Although Singapore’s tax rate is one of the lowest
in the world, 笨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, 笨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:
- S$432 to husband and balance to wife,
- All $4,000 to husband
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