Top money-saving tax relief and rebate options for parents in Singapore
No one ever said raising kids was cheap. In fact, TODAY online reported that raising one child up to the age of 21 years old in Singapore can cost anywhere between SGD 200,000 to an eye-watering figure of nearly SGD 1 million.
These estimated costs account for medical expenses associated with pregnancy and childbirth (check out our maternity guide for cost info), infant care, child care, extracurricular activities, preschool to university education, basic food and shopping. Depending on a myriad of factors – such as the type of school your child attends (international/local) – costs can, of course, be even higher than SGD 1 million.
With such costs in mind, smart financial planning is essential in maintaining a comfortable standard of living for your family. Fortunately, help is available in the form of tax relief and rebates for families with children – even for expats (depending on the rebate/relief in question). Read on to learn more about the four key relief and rebate options available in Singapore, and whether or not you are eligible.
Tax relief and rebate options for families living in Singapore
In Singapore, a number of types of relief and rebates are available to support certain social/economic objectives. Such options are allowable if:
- You are a tax resident – You will be considered a tax resident if you are either A) A Singaporean Citizen or Permanent Resident who resides in Singapore, or B) A foreigner (excluding company directors) who has stayed/worked in the country for 183 days or more in the previous year (the year before the Year of Assessment); and
- You meet the eligibility conditions of a particular relief/rebate
In light of Singapore’s low birth rate, schemes to encourage parenthood are high on the government’s agenda. Key among these schemes are the below tax relief and rebate options, which can be easily claimed against your tax repayments every year:
Parenthood Tax Rebate (PTR)
The Parenthood Tax Rebate (PTR) allows married, divorced, or widowed tax resident parents to claim rebates of up to SGD 20,000 per child. To qualify for the PTR, a number of conditions will need to be met – e.g. the child must be born/adopted on or after 1 Jan 2008.
If your first child was born/adopted before 1 Jan 2008, the PTR won’t be available, but your 2nd, 3rd, or 4th child may qualify for a rebate provided that they meet the Inland Revenue Authority of Singapore’s (IRAS) specific ‘conditions for qualifying child’. Your child must also be a Singaporean Citizen at birth, or within 12 months after.
For the exact details on this rebate, be sure to visit the IRAS website here, which includes a PTR eligibility and calculator tool.
Qualifying Child Relief (QCR) and Handicapped Child Relief (HCR)
To recognize the efforts of families supporting their children, those meeting certain criteria are eligible for the Qualifying Child Relief (QCR)/Handicapped Child Relief (HCR). The QCR amount is SGD 4,000 per child, and SGD 7,500 per child for the Year of Assessment 2015, and SGD 5,500 per child for the Year of Assessment 2009-2014.
The qualifying conditions for QCR and HCR are as follows:
|The child is either:
|The child is below 16 years old, or studying full-time at any educational institution/university/college at any time in 2017||Yes||NA|
|The child’s annual income (if applicable) did not exceed SGD 4,000 in 2017||Yes||NA|
|The child is mentally or physically handicapped||NA||Yes|
Working Mother’s Child Relief (WMCR)
In their goal of encouraging married women to continue employment after having children, the Working Mother’s Child Relief (WMCR) amount is 15% of the mother’s earned income for the first child, 20% for the second child, and 25% for the 3rd child and beyond. If you have more than one child, the total relief is capped at 100% of the mother’s earned income. Single or male taxpayers are not eligible for this tax relief. To learn more about WMCR, click here to visit the IRAS website.
Foreign Maid Levy (FML)
The Foreign Maid Levy (FML) relief allows married women to claim twice the total foreign domestic worker levy paid in the previous year on one domestic helper, regardless of whether they have/their husband has paid the levy. To qualify for FML relief, you must meet all the following criteria:
- You/your husband employed a foreign domestic helper in 2017; and
- In 2017, you were either:
- Married and living with your husband
- Married and your husband was not a tax resident
- Separated/divorced/widowed and had children who lived with you and whom you could claim child reliefs for.
Final advice: Don’t forget health insurance
The above tax relief and rebate options can certainly alleviate some of the financial burden of raising children in Singapore, but having the right health insurance protection is also essential in offsetting bank-breakingly expensive medical costs.
While Permanent Residents and Singaporean Citizens have access to Medishield Life – Singapore’s mandatory health insurance scheme – the majority of expats do not, and must therefore rely on their employer-provided plan or obtain private health insurance. Those on the hunt for insurance, however, will quickly find that there are thousands of options on the market.
To ensure that you obtain the best health insurance protection for you and your family’s healthcare and budget needs, be sure get in touch with Pacific Prime Singapore today. As Singapore’s broker of choice, we’ve helped over 500,000 clients secure tailored insurance solutions. We offer coverage from all major insurers, meaning our clients are able to secure the best plans with options to add a wide variety of coveted benefits, such as:
- Maternity insurance coverage
- Newborn health insurance coverage
- Child health insurance
- Family insurance coverage
- Dental insurance
- Vision insurance
- Wellness benefits
- International health insurance coverage
Not only that, but we also offer free advice and plan comparisons, as well as value-added services like claims and renewals support at no extra cost vs. going direct to the insurer. To learn more about how we can help you, or for some friendly advice on insurance and raising a family in Singapore, contact our team of consultants (and parents!) today.