7 Ways to Pay Lesser Income Tax in Singapore Legally
Tax season is here, and it's time for you to file and pay your taxes. First thing first, who needs to pay income tax in Singapore? Well, as long as you have derived or earned any income in and from the country, tax is chargeable. In Singapore, taxes collected by the government goes towards economic, social, environmental and national development.
Undoubtedly, tax filing can be lengthy and tedious. With so many details to consider, preparation for tax filing can be confusing. To ease the process of filing your taxes, we have come up with seven ways for you to reduce your taxable income legally, making your tax-filing season simpler and cheaper.
Current Income Tax Rate in Singapore
In Singapore, your income tax rate depends on your tax residency status. Additionally, as Singapore adopts a progressive tax system, tax rates differ from income group to income group. Low-income earners have a lower tax rate. On the other hand, higher-income earners pay a proportionately higher tax.
Presently, the resident tax rate is (up to YA 2023):
| Chargeable Income | Income Tax Rate | Gross Tax Payable |
|---|---|---|
| Up to $20,000 | 0% | - |
| $30,000 | 2% on $10,000 | $200 |
| $40,000 | 2% on $10,000 + 3.5% on $10,000 | $550 |
| $50,000 | 2% on $10,000 + 3.5% on $10,000 + 7% on $10,000 | $1,250 |
| $60,000 | 2% on $10,000 + 3.5% on $10,000 + 7% on $20,000 | $1,950 |
| $70,000 | 2% on $10,000 + 3.5% on $10,000 + 7% on $30,000 | $2,650 |
| $80,000 | 2% on $10,000 + 3.5% on $10,000 + 7% on $40,000 | $3,350 |
| $90,000 | 2% on $10,000 + 3.5% on $10,000 + 7% on $40,000 + 11.5% on $10,000 | $4,500 |
| $100,000 | 2% on $10,000 + 3.5% on $10,000 + 7% on $40,000 + 11.5% on $20,000 | $5,650 |
| $110,000 | 2% on $10,000 + 3.5% on $10,000 + 7% on $40,000 + 11.5% on $30,000 | $6,800 |
| $120,000 | 2% on $10,000 + 3.5% on $10,000 + 7% on $40,000 + 11.5% on $40,000 | $7,950 |
| $130,000 | 2% on $10,000 + 3.5% on $10,000 + 7% on $40,000 + 11.5% on $40,000 + 15% on $10,000 | $9,450 |
But is the rates in the table above set in stone? Definitely not. If you are someone who can't bear to pay that much for income taxes, and yet, aren't willing to stray on the wrong side of the law, here are seven ways to reduce your income tax payable.
So, What Are Some Ways to Reduce Your Taxable Income in Singapore?
1. Make Donations for a Good Cause
Your primary motivation for donating to charities should be to give back to society. However, you should know that there are tax benefits for those who give back.
Charitable contributions to qualified organisations can lower your taxable income. To get tax relief, you can donate to any approved Institution of a Public Character (IPC). You will get to enjoy tax deductions of 250% of your qualifying donation amount. For example, if you donate $5,000 to an IPC, you will get $12,500 reduced from your taxable income.
Some approved IPC's are:
- Movement for the Intellectually Disabled of Singapore (MINDS)
- Club Rainbow (Singapore)
- Willing Hearts
- MERCYLIGHT ANIMAL RESCUE AND SANCTUARY LIMITED
- Chen Su Lan Methodist Children's Home
Click here to find out if your donation is approved under Singapore’s list of IPC’s.
Apart from cash donations, there are other tax-deductible donations that are eligible for a 250% tax relief, they are:
- Shares Donations
- Artefact Donations
- Donations under the Public Art Tax Incentive Scheme (PATIS)
- Land and Building Donations
2. Top Up Your CPF Account
Want to give yourself money while paying lesser taxes? You can do so by topping up your CPF account. After all, the money in a CPF account belongs to you, so ultimately, you will gain.
All you need to do is top up your Special or Medisave account. Bear in mind that the maximum amount you can top up is $8,000 for yourself. If you want to maximise your savings, you can also top up your family member's Special or Retirement Account (up to $8,000). This brings your total maximum relief to $16,000 per assessment year.
Do note that you have to top up your CPF by 31st December to enjoy tax relief in the following year. Hence, if you are looking to reduce your taxable income for YA2022, it is too late. However, do not worry as you can start preparing for the next assessment year.
3. Claim Work-From-Home Expenses
Despite the gradual easing of safe management measures in Singapore, many offices are continuing some form of remote work arrangements. Undoubtedly, working from home has resulted in additional costs that employees have to bear, such as electricity and telecommunication charges.
Presently, employees can already claim employment expenses that are “wholly and exclusively” for the production of their employment income. These are:
- Incurred while carrying out their official duties;
- Not reimbursed by employers; and
- Not capital or private in nature
On top of the existing list of allowable expenses, IRAS has also created a list of work-from-home expenses that employees can claim on their tax returns. These are:
- Electricity charges
- Telecommunication charges
For tax relief on these charges, you will need to keep proper records and accounts with invoices, receipts, vouchers and other relevant documents for five years.
How does it work? You will need to compare your bills before and after their work-from-home arrangements. For example, you need to work from home from 1st February 2021 till 30th April 2021. The utility charges from 1st February 2021 till 30th April 2021 were as follows:
- Jan: $100 (base month)
- Feb: $150
- Mar: $170
- Apr: $190
The utility charges that may be claimed as deductible expenses against your employment income is $100.
| Month | Allowable Amount |
|---|---|
| Feb | $150 - $100 = $50 |
| Mar | $170 - $100 = $70 |
| Apr | $190 - $100 = $90 |
| Total | $210 |
4. Upgrade Your Skills
One way to cultivate a habit of lifelong learning is by upgrading your skills through courses, seminars and conferences. Upgrading your skills will improve your career prospects, increase your self-confidence, and improve your marketability and competitiveness.
In Singapore, you can get tax relief on courses attended in the previous year. This tax relief is known as the Course Fee Relief. It is given to encourage individuals to upgrade their skills and enhance employability. Under the Course Fee Relief, you are eligible for up to S$5,500 in tax relief. How does it work? You can claim the amount you spent on relevant courses and exams. It will be deducted from your taxable income.
You may claim the following types of fees:
- Aptitude test fees (for computer courses)
- Examination fees
- Registration/enrolment fees
- Tuition fees
These courses must be relevant to your current employment, trade, business, profession or vocation. If you attend courses not related to your current job, you will not be eligible for tax relief. However, keep the invoices as you can still claim tax relief in the future, provided that it will help you in your new career.
5. For NS Men: Claim NSman Relief
If you are part of the Singapore Armed Forces, you will be glad to know that the country rewards NS men for their service to the nation. If you are an NS key command and staff appointment holder, your tax relief ranges from $3,500 to $5,000. It is dependent on whether you have performed NS activities in the preceding work year. General population NS men can enjoy tax reliefs from $1,500 to $3,000.
| Did you perform NS activities in the preceding year? | NSmen (General population) | NS key command and staff appointment holders |
|---|---|---|
| Yes | $3000 | $5000 |
| No | $1,500 | $3,500 |
Moreover, as long as you are eligible for the NS men tax relief, your spouse and parents will also be entitled to $750 in tax reliefs for that year of assessment.
Best of all, IRAS will automatically grant this relief to you, and you need not claim the NS men's relief on your own. Your eligibility will be based on your records sent to IRAS by MINDEF, SPF and SCDF.
6. For Mother’s: Join the Workforce
Are you a working mother who is married, divorced, or widowed? If you are, you qualify for the Working Mother’s Child Relief (WMCR). The main purpose of the WMCR relief is to encourage women to remain in the workforce after having children. However, to qualify for the WMCR tax relief, your child must be a Singapore Citizen.
The tax relief amount that you may claim for each child is dependent on the child order, it is as follows:
| Child Order | WMCR amount |
|---|---|
| 1st Child | 15% of mother’s earned income |
| 2nd Child | 20% of mother’s earned income |
| 3rd Child | 25% of mother’s earned income |
| All Children After | 25% of mother’s earned income |
7. Pay Taxes With Your Credit Card
Is it worthwhile to pay your income taxes with a credit card? Well, there are a few benefits of doing so. Firstly, using rewards credit cards to make payment will help you earn rebates, cashback, points or miles. These benefits will help to reduce your tax paid. Secondly, if you decide to apply for a new credit card that offers an attractive welcome bonus, tax payments can help you meet the spending requirement. Lastly, charging your tax payments is convenient as you can consolidate them into one account.
Wonder what are some of the best credit cards in Singapore to pay your income tax with? Here are four of the best credit cards in Singapore for your consideration: HSBC Visa Infinite
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HSBC Visa Infinite Card is not just a great option for airport perks, it also offers one of the highest rewards rates for income tax payments. Cardholders earn 1 mile per S$1 locally and 2 miles overseas during their first year; if they spend S$50,000 annually, they’ll subsequently earn 1.25 miles per S$1 locally and 2.25 miles overseas. This local rate applies to cardholders’ income tax payment. Considering the 1.5% processing fee for using HSBC’s tax facility, this translates to a ‘buy rate’ of 1.50 cents per mile for 1st year spenders, and 1.20 cents per mile for subsequent higher spenders. Again, these costs are just a fraction of the actual value of miles redeemed for business or 1st class air tickets.
Cardholders also benefit from great airport perks. Such benefits include expedited immigration clearance, unlimited lounge access, free limo transfers, and travel insurance. While there’s a S$650 fee (S$488 for HSBC Premier customers), the rewards rates, perks, and discounted miles rate (through tax payment) make HSBC Visa Infinite Card a great option for high-spending, frequent travellers. | |
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HSBC Visa Infinite Card is not just a great option for airport perks, it also offers one of the highest rewards rates for income tax payments. Cardholders earn 1 mile per S$1 locally and 2 miles overseas during their first year; if they spend S$50,000 annually, they’ll subsequently earn 1.25 miles per S$1 locally and 2.25 miles overseas. This local rate applies to cardholders’ income tax payment. Considering the 1.5% processing fee for using HSBC’s tax facility, this translates to a ‘buy rate’ of 1.50 cents per mile for 1st year spenders, and 1.20 cents per mile for subsequent higher spenders. Again, these costs are just a fraction of the actual value of miles redeemed for business or 1st class air tickets.
Cardholders also benefit from great airport perks. Such benefits include expedited immigration clearance, unlimited lounge access, free limo transfers, and travel insurance. While there’s a S$650 fee (S$488 for HSBC Premier customers), the rewards rates, perks, and discounted miles rate (through tax payment) make HSBC Visa Infinite Card a great option for high-spending, frequent travellers. |
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Apart from offering some of the best fixed deposit rates in Singapore, DBS also offers attractive credit cards. If you’re a frequent traveller seeking luxury perks–without having to pay a massive annual fee–you may be interested in DBS Altitude Visa Card. Cardholders earn 1.2 miles per S$1 locally, 2 miles overseas, and 3 miles for online travel bookings. In addition, they receive 2 free lounge visits/year, free travel insurance, golfing privileges throughout SE Asia and more. While many cards with such perks charge sizeable fees, DBS Altitude Cardholders are exempt from the S$192.6 fee with just S$25,000 annual spend.
In addition to its affordability, DBS also offers rewards on income tax payments. Cardholders receive 1.2 miles per S$1 spend on their income tax, which is paid off through DBS’s My Preferred Payment Plan for Income Tax Payments. Unlike other cards, which require repayment in one lump sum, or that coordinate instalments to align with GIRO monthly payments, DBS’s plan allows cardholders to pay DBS back in 0% interest instalments over up to 12 months, rather than paying back the entire sum in the next card statement. This instalment plan has a 3% processing fee, however, which is higher than any other tax facility’s. At this rate, paying taxes through DBS Altitude Card offers a ‘buy rate’ of 2.50 cents per mile. While this is notably more expensive than buy rates with alternative cards, it’s still a discount of nearly 50% on a mile’s redemption value for business class tickets. Therefore, if you tend to fly business or 1st class and want a great travel card with a fee-waiver, DBS Altitude Card could be an excellent option for you. | |
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Apart from offering some of the best fixed deposit rates in Singapore, DBS also offers attractive credit cards. If you’re a frequent traveller seeking luxury perks–without having to pay a massive annual fee–you may be interested in DBS Altitude Visa Card. Cardholders earn 1.2 miles per S$1 locally, 2 miles overseas, and 3 miles for online travel bookings. In addition, they receive 2 free lounge visits/year, free travel insurance, golfing privileges throughout SE Asia and more. While many cards with such perks charge sizeable fees, DBS Altitude Cardholders are exempt from the S$192.6 fee with just S$25,000 annual spend.
In addition to its affordability, DBS also offers rewards on income tax payments. Cardholders receive 1.2 miles per S$1 spend on their income tax, which is paid off through DBS’s My Preferred Payment Plan for Income Tax Payments. Unlike other cards, which require repayment in one lump sum, or that coordinate instalments to align with GIRO monthly payments, DBS’s plan allows cardholders to pay DBS back in 0% interest instalments over up to 12 months, rather than paying back the entire sum in the next card statement. This instalment plan has a 3% processing fee, however, which is higher than any other tax facility’s. At this rate, paying taxes through DBS Altitude Card offers a ‘buy rate’ of 2.50 cents per mile. While this is notably more expensive than buy rates with alternative cards, it’s still a discount of nearly 50% on a mile’s redemption value for business class tickets. Therefore, if you tend to fly business or 1st class and want a great travel card with a fee-waiver, DBS Altitude Card could be an excellent option for you. |
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Citi Prestige MasterCard offers some of the best luxury perks on the market, while still providing high miles rates and even rewards for spend on taxes. Cardholders enjoy 1.3 miles per S$1 locally and 2 miles overseas, plus 25,000 annual bonus miles (worth S$250) and up to 30% annual bonus (based on tenure of relationship with Citibank). Cardholders also receive unlimited lounge access, free limo transfers, bonus hotel nights, golfing privileges, and more.
Cardmembers also have access to Citi PayAll, which offers 1.3 miles per S$1 spend on taxes, rent, condominium management fees, school fees, and electricity bills, for a 1.5–2% administrative fee. This fee outweighs the rewards rate, which essentially means cardholders can "buy" miles rewards at a discounted rate: about 1.15 cents/mile at the 1.5% rate and 1.53 cents/mile at the 2% rate. Rewards miles can often be redeemed for 4–8 cents value when booking first class, so paying taxes through Citi PayAll is an excellent opportunity to accrue miles cheaply. This being said, Citi Prestige Card does come with a S$535 annual fee; therefore, it's best matched to higher-earners who frequently travel. | |
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Citi Prestige MasterCard offers some of the best luxury perks on the market, while still providing high miles rates and even rewards for spend on taxes. Cardholders enjoy 1.3 miles per S$1 locally and 2 miles overseas, plus 25,000 annual bonus miles (worth S$250) and up to 30% annual bonus (based on tenure of relationship with Citibank). Cardholders also receive unlimited lounge access, free limo transfers, bonus hotel nights, golfing privileges, and more.
Cardmembers also have access to Citi PayAll, which offers 1.3 miles per S$1 spend on taxes, rent, condominium management fees, school fees, and electricity bills, for a 1.5–2% administrative fee. This fee outweighs the rewards rate, which essentially means cardholders can "buy" miles rewards at a discounted rate: about 1.15 cents/mile at the 1.5% rate and 1.53 cents/mile at the 2% rate. Rewards miles can often be redeemed for 4–8 cents value when booking first class, so paying taxes through Citi PayAll is an excellent opportunity to accrue miles cheaply. This being said, Citi Prestige Card does come with a S$535 annual fee; therefore, it's best matched to higher-earners who frequently travel. |
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Standard Chartered is known their best saving accounts in Singapore. Apart from saving accounts, they also offer exclusive credit cards. Standard Chartered Visa Infinite Card is not only the absolute best option on the market for paying income taxes, it also offers exceptional rewards rates and travel perks. Cardholders earn a market-leading 3 miles per S$1 overseas, 1.4 miles locally, and receive 35,000 welcome miles (worth S$350). Privileges include 6 free lounge visits/year, a free yacht hire, free travel insurance, Hertz Asia privileges, discounted green fees and more.
In terms of paying income taxes, SC Visa Infinite stands out from all alternatives. Cardholders (both principal and supplementary) earn some of the highest rewards rates for tax payments on the market–those with at least S$2,000/month spend earn 1.4 miles per S$1, and those with spend below earn 1 mile per S$1. The bank’s tax facility then debits the amount of your tax payment to your card and credits this amount to your bank account. You are then responsible for arranging payment with IRAS, and must pay off the credit card charge by the next statement month. Paying income taxes through a credit card incurs a processing fee–in this case, 1.6% of your total tax amount. This fee rate is higher than the rewards rate offered, so essentially, paying taxes through your card is a way of ‘buying’ miles for a cheap price. For SC Visa Infinite Card, tax payment allows you to buy at the rate of 1 mile for 1.14 cents (1.60 cents for lower spenders). This is the best ‘buy rate’ on the market. In addition, if you use rewards to book a business class ticket, 1 mile’s redemption worth is 4.40 cents, on average. This means by paying your income taxes, you’re buying miles at a deep discount. Finally, SC Visa Infinite Card stands out because cardholders with an SC banking account can also earn rewards on fixed deposits, investments, savings accounts, mortgage loans, and more. Overall, the benefits of SC Visa Infinite Card considerably validate it’s admittedly high S$588.5 fee. Ultimately, if you want elite perks, top rates, and the chance to buy miles at a discount, SC Visa Infinite Card is an excellent option for you. | |
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Standard Chartered is known their best saving accounts in Singapore. Apart from saving accounts, they also offer exclusive credit cards. Standard Chartered Visa Infinite Card is not only the absolute best option on the market for paying income taxes, it also offers exceptional rewards rates and travel perks. Cardholders earn a market-leading 3 miles per S$1 overseas, 1.4 miles locally, and receive 35,000 welcome miles (worth S$350). Privileges include 6 free lounge visits/year, a free yacht hire, free travel insurance, Hertz Asia privileges, discounted green fees and more.
In terms of paying income taxes, SC Visa Infinite stands out from all alternatives. Cardholders (both principal and supplementary) earn some of the highest rewards rates for tax payments on the market–those with at least S$2,000/month spend earn 1.4 miles per S$1, and those with spend below earn 1 mile per S$1. The bank’s tax facility then debits the amount of your tax payment to your card and credits this amount to your bank account. You are then responsible for arranging payment with IRAS, and must pay off the credit card charge by the next statement month. Paying income taxes through a credit card incurs a processing fee–in this case, 1.6% of your total tax amount. This fee rate is higher than the rewards rate offered, so essentially, paying taxes through your card is a way of ‘buying’ miles for a cheap price. For SC Visa Infinite Card, tax payment allows you to buy at the rate of 1 mile for 1.14 cents (1.60 cents for lower spenders). This is the best ‘buy rate’ on the market. In addition, if you use rewards to book a business class ticket, 1 mile’s redemption worth is 4.40 cents, on average. This means by paying your income taxes, you’re buying miles at a deep discount. Finally, SC Visa Infinite Card stands out because cardholders with an SC banking account can also earn rewards on fixed deposits, investments, savings accounts, mortgage loans, and more. Overall, the benefits of SC Visa Infinite Card considerably validate it’s admittedly high S$588.5 fee. Ultimately, if you want elite perks, top rates, and the chance to buy miles at a discount, SC Visa Infinite Card is an excellent option for you. |
CardUp
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If you make one-off or recurring tax payments and would like to earn rewards while also automating those payments all in one platform, then you should consider signing up for CardUp. This online platform enables you to make payments with your credit card even for services which do not currently accept credit cards. In addition, the platform allows you to earn miles or cashback on your tax payments, property tax, income tax and stamp duty.
You can schedule future, recurring and one-off payments, monitor them and receive real-time payment status updates. While it is free to sign up, each transaction carries a corresponding processing fee. As an added bonus, however, making payments through CardUp allows you to free up some cash for other uses before the credit card bill is due. | |
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If you make one-off or recurring tax payments and would like to earn rewards while also automating those payments all in one platform, then you should consider signing up for CardUp. This online platform enables you to make payments with your credit card even for services which do not currently accept credit cards. In addition, the platform allows you to earn miles or cashback on your tax payments, property tax, income tax and stamp duty.
You can schedule future, recurring and one-off payments, monitor them and receive real-time payment status updates. While it is free to sign up, each transaction carries a corresponding processing fee. As an added bonus, however, making payments through CardUp allows you to free up some cash for other uses before the credit card bill is due. |
Do Not Forget to Pay Your Taxes on Time
To reduce tax season stress, you should set aside a portion of your income every month so that you will have money readily available to repay your taxes when it is due. You should also keep your documents organised for a seamless payment process.
It is imperative that you pay your taxes on time. Taxpayers who do not file their taxes or pay their taxes on time are at risk of severe penalties. In Singapore, if you fail to pay your income tax for two or more years, you will be required to pay a penalty twice the amount that you owe IRAS. You will also be liable for a fine of up to $1,000. Failure to do so might result in imprisonment of up to six months.
Are you still looking for the best credit cards to pay your income tax in Singapore? Check out our handy guide that will help you in your decision-making process here.
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Boon Hun spent over five years in the content marketing space as the managing editor of Goody Feed creating interesting and relevant content for the social media generation. In 2022, he moved to the FinTech space while remaining true to his roots, intending to bring financial literacy to more people in Singapore. When not doing his work, he can be found watching people build homes on YouTube.