How do you save on your taxes?

Panerex

Supremacy Member
Joined
Nov 29, 2010
Messages
6,003
Reaction score
55
For the more adventurous ones, set up a non incorporated business where your personal tax is combined together with your sole proprietor or partnership business.

With proper tax planning, you could have some tax savings.


Also, perform an analysis with your spouse to ascertain if joint assessment will reap some savings as compared to single assessment
 

chopra

High Supremacy Member
Joined
Apr 15, 2003
Messages
49,481
Reaction score
472
Worrying about being too successful and having too much capital gains? Seriously :s13:

Besides, there is no difference in the treatment of capital gains whether inside or outside SRS. This is a common misconception. In fact, with good planning of withdrawals, SRS allows you to pay no taxes on the money.

Hey lzydata, I believe you got it wrong. Capital gain outside SRS is not subjected to tax. But capital gain inside SRS might be subjected to tax upon withdrawal if you exceed the lower limit.


====

investment gains will accumulate tax free in SRS
Tax will be payable only when you withdraw your SRS savings(comprising both your SRS contributions and gains on investments).

If you withdraw your SRS savings upon retirement *, only 50% of the savings withdrawn will be subject to tax. You may also spread your withdrawals over a period of up to 10 years to meet your financial needs. Spreading out your withdrawals will generally result in greater tax savings.

http://app.mof.gov.sg/data/cmsresource/srs/SRS_Booklet - 18Feb11.pdf
 
Last edited:

lzydata

Supremacy Member
Joined
Oct 16, 2010
Messages
5,978
Reaction score
2,225
Hey lzydata, I believe you got it wrong. Capital gain outside SRS is not subjected to tax. But capital gain inside SRS might be subjected to tax upon withdrawal if you exceed the lower limit.

For a realistic illustration of why this is wrong, see MOF's FAQ. Here is a simplified example.

Suppose you are able to get 900% capital gains on your investment, and assume your current and future tax bracket is both 10%. You start off with $10k.

No SRS: First, you pay income tax of $1k. You have $9k left. Then you invest it, and x years later, you have $90k.

SRS: You contribute the $10k to your SRS account, so you can invest the whole amount. X years later, you have $100k. If you withdraw it in one shot, you are left with $100k x 90% = $90k.

$90k = $90k. There is no difference, capital gains or otherwise.

In fact, the SRS case above is not accurate. With competent planning, you need only pay minimal or even no taxes on your SRS funds.

First, only 50% of the withdrawn amount will be taxed. Hence the tax payable in future is $5k, not $10k. $95k > $90k.

Also, you can choose to withdraw not in one shot, but up to over 10 years. Suppose you withdraw the $100k over 3 years i.e. $40k, $40k, $20k. Assuming you have no other income, you will pay no income taxes for these withdrawals. So you are left with the full $100k.
 

chopra

High Supremacy Member
Joined
Apr 15, 2003
Messages
49,481
Reaction score
472
For a realistic illustration of why this is wrong, see MOF's FAQ. Here is a simplified example.

Suppose you are able to get 900% capital gains on your investment, and assume your current and future tax bracket is both 10%. You start off with $10k.

No SRS: First, you pay income tax of $1k. You have $9k left. Then you invest it, and x years later, you have $90k.

SRS: You contribute the $10k to your SRS account, so you can invest the whole amount. X years later, you have $100k. If you withdraw it in one shot, you are left with $100k x 90% = $90k.

$90k = $90k. There is no difference, capital gains or otherwise.

In fact, the SRS case above is not accurate. With competent planning, you need only pay minimal or even no taxes on your SRS funds.

First, only 50% of the withdrawn amount will be taxed. Hence the tax payable in future is $5k, not $10k. $95k > $90k.

Also, you can choose to withdraw not in one shot, but up to over 10 years. Suppose you withdraw the $100k over 3 years i.e. $40k, $40k, $20k. Assuming you have no other income, you will pay no income taxes for these withdrawals. So you are left with the full $100k.

there are ppl srs-ing the max amt each year. this will add up to alot of money.
 

The_Davis

Honorary Member
Deluxe Member
Joined
Mar 31, 2001
Messages
139,044
Reaction score
7,643
My only contribution is:
1. Buy from duty-free shop @ changi airport (e.g. watsons)

Can i get free lunch as well? (Weekend?)
 

beri stupid idiot

Supremacy Member
Joined
Mar 16, 2013
Messages
9,200
Reaction score
1
do we need to pay any fee to open srs at ocbc and if we have say 20k deposits gradually, can use funds for ocbc fixed deposit as investment gains?

Thanks
 

OCBC Bank

Suspended
Joined
Sep 13, 2013
Messages
6,964
Reaction score
119
do we need to pay any fee to open srs at ocbc and if we have say 20k deposits gradually, can use funds for ocbc fixed deposit as investment gains?

Thanks

Hi there. Below are the products eligible financial products for SRS account:
• Fixed Deposit
• Unit Trust
• Bonds
• Stock
• Structured Deposit
• REITS
• ETFs
• Single premium life insurance plans


^Eric
For OCBC Bank
 
Last edited:

beri stupid idiot

Supremacy Member
Joined
Mar 16, 2013
Messages
9,200
Reaction score
1
Hi there. Beloware the products eligible financial products for SRS account:
• Fixed Deposit
• Unit Trust
• Bonds
• Stock
• Structured Deposit
• REITS
• ETFs
• Single premium life insurance plans


^Eric
For OCBC Bank

tks ... alot if no invest the money, what is the base interest rate for money in the srs acct? thks
 

OCBC Bank

Suspended
Joined
Sep 13, 2013
Messages
6,964
Reaction score
119
tks ... alot if no invest the money, what is the base interest rate for money in the srs acct? thks

Hi there. The interest rate is linked to our Passbook Savings account and it's currently at 0.05% p.a. Thank you!


^Eric
For OCBC Bank
 
Last edited:

Verbatin

Senior Member
Joined
Apr 19, 2008
Messages
1,207
Reaction score
0
Open a SRS with Ocbc. Contribute $8,000 to your SRS. Get free Robinson vouchers and reduce my income tax.

Use your SRS to invest on OCBC share.

Kill 4 bird (Robinson vouchers, reduce tax and capital gain /dividend from OCBC + free lunch from OCBC)

Btw is the free lunch over? Lol
 

icyflame

Master Member
Joined
Jan 1, 2000
Messages
3,551
Reaction score
196
Open a SRS with Ocbc. Contribute $8,000 to your SRS. Get free Robinson vouchers and reduce my income tax.

Use your SRS to invest on OCBC share.

Kill 4 bird (Robinson vouchers, reduce tax and capital gain /dividend from OCBC + free lunch from OCBC)

Btw is the free lunch over? Lol

Hmm how much is the robinson voucher? I am also considering the use of SRS as one of the means of reducing income tax and has been searching around for information.

Having said that the interest rate offered by SRS is really low.
 

icyflame

Master Member
Joined
Jan 1, 2000
Messages
3,551
Reaction score
196
Btw, since we are at this topic, just wanna share some useful websites which I found on how to reduce income tax.

Reduce Income Tax in Singapore - Little Red Tips
This guy provided a good summary of the various tax reliefs and showed that if you can maximise the reliefs, you will not be paying any taxes unless your income exceeds $100k.

Three Ways to Reduce Personal Income Tax in Singapore
This guy suggested 3 ways, 1) SRS, 2) Voluntary top-up to Medisave, and 3) Min sum top-up.

A Singaporean Stockmarket Investor (ASSI): Ways to reduce income tax.
This guy is inspirational. He paid a tax of less than $2k even though his income exceeds $200k which normally means he will have to pay more than $10k. Even factoring the $100k tax relief savings from the first link (which already includes SRS), I cannot understand how he can pay such low taxes, unless a high chunk of his income comes from non-taxable sources, e.g. investment.

Please share your views and advices. Thanks!
 

wahkao3

High Supremacy Member
Joined
Mar 6, 2005
Messages
26,835
Reaction score
19
poor ppl like me no need to save on taxes because my tax so low:(
good thread bookmark
 

icyflame

Master Member
Joined
Jan 1, 2000
Messages
3,551
Reaction score
196
poor ppl like me no need to save on taxes because my tax so low:(
good thread bookmark

Nah, tax savings is important as long as you are paying taxes. My own experience shows that while the first link says that it may not be necessary to pay tax if your income is below $100k, it depends greatly on whether you qualify for the various reliefs and whether you are keen in the CPF top-ups and SRS.
 
Important Forum Advisory Note
This forum is moderated by volunteer moderators who will react only to members' feedback on posts. Moderators are not employees or representatives of HWZ. Forum members and moderators are responsible for their own posts.

Please refer to our Community Guidelines and Standards, Terms of Service and Member T&Cs for more information.
Top