Lady, You Can Be Free

View Comments

• Hmmm...as singles, not much tax reliefs we can get. So, I think having this deferred tax program is better than nothing at all. I'm not too keen to give so much money as taxes since on a day to day basis, I'm already contributing 7% gst. My taxes this year is almost my 1 month salary. So, I even started to contribute to cpf min sum top up to reduce tax next year.

  I have some high dividend yield stocks in SRS which gives me decent return. And I'm satisfied. :)

• Hi PF,
  Topping up CPF min sum sounds like a great plan :). Thanks for sharing.

• You can withdraw when you get retrenched during your career. That means your income tax bracket for the withdrawn amount is lower.

  the savings is lesser 18%-5% maybe. But still worth it. If you are investing your srs in stocks, you can consciously determine that to be your retirement sum. If you withdraw less than 30k a year when you are retired, the tax savings is maximum.

  You can consider voluntary contribution to your cpf up to 30600 also. Part of it goes to oa which you can buy house. Use the medisave acc to buy medical insurance for parents.

• Hi NoName,
  If I withdraw when I get retrenched, I will face a penalty of 5% and taxed 100% for the income withdrawn if I am not wrong. Voluntary contribution to CPF sounds like a plan ;-). Thanks for sharing.

• You can further reduce your taxes by sharing your wealth with the less fortunate of your choice.

  This contribution to the less fortunate is multiplied by 2.5 times to reduce your taxable amount. :D

  Topping up parents cpf account also helps to lower your tax contribution. :)

• Hi Numbers,
  Kool ! Guess it's a reminder for me to start opening up my heart to the less fortunate :-). Not sure whether my parents would be too happy when I announce to them that they would no longer be getting allowance in cash from me, but through CPF. Worth a try I guess as it gels well with the cpf lifetime min sum benefits they would enjoy. Thanks for sharing.

• You can consider giving some money to charity. Every $1 you donate will give you 2.5 times relief. So a $10,000 donation effectively can reduce your taxable income by $25,000.00. You can do charity while reducing your tax bill in the mean time.

• Hi Vincent,
  Charity ! What a great idea! Will include this in my coming new year resolution :-). Thanks for sharing.

• Hi Lady,

  You will only be taxed on withdrawing monies from the SRS account after 62 if the amount you withdraw exceeds $40,000 a year. Even if you withdrew $60,000 a year, you will only pay taxes on $10,000 at the 2% rate, which is just $200.

  As long as you plan to retire before 62 and have enough money to cushion you through any hard times until 62, I think the SRS is extremely good.

  If you plan to work in a similar capacity as currently past the age of 62, you will still have to pay a high income tax, so it does not really help you much.

  I think the SRS account is very good only if you know that the money you set aside in it will not be needed anytime soon, and you wish to grow your retirement nest egg even bigger and faster.

  I have wrote about the SRS before, maybe my post might be useful to you: http://gotmoneygothoney.blogspot.sg/2014/04/supplementary-retirement-scheme-srs-and.html

  Cheers,
  MH

• Hi MH,
  Thanks for sharing. Great Insights !

• Dear lady, I'm not sure abt volunteer cpf top up. There is a cap of how much u can contribute per year, I think. And that cap minus away ur contribution from your job is the max u can do voluntary contribution. This one I am not sure. Pls research and confirm.

  Cpf min sum top up is direct to the Cpf-SA. Provided the SA plus MA is less than the prevailing min sum. If u already met min sum, then u can't do this top up anymore. And even if u can, its just 7k tax relief max. SRS is 12,750.

  I'm contributing for both. Did a tax projection next yr. Hopefully I can contain my taxes to 1mth of my salary or below.

• Hi PF,
  Thanks for clarifying. Looks like I need to do some math and googling here :). You are doing great in "escaping" tax :-).

• I posted on this subject before. Info may be a bit dated. Perhaps useful.

  http://lizardorealm.blogspot.sg/2010/08/maximising-returns-with-minimal-risks.html

  With the tax avoidance savings, consider if you were to take the same savings to donate. And as mentioned in an earlier comment, this gains a further deductible at 2.5x the donation. At the 18% tax bracket, every $4,000 donated actually generates $10,000 in deductible. That's a further $1,800 of tax avoided. So in truth, you would only need to spend $2,200 for that $4,000 donation.

• Hi Lizardo,
  I love this donation idea ! :-). Thanks for making the math clearer. Am getting rusty with numbers with all these t&cs.

• Take that $12,750 and invest. Can buy Unit Trust and Stocks as per usual.

  If you were to subsequently withdraw post-retirement $40,000 per year over 10 years, you would pay no tax - assuming (a) no other taxable income, (b) the policy remains that only half of the SRS sum withdrawn is taxable, (c) that it remains that for taxable income below $20,000, no taxes are levied.

• Hi Lizardo,
  Thanks for the input. There's so much t&cs when one reaches 62 - 65 in Singapore. Tax, how much to withdraw, how much to keep as CPF min sum, Medishield, Eldershield etc...Sigh, really needs to pray one doesn't get dementia or alzheimer :-). Feels like retiring is a full time job, rather than a time for celebration !!

• Already not too bad. Try understanding the US, UK or Aussie systems!

  And so true about not getting any of those touch wood problems. It will be so difficult to manage if any of those happen.

• Hi Lizardo,
  Agree !! Touch wood :)

• Seems like no one mention tax on capital gain.... That is if your srs ROI is fantastic and the after 62 withdrawal is not managed properly, you may end up paying more tax ie capital gain tax.

• Hi Jimmy,
  Thanks for highlighting !! This was on my mind as well. I wonder if I made a stock investment that pays dividends. Typically, the tax would be deducted before it is returned to the SRS. When I reach 62, how do they know which amount has already been tax deducted and which are not. Any idea?

• They dun, so double tax. And if the retirement age is raised (probably will), we will have a shorter window to withdraw and enjoy our retirement.

• Hi Jimmy,
  Wah, looks like topping up CPF min sum is a better plan than topping up SRS. At least there's no tax on CPF withdrawal and whatever capital gain on investment.

• Yeah...it takes a lot of planning to retire! Although I think I won't retire.

  I've been studying ways to plan my taxes when I realized that this year we hv no discount from govt per last 2 yrs....sigh. I've also started to donate to sg charities for tax relief. I used to donate to World Vision. Now my choice charities this year are ST school pocket money fund and children's society where ocbc donate 1 for every 2 bucks I donate.

• Hi PF,
  I need to start thinking like you. Stop thinking about Retiring :). Hahaha
  Any tips on how to go about hunting for charities to donate? Is there a blessed list of charity organizations recognized by the IRAS?