You will be able to explain three other common reliefs and deductions and their conditions.
Marcus spent two weeks of last year in camp for his reservist training, and Shu Ting gave S$50 a month to an animal welfare charity through a standing card payment. Neither of them thought of either thing as a tax matter. Then Shu Ting noticed two lines on her assessment she had never paid attention to, and Marcus found a third on his.
This lesson covers three reliefs and deductions that sit outside the family reliefs: NSman Relief, life insurance relief and the deduction for donations. Each one has a narrow set of conditions, and each is easy to get wrong in one direction or the other.
NSman Relief recognises national servicemen who serve in the reserves. It is given for NS activities in the previous work year, such as in-camp training or other duties, and the amount depends on what you did and on whether you hold a key appointment. The details are set by IRAS with MINDEF, the SPF and the SCDF.
The relief isn't only for the serviceman. The wife of an NSman and the parents of an NSman can claim a relief of their own, under conditions IRAS sets. So one round of in-camp training can mean relief for the NSman, his wife and his parents.
For most people NSman Relief is pre-filled, because the information comes from the ministries. Marcus's relief appeared on his return without him doing anything. Shu Ting found that the relief for an NSman's wife was also pre-filled on hers. She read the conditions on the IRAS page anyway, since a pre-filled claim is still her claim, as lesson 2.1, Reliefs you get without asking, explained.
Life insurance relief lets some people claim relief for premiums on a policy covering their own life or their wife's life. The condition that rules most people out is linked to CPF. The relief is only available if your compulsory CPF contributions for the year were below a level IRAS sets, and the relief you can claim is reduced by those contributions.
For a full-time employee on a typical salary, the CPF contributions alone usually exceed that level, so the relief is worth nothing. It matters mainly for people with low or no CPF contributions, such as some self-employed people or people who worked only part of the year.
Shu Ting pays premiums on a term policy, and she wondered if she was missing out. Her compulsory CPF for the year was far above the level, so she wasn't. If your CPF contributions were small last year, read the IRAS page on this relief, check the conditions on the policy itself, and confirm the relief still applies for the year you are filing. IRAS has removed several older reliefs in recent years.
Donations work differently from reliefs. A donation to an approved Institution of a Public Character, usually called an IPC, gives you a tax deduction. It comes off your income before personal reliefs, so it doesn't count toward the cap on personal reliefs that module 3 covers.
The deduction is a multiple of the amount you give, set by the government. For many years that multiple has been more than one, so a S$100 gift has produced a deduction larger than S$100. The multiple is set for a period and has been renewed in Budgets before, but it can change, so check the current figure on the IRAS website before you rely on it.
Only some gifts qualify. Cash donations to an approved IPC do. If you get something back for your money, such as a dinner or a concert ticket at a charity event, the rules treat it differently. Gifts to groups that aren't IPCs, including many overseas causes and crowdfunding pages, generally give no deduction at all.
You don't usually claim donations yourself. When you give your NRIC or tax reference number to the IPC, it reports the donation to IRAS, which adds the deduction automatically. If you donated without giving your number, the IPC may be unable to report it, and the deduction can be missed.
Shu Ting's S$600 over the year, an example figure, had been given with her NRIC through the charity's website. She found the deduction pre-filled in her IRAS account. With an example deduction of S$1,500, at her 10% marginal rate under the practice table from lesson 1.4, Rebuild your tax bill from scratch, it saved her S$150. Her gifts to a friend's fundraising page for a family emergency gave nothing, which she had expected, because the money had gone to an individual.
All three of these show up in your IRAS account when the information reaches IRAS. So the first step is to look. NSman Relief should match the service you did. Life insurance relief should appear only if your CPF was low enough. And each donation you made with your NRIC should be listed, with the right charity and amount.
If a donation is missing, contact the charity first, since it is the one that reports it. If NSman Relief is missing when you did your training, check with IRAS.
For the activity, log in to your IRAS account and find these three items, then write down what each shows for you.
Check whether you qualify for NSman, life insurance or donation deductions and write the amount shown in your IRAS account.
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