 30 diapers a month. Pamper XL pants (36 pcs) is selling for S$22.90 on Redmart (without any discount). Hopefully, this expense would go off once Child 1 mastered night time toilet training ability.
3 Child 1 is drinking Similac Gain IQ stage 4 and he finished a tin of 850g in a month. One tin is selling for S$39.90 on Redmart.
4 Child 2, being an infant, uses an estimate of 5 diapers a day, and a month would be 150 diapers. Pamper tape diaper size M is selling for S$52 (for 184 pcs) on Qoolife store on Qoo10. The cost per month is estimated to be around $43 (150 x 52/184)

5 Child 2 finished a tin of 800g milk powder in a week. The cost of a tin of her milk power is 66.90 and a monthly would cost S$267.60. Infant milk powder for babies below 6 months does not have promotion, hencemummy has to bear with the ridiculously high price for a while before Child 2 can move to stage 2 milk formula which come with a lower price tag. 

Wednesday, April 5, 2017

Updates for Mar 2017

As always March is a quiet month with no buy/sell action taken and minimal cash inflow from dividends or coupon payout from bonds/ preference shares. 

The only action that
mummy took this month was to subscribe for the Ascott rights. She decided to subscribe to the full entitlement of her rights of Ascott Trust as well as excess rights of 680 to make it a round amount of 3000 units. Let's wait patiently for the result that would be out 11 April. 
This month is ended with a major personal decision made that would have a very huge impact to the overall financial of mummy - she has decided to quit her job to be a stay at home mum. Yes, it is a major decision that was attributed to a number of push factors - family conflict with sibling over getting her mum to take care of her children (家家有本难念的经, that's a story for another time), lack of motivation at work due to the mismatch of abilities vs work expectation (she rather spend her time on something more meaningful, like her family, than on a job that go nowhere) , mid life crisis (wanting to have a more meaning in life than being tied down with the routine stuffs with no time to rest). 
Although mummy has not ascertain how much the finance of the household would be impacted by the decision, she is confident that a single income from her husband should be able to support the expense of the family of 4. Meanwhile she would explore alternative source of incomes to increase the cash position. Some avenues she is exploring are selling used stuff on carousell (mainly preloved baby clothes and toys), earning more dividend income from shares, finding part time work that can be done at home or during spare time and renting out a spare room of her house. 

Dividend / interest for month of Mar 17: 
HPH Trust - 29.93


Dividend received in Year 2014
$ 8,241.99
Dividend received in Year 2015
$ 8,978.59
Dividend received in Year 2016
12,145.15
Dividend received in Mar 2017
$ 29.93
Dividend received in Year 2017 to date
$ 2,190.13