You will be able to identify the reliefs IRAS gives automatically and check they were applied.
Two years ago, while Shu Ting's husband Marcus was finishing a full-time master's degree and earning almost nothing, she claimed Spouse Relief. Last year Marcus started work at an engineering firm in Jurong, on a full salary. When Shu Ting opened her return this year, Spouse Relief was sitting there, already filled in, as if nothing had changed.
That is the problem this lesson deals with. Some reliefs arrive without you lifting a finger. Others are copied forward from last year whether or not they still apply. Either way, you are the one signing the return, so you need to know which is which.
Earned Income Relief goes to people with income from work, such as a salary or trade income, and you don't have to claim it, because IRAS works it out from the income it already has and adds it to your assessment.
The amount rises with age, so a worker in their late fifties gets more than one in their thirties, and it is higher again for people with a disability. It can never be more than the earned income itself, which only matters for someone who earned very little in the year. IRAS sets the amounts and age bands, and the current figures are on its website.
Because the relief depends on your age and income, there is little to check beyond making sure it appears. If you have a disability and the higher amount doesn't show, that is worth raising with IRAS.
If you're an employee, part of each month's salary goes to CPF as your employee contribution. The tax system doesn't tax that slice. Instead, you get CPF relief equal to the compulsory employee contributions you made in the year, up to limits set by the CPF contribution rules.
You don't claim this either. The CPF Board sends your contribution records to IRAS, and the relief is filled in from them. Your employer's share isn't part of your income in the first place, so it doesn't appear as a relief.
Two things can still go wrong. If you had more than one employer, or an employer paid CPF late, the figure may not match what came off your payslips. And the relief only covers compulsory contributions, so voluntary contributions and cash top-ups are a separate matter, covered in module 3, Use CPF top-ups and stay under the relief cap.
Shu Ting compared her CPF relief with the employee CPF lines on her payslips for the year. Twelve months, plus the CPF deducted from her bonus, came to S$14,800 in this example, the same figure as her notice, so she ticked it and moved on.
The trickier group is the reliefs IRAS pre-fills because you claimed them before. Depending on the relief, IRAS may assume your situation is unchanged and fill in the same claim. That is convenient when nothing has changed. When something has, it can quietly give you a relief you no longer qualify for, or leave out one you now do.
The reliefs most likely to need updating are the ones tied to other people's lives. Spouse Relief depends on your spouse's income. Reliefs for children depend on their age and whether they are studying. Parent Relief depends on where your parent lives and how much income they have. A marriage, a birth, a child finishing school, a parent moving in or out, or a parent passing away can each change what you should claim.
A wrong pre-filled claim is still your claim. If you submit it, you are telling IRAS you qualify. IRAS can review claims after the notice is issued and recover the tax, with penalties if it decides the claim was careless. Correcting it before you submit takes two minutes. Fixing it later takes much longer.
Go through your return relief by relief and ask the same question each time: was this true for me in the calendar year being assessed? Reliefs follow the facts of that year, so a change in January this year doesn't affect last year's return.
Shu Ting went down her list. Earned Income Relief: given automatically, and her age band was right. CPF relief: matched her payslips. NSman Relief: Marcus had done his in-camp training, but NSman Relief for wives depends on conditions that IRAS sets, and she checked them rather than assuming. Spouse Relief: because Marcus had earned a full salary for most of the year, well above the income limit on the IRAS page, she took it off.
Taking that relief off raised her tax. Under the practice table from lesson 1.4, Rebuild your tax bill from scratch, a relief of S$2,000, an example amount, at her 10% marginal rate is worth S$200. Paying that S$200 now was far better than having IRAS find the claim later.
Lesson 2.2, Spouse, child and working mother reliefs, goes through the family reliefs and their conditions in detail. For the activity, open last year's return and list every relief it shows, with a mark beside any that might no longer fit.
List the reliefs pre-filled on your last return and mark any that no longer fit your situation.
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