You will be able to explain the main reliefs for a spouse and children and the conditions for each.
Shu Ting and Marcus's daughter Wen was born in the middle of last year. Somewhere between night feeds and the first vaccinations, a friend in their antenatal class mentioned that the baby came with "a stack of tax stuff" and that they should sort out who claims what. Neither of them knew there was anything to sort out. They assumed IRAS would just give the reliefs to whoever needed them.
It doesn't work like that. Family reliefs come with conditions, some can be split between parents, and one of the biggest isn't a relief at all. This lesson goes through each one and shows how a couple decides who claims.
Spouse Relief is for supporting a husband or wife whose own income was low in the year. IRAS sets the income limit for the spouse, and it counts most kinds of income, so rent or freelance earnings can push a spouse over it as easily as a salary. The couple generally needs to be living together, or you need to be supporting a spouse you are separated from, under the conditions on the IRAS page.
Lesson 2.1, Reliefs you get without asking, showed what happens when this relief is copied forward after the spouse starts earning. The test is the spouse's income in the calendar year being assessed, so check it each year.
Qualifying Child Relief is for a child who meets IRAS's conditions on age, whether they are in school, and how much they earn themselves. A baby qualifies easily, while a teenager who has left school for a full-time job may not.
Parents can split this relief in any proportion they agree, as long as the total stays within the amount for that child. Because a relief is worth your marginal rate, the parent with the higher top rate usually gets more from it, and that is why the split is worth a conversation.
Working Mother's Child Relief can only be claimed by the mother, and she has to be working and married, divorced or widowed, with a qualifying child. The way it is worked out depends on when the child was born. For children born before 2024 it is linked to the mother's earned income, and for children born from 2024 it follows a different rule. Check the IRAS page for the rule that fits each child's birth date, because two siblings can fall under different rules.
There is also a combined limit on how much child relief can be claimed for one child across these reliefs. For most families it never comes close, but if you claim several reliefs for one child, check it.
The Parenthood Tax Rebate works differently from everything above. A relief reduces your chargeable income. A rebate comes off the tax itself, dollar for dollar, after the tax has been worked out.
So a S$1,000 rebate saves S$1,000 of tax whatever your marginal rate. That holds as long as you have at least S$1,000 of tax to pay; any unused part is carried forward to later years until it runs out. Parents can share it too, in whatever proportions they choose.
The rebate is given for each qualifying child, and IRAS sets the amount, which depends on the child's birth order. Read the current amounts on the IRAS website.
They sat down with the practice table from lesson 1.4, Rebuild your tax bill from scratch, and their own example figures. Shu Ting's chargeable income was S$92,000, with a marginal rate of 10%. Marcus's was S$48,000, with a marginal rate of 6%.
Suppose Qualifying Child Relief for Wen were S$4,000, an example amount. If Shu Ting claimed all of it, her tax would fall by S$400. If Marcus claimed it, his would fall by S$240. Both of them stay inside their bands, so the arithmetic is simple, and Shu Ting claiming saved the household S$160 more.
Working Mother's Child Relief could only go to Shu Ting, so there was no decision there, only the rule for a child born from 2024 to look up.
The rebate needed more thought. Suppose it were S$5,000, again an example. Shu Ting's tax under the practice table was S$4,200. If she took the whole rebate, it would wipe out her tax for the year, with S$800 carried forward. If they split it, part could go against Marcus's S$1,080 of tax as well. Either way the household gets the full S$5,000 eventually. Splitting it simply uses it up sooner.
They agreed on Shu Ting claiming the child relief and the two of them sharing the rebate. They wrote down why, with the date and the IRAS pages they had read.
Every one of these reliefs has changed at least once in recent years, in amount, in conditions or in how it is calculated. So before you claim, open the IRAS page for each relief for the year of assessment you are filing. Check the condition, then the amount, then whether it can be shared.
For the activity, write down every spouse and child relief your household could claim, using your own marginal rates from lesson 1.4.
Write the spouse and child reliefs your household could claim and which parent should claim each.
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