Overview of Tax Changes in Singapore 2018


1. Personal Income Tax Relief Cap

As of YA 2018, the total amount of personal income tax is subject to an yearly relief cap of $80,000. The cap on personal income tax relief applies to the total amount of all tax reliefs claimed. This includes any relief on voluntary CPF contributions made. Individuals who have met the qualifying conditions should continue to claim the personal reliefs.

In effect, $100 million worth of additional tax revenue a year is expected to be generated. This engenders a more progressive tax system, affecting only 1% of tax-resident individuals.  SMU Professor Sum Yee Loong, a former Deloitte tax partner, remarked that the cap was a wise move. This will affect high income earners who are making S$150,000 or S$300,000 a year. On the contrary, the middle-income bracket who are earning S$50,000 to S$80,000 a year are not likely to be implicated. However, this change will also impact working mothers who are higher wage earners with two children, as well as some lower-income taxpayers. Taxpayers who have parents, grandparents and disabled family members in their care can also expect to take up additional burden.

Singapore’s personal income tax burden remains low and most Singaporeans are in support of the new cap. In addition, this tackles a potential loophole in the tax system and prevents further exploitation from certain group of taxpayers. This refers to self-employed individuals who divert a portion of their earnings to their spouses. That is to say, the aforementioned spouses are not wholly responsible in income generation.

To find out whether you have reached the cap on personal income tax relief, click here to access to IRAS’s tax calculator.


2. Removal of tax concession on home leave passages for expatriate employees

The 20% tax concession for the value of home leave passages for expatriate employees will be removed with effect from YA 2018.

The home leave passages provided to expatriate employees, their spouses and children are taxable in full.