Imagine the year coming to a close and at the end of it you have a steep tax bill. Now paying taxes is inevitable, but wouldn’t you like to know if there is some way to reduce the tax burden? Here are 7 ways you can reduce your taxes (legally) and keep more of your earnings with you. You’ll have an extra little bit that could pay for a holiday abroad or could enhance your retirement fund.
Say you have spent money in the process of earning your income. Perhaps you travel to work or you need to pay for entertainment expenses. You could claim employment expenses if the expense is allowable.
Here are some of the conditions that need to be satisfied to qualify your expense as allowable:
While running your business there are certain costs you are bound to incur. Knowing what you can claim deductions for can help reduce your tax liability and save you a few dollars.
You may claim tax deductions if you incur expenses to improve or enhance your business. For instance, if you need to repair or replace equipment or machinery. You also could claim tax deductions if you pay for R & D expenses.
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Do you earn an income from a property you own? Well, if you spend money on repairs for that property you could be eligible for a tax deduction. However, you need to bear in mind these two factors:
Did you know that you could claim a deduction up to 3 times the amount of a donation you make? Yes, it does pay to be kind.
For donations made between 2009 and 2021, you could be eligible for a tax deduction. Your donation could be cash, computers, shares, land or buildings, artefacts, or works of art and sculptures that are to be displayed publicly.
You will need to make your donation to the Singapore government or an Institution of a Public Character (IPC). Only if you make your donation to an approved IPC will it qualify for tax deduction.
As an angel investor, you could claim tax deduction if you invest in a qualifying start-up firm. You should invest at least S$100,000 in an eligible company within a year from the day you first invested in the firm. You also have to keep your money invested for a continuous period of 2 years.
If you make deposits in licensed financial companies or approved banks, the interest you earn from them will not be taxable. Even interest earned from bonds won’t be taxable. However, if the interest from the bond is earned from a partnership based in Singapore, it will be taxed. If you have earned non-taxable interest, you don’t have to declare it.
If you have any form of taxable interest, you have to declare the complete amount under “Other Income” while filing your taxes.
Tax reliefs and rebates help you save more of your money based on what you qualify for. You need to be a Singapore tax resident to be eligible. Some of the ways you can save on tax relief are:
If you are planning to claim tax relief, you should know that from 2018 onwards there is a cap on income tax relief of S$80,000. You may or may not be affected by this, but there are several schemes offered where you can still save on your tax bill. However, this cap only applies to tax reliefs. You can still be eligible for rebates and other tax deductions. You can utilise the steps above to take full advantage of the tax-saving opportunities and keep more of your hard-earned income.