Saturday, July 31, 2021

Typical ways to enjoy tax relief / tax savings in Singapore & GROW your CPF balance exponentially !

There are few typical ways to enjoy tax relief in Singapore and at the same time, build up a strong retirement income. Kill 2 birds with 1 stone. Nice! 

There is a cap now for the tax relief, which is S$80,000. It is sad for the working mothers as they can easily burst the S$80,000 ceiling if they have children.

(A) Enjoy tax relief / tax savings :

(1) Hitting CPF Annual Limit (AL) of S$37,740 to enjoy maximum tax relief of S$20,400, be it your high salaries/bonuses or you do Voluntary Contribution (VC) to your CPF MA account (to hit the Annual Limit) if your MA is below Basic Healthcare Sum (BHS).

(2) CPF Cash top-up to SA account to enjoy S$7,000 maximum tax relief. Enjoy while it lasts. It can be done until SA reaches Full Retirement Sum (FRS).

(3) SRS contribution to enjoy S$15,300 maximum tax relief. Then buy S&P500 fund (through Endowus), local equities / REITs, etc. to grow your monies in SRS account further!

Of course there are other tax relief you can claim if you are eligible, for example: 
- NSman-self/wife/parent, 
- Course Fee, 
- Cash top-up to parent CPF, 
- Parent relief, 
- Foreign domestic worker levy
- Earned income relief
- Qualifying child relief 
- Working mother child relief (this is one massive tax relief for female working mothers)

(B) No tax relief/ tax savings:

(1) Transfer CPF OA to SA to enjoy additional 1.5% interest. This cannot be done once SA reaches FRS.

(2) VHR (Voluntary Housing Refund) back to your CPF OA.

(3) Top up kid's CPF SA to enjoy 5% interest (for the first S$60,000, thereafter 4% interest).

(4) CPF SA shielding only when you approach age 55, that's just one time in & out. Some will even want to shield OA account. There are many articles out there to teach how you to do CPF SA shielding. Go check it out!

By doing all above diligently, there is no way you cannot see your CPF balance goes up exponentially. You build up a strong retirement income and yet enjoy a good tax savings. 

Good luck and enjoy hacking the eggs!

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