4 Easy Ways to Pay less Tax without Lowering Your Income or Cheating
Singapore is famed for having one of the lowest income tax rates in the world today. Despite this amazing fact, for most of us, the idea of paying less tax without lowering our income or trying to cheat the IRAS system is a like a breath of fresh air.
In fact, it is possible to grow richer while paying less tax. IRAS has made this possible by instituting handsome reliefs for your efforts at securing your future; pursuing philanthropic objectives; and build your career. Also, there are attractive rebates for entrepreneurs through different schemes.
Here are four easy ways to pay less tax without lowering your income or cheating.
1. Secure Your Future and Pay Less Taxes
One of the most cost efficient ways of cutting down on your income tax is topping up your special CPF account. This enables you to build a larger risk-free retirement portfolio and benefit from the interest. This especially applies to the younger folk who can benefit more from the magic of compounding for a prolonged period.
IRAS allows for a tax relief of up to $7,000 per annum for CPF members and has a tax relief scheme for life insurance policyholders who have CPF contributions not exceeding $ 5, 000 per annum and paid premiums in 2015 on their life insurance.
2. Do Good and Pay Less Taxes
Believe it or not, you can grow your generous nature by donating to an approved institution and claim tax relief of more than double the amount given. What’s more interesting about this scheme is that you do not have to donate cash to qualify, your donations either in cash or kind will count (as long as you can attach a value to it). You can donate shares, artefacts, or even computers.
In addition to donating to charitable institutions, you can invest and claim for deductions under the Angel Investor Tax Deduction Scheme (AITDS). This applies to investments made to qualifying startup companies.
3. Build Your Career on Tax Relief
One of the core drivers of Singapore’s economy is knowledge. To this end, continuous training and learning are encouraged by the government to an extent that you qualify for tax relief when you sign up and undertake a course to upgrade your skills.
This is achieved through the Course Fee Relief scheme. For instance, you can take a master’s degree program to improve your skills on your current job; you can easily claim the maximum $ 5,500 annually in tax relief.
However, this only applies for those who are currently working and seek to improve their skills. It is not geared to reward those looking to attain an approved academic or professional stipulation or those who have not previously worked.
4. Tax Incentives for Entrepreneurs
For entrepreneurs such as self-employed persons, sole proprietors or partners, there are different tax saving schemes such as the Productivity and Innovation Credit (PIC) scheme. This system is purposed to aid integration of technology and productivity improvement measures in your business. Entrepreneurs can claim up to 400% tax deduction on costs incurred for leasing automation equipment such as computers, purchasing software or building websites aimed at growing your business.
Also, IRAS permits tax exemptions for SME’s which have an income of up to $300,000.
These measures by IRAS will not only enable you to pay less tax without reducing your income or cheating but will also propel your financial security, career development, build your reputation and grow your business.
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