Keep the records behind your claims and take action before the year ends.
On 29 December last year, Raymond (an invented example) was on leave and half packed for a family trip to Penang when the CPF top-up for Raymond's father came to mind. The top-up went through from a phone at the airport, and Raymond spent the flight wondering whether it had reached the CPF Board in time. It had, just.
Raymond, who is Shu Ting's manager, told the story at lunch. Shu Ting (also an invented example) decided her first top-up would not be done that way. Two habits prevent this kind of scramble: keeping records that back up every figure on your return, and running a short check in early December, before the year closes.
Every figure on your tax return should trace back to a document you can find. IRAS can ask about a return after it has been assessed, and it can ask you to show that you qualified for a relief. IRAS also sets how long you must keep records and publishes that period on its website. Keep yours for at least that long.
For most employees, records fall into five groups:
Income: payslips, the IR8A and its appendices, and statements for any income outside your job. Reliefs: proof that you met each condition, such as proof that a parent lives with you, bank transfers for an allowance, or a child's birth certificate. Rental income: the tenancy agreement and records of rent received. If you claim your actual rental expenses, keep the invoices and receipts for each one. If you claim the deemed rental expenses instead, IRAS does not require records of the other rental expenses. SRS and CPF: statements showing each contribution or top-up and its date. Donations and anything else you claim: receipts and the confirmation from the charity.
Paper and digital records are both fine, as long as you can produce them quickly. A simple setup is one folder per tax year, with a subfolder inside it for each of the five groups. A cloud folder with the same structure also works, provided your scans are readable. File each document as it arrives so the folder stays current.
Shu Ting's folder for this year already holds her payslips, the tenancy agreement and rent records for the room she rents out, receipts for the room's expenses, her mother's address details, the records of her monthly transfers, and her donation receipts. Two subfolders are still empty. They are waiting for the CPF top-up confirmation and the SRS statement.
Some items only count for a year of assessment if they happen by 31 December of the previous year. SRS contributions, CPF cash top-ups and donations count for the year in which you make them. Lesson 3.1, "Tax relief on CPF cash top-ups", showed that a top-up made on 2 January counts a year later than one made on 31 December.
The CPF Board and the SRS operator banks publish year-end cut-offs for each payment method. The date that counts is the date the money arrives, which can be later than the date you send it. Leaving payments to the last week of December is risky because banks have holidays and you may be travelling. This is how people miss a year.
Reliefs follow your circumstances in the calendar year. A change during the year can add a relief, remove one, or change what you need to declare. Marriage, or a spouse starting or stopping work, affects Spouse Relief. Having a child, or a child leaving school or starting to earn, affects the child reliefs covered in lesson 2.2. A parent moving in or out, passing away, or starting to earn more affects Parent Relief, covered in lesson 2.3. Starting or changing jobs, renting out a room, or starting a side income changes what you must declare.
IRAS also removes reliefs from time to time. Course Fees Relief has lapsed, so fees for a course you take now will not reduce your tax. Go through your relief list from lesson 2.5, "List every relief you qualify for", and drop any relief that no longer exists. If you share a relief with family members, agree with them on who claims it.
Set a recurring calendar reminder for the first week of December. When it comes up, spend about half an hour on five questions. First, have you made any top-up or SRS contribution you decided on, with enough time to clear the cut-off? Second, did anything in your life change this year that adds or removes a relief? Third, has anything happened that you'll need to declare, such as rent, side income or a new job? Fourth, are this year's records in this year's folder? Fifth, are any reliefs shared with family, and have you agreed who claims them next year? When you've answered all five, remove any lapsed reliefs from your relief list.
Shu Ting's reminder is now set for the first Saturday of December. She makes her top-ups and SRS contribution that weekend, well before the cut-off. The rest of the check takes her about twenty minutes with her workbook open.
For the activity, set up this year's records folder now and put your December reminder in your calendar.
Make a folder for this year's tax records and set a calendar reminder for your year-end check.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).