| Fun fact: Today, there are 15 tax reliefs, each serving an objective. Taken together, the reliefs can unduly reduce the taxable income. |
Earlier, I was just briefly looking at income tax reliefs from CPF contributions, CPF top-ups and SRS top-ups. Having some time at hand, I delve into the other tax reliefs over the years from 2004 to 2018, depending on the data available. At first glance, the number of claimants for Earned Income and NSman looked pretty high.
| Earned Income relief | Quantum |
| i) Below 55 years old | $1,000 |
| ii) 55 – 59 years old | $6,000 |
| iii) 60 years old and above | $8,000 |
We can see that the Government is encouraging people to work longer, with an emphasis on those above 60 having a higher quantum for Earned Income relief. However, the majority of us fall under the “Below 55 years old” category and the tax reliefs is just $3.25 billion dollars, or on average about $1,800 per individual for YA 2018.
| Relief for NSmen | Quantum |
| i) Active | $3,000 |
| ii) Inactive | $1,500 |
| Key Appointment Holders | additional $2,000 |
| Relief for Wives of NSmen | $750 |
| Relief for Parents of NSmen | $750 |
As seen from the graph, tax reliefs for NSmen is just $0.98 billion dollars, or on average about $1,500 per individual for YA 2018. In contrast, tax reliefs from CPF contribution is the highest and stands at $13.7 billion dollars, or on average $11,400 per individual for YA 2018.
Child reliefs is seeing a good increase both in terms of number of claimants and tax reliefs, which is a good sign. This not only means more children are being borne, but also more per family nucleus. The Working Mother Child Relief (WMCR) was reviewed for YA 2009. This was not only to encourage married women to remain in the workforce after having children, but also to have more children.
| YA 2005 to YA 2008 | YA 2009 onwards | |
| 1st child | 5% | 15% |
| 2nd child | 15% | 20% |
| 3rd child | 20% | 25% |
| 4th child | 25% | 25% |
| Subsequent child | N/A | 25% |
| Cap (QCR+HCR+WMCR) | $25,000 per child | $50,000 per child |
| QCR: Qualifying Child Relief HCR: Handicapped Child Relief |
Note: Above percentages are of mother’s earned income. Cumulative WMCR for all children is capped at 100% of mother’s earned income.
By removing tax reliefs for Child, CPF, Earned Income and NSman from the picture, we could now have a better look at the rest.
Even though the government has continuously encouraged life-long learning with an enhanced Course Fee relief, it seems that Singaporeans are not catching up. Only 43,239 claimants, which accounts for 1.71% of assessed individuals for YA 2018.
| Prior to YA 2011 | YA 2011 onwards | |
| Course Fee relief | $3,500 | $5,500 |
Food for thought, does the numbers mean anything to you from a macro perspective?
Theory of Constraints 