Employment expenses can be deducted from employment income if they are wholly and exclusively incurred in the production of the income in Singapore. These expenses must have been incurred by the employee in carrying out one's official duties, and cannot have been reimbursed by the employer, of a capital/private nature, or incurred on public transport.
Generally, a 250% deduction may be claimed for qualifying donations to approved charities, foundations, and grantmakers.
Life insurance premiums
Life insurance premiums are deductible but subject to certain conditions, and the total deduction (i.e. contributions to the CPF and life insurance premium) is restricted to SGD 5,000.
Interest expense may be deductible, provided it is incurred wholly and exclusively in the production of taxable income. Mortgage interest is, therefore, deductible only where the property concerned yields income.
An individual can deduct annual subscriptions paid to professional institutes or societies in which membership is generally required as a condition of employment. Subscriptions paid to professional bodies or societies for professional updates, knowledge, and networking are generally allowed as a deduction as well if relevant to the individual’s employment duties.
No deductions are allowed for medical expenses or for any other personal or household expenditure.
Singapore citizens and permanent residents are allowed deductions against their taxable income for contributions made to the CPF or an approved pension/provident fund but subject to the following limits:
- Contributions made up to the limit prescribed in the CPF Act.
- For a self-employed individual, the deduction for contributions made for each year of assessment is restricted to the lower of SGD 37,740 (i.e. CPF contributions up to the specified income ceiling of SGD 102,000) and the CPF contribution rate of 37% applied to the individual's assessable business income.
A deduction for SRS contributions of up to 15% of income (for Singapore citizens and permanent residents) and up to 35% (for foreigners) can be claimed against the income earned in the year in which the contributions are made (subject to income capping rules).
Spouses cannot transfer qualifying deductions (including excess capital allowances, trade losses, donations, and rental deficits) to each other.
Any unabsorbed trade losses or capital allowances can be carried forward to future years to be offset against the future income of the taxpayer until the amount is fully utilised, subject to existing rules. Any unutilised donations can also be carried forward to future years to be offset against the future income of the taxpayer, up to a maximum of five years.
For year of assessment 2020 (income year 2019), the following amounts are deductible from the assessable income of a resident individual to arrive at the income subject to tax:
- Spouse relief: SGD 2,000 provided the spouse is living with or supported by the resident individual taxpayer and the annual worldwide income of the spouse is not more than SGD 4,000.
- Handicapped spouse relief: SGD 5,500 for the maintenance of a handicapped spouse. There is no income threshold for this relief.
- Earned income relief: Lesser of actual earned income or SGD 1,000 if age is under 55; increased for individuals who are 55 and over or are handicapped.
- Child reliefs:
- Qualifying child relief: SGD 4,000 for each child under the age of 16 years or in full-time education provided the child’s annual worldwide income is not more than SGD 4,000.
- Handicapped child: SGD 7,500 instead of the qualifying child relief of SGD 4,000. There is no income threshold for this relief.
- Working mother's child relief for each Singaporean child who satisfies all conditions under the qualifying child relief or handicapped child relief is a percentage of the mother's earned income, subject to a cumulative maximum of 100% of her earned income. The percentages applicable for the first, second, and each subsequent child are 15%, 20%, and 25%, respectively.
Qualifying child relief and handicapped child relief may be apportioned and claimed as agreed between a husband and wife. The total relief claimed by husband and wife must not exceed the maximum claim available for each child.
- Aged dependant relief:
- Aged parent or grandparent maintained by taxpayer in Singapore: SGD 5,500.
- Aged parent or grandparent maintained and living with taxpayer in Singapore: SGD 9,000.
- Handicapped aged parent or grandparent maintained by taxpayer in Singapore: SGD 10,000.
- Handicapped aged parent or grandparent maintained and living with taxpayer in Singapore: SGD 14,000.
Relief for aged parents and grandparents are available subject to the dependant’s worldwide income not exceeding SGD 4,000. There is no qualifying income threshold for handicapped aged parents and grandparents. Aged dependant relief may be shared by two or more taxpayers.
- Grandparent caregiver relief: SGD 3,000 is available to working mothers with Singaporean children aged 12 years and below, subject to certain conditions. The cap on the child’s age is removed for dependent children who are handicapped and unmarried, with effect from year of assessment 2020. This relief is in addition to the aged dependant relief (above).
- Educational expenses: Course fees (including tuition and examination fees) not exceeding SGD 5,500 relating to approved academic, professional, or vocational qualifications. Subject to certain conditions, the taxpayer can claim the relief within two years of assessment from the year in which the course is completed.
- Foreign maid levy: Twice the amount of levy imposed on one maid is deductible against the earned income of a married woman or of a divorced or separated woman with dependent children living with her in the same household.
- Reservists: SGD 1,500 or SGD 3,000 for those who have completed or performed national service. An additional SGD 2,000 relief will be given to key appointment holders. A relief of SGD 750 each will also be given to Singaporean parents (who do not qualify for national service relief of their own) and wives of reservists against their own income.
- CPF cash top-up relief: Lower of SGD 7,000 per year or the actual amount of cash top-up by the taxpayer or the employer to the taxpayer’s CPF retirement account. The taxpayer can claim a further relief of up to SGD 7,000 for top-ups made to the accounts of one's siblings, parents, parents-in-law, grandparents, grandparents-in-law, and spouse. For the taxpayer’s siblings and spouse, they must have derived income of not more than SGD 4,000. In addition, individuals who make voluntary contributions to their own CPF healthcare accounts (Medisave) will be allowed tax relief up to a cap of SGD 37,740 less mandatory contributions for the year.
Additional reliefs are granted for dependant great-grandparents and handicapped siblings.
Personal income tax (PIT) reliefs are subject to a cap of SGD 80,000 per year of assessment.
Where an individual carries on a trade, business, profession, or vocation, deductions are allowed for all outgoings and expenses incurred wholly and exclusively in the production of the income being assessed (except expenses specifically prohibited under the Income Tax Act), including capital allowances (fiscal depreciation) on most fixed assets except for land and non-industrial buildings.
Business losses and unutilised capital allowances may be offset against other sources of income such as employment, interest, dividend, and rental income in the same year. Any remaining unabsorbed losses and capital allowances can be carried forward, subject to certain conditions.
Current year unutilised business losses and capital allowances of up to SGD 100,000 can also be carried back to the year of assessment immediately preceding the year of assessment in which the loss and capital allowance arose.