What is Tax Planning?

What is Tax Planning?

Tax planning is the process of organizing your financial affairs in a way that minimizes your tax liability. This can involve making strategic choices about where to earn income, what type of expenses to claim, and when to take certain actions.

The goal of tax planning is to ensure that you pay the least amount of tax possible while still meeting your financial goals. There is no one-size-fits-all solution, so it’s important to work with a tax professional to find the best approach for your situation.

Tax planning can be especially important in today’s uncertain economic climate. With new tax rules and regulations being introduced all the time, it’s more important than ever to make sure you’re taking advantage of all the tax breaks available to you.

Some of the most common tax planning strategies include:

● Claiming all available deductions and credits

● Keeping track of your income and expenses

● Taking advantage of retirement savings plans

● Investing in taxable and tax-free accounts

● Utilizing estate planning strategies

If you’re not sure where to start, talk to your tax professional about the best way to reduce your tax bill. There are many options available, and the right approach will depend on your unique situation.

Tax planning can seem daunting, but it’s important to remember that the goal is to save you money. By working with a professional and making smart choices, you can keep more of your hard-earned money in your own pocket.

Hiring Tax Planners in Singapore

When you need expert help to save money on your taxes, turn to the professionals at H&R Block. We have years of experience in tax planning and can help you find the best way to reduce your tax bill. Contact us today to schedule a consultation!

Claiming all available deductions and credits

One of the most common tax planning strategies is to claim all available deductions and credits. Deductions reduce your taxable income, while credits lower your tax bill dollar for dollar.

There are a number of deductions and credits available, so it’s important to take the time to research which ones apply to you. Some of the most common include:

● Home mortgage interest deduction

● Charitable donation deduction

● Child and dependent care credit

● Education credits

● Retirement savings contributions credit

Keep in mind that not all of these deductions and credits are available every year. The rules change frequently, so it’s important to stay up-to-date on the latest tax changes.


If you require help with you Singapore Tax Planning, speak to K Cloud Accounting

KCA is also a Singapore top bookkeeping services and accounting services firm.

If you require such help, you can speak to us to find out more about how we can help your company.

What is Tax Planning?

Ideas for Corporate Tax Savings in Singapore

Ideas for Corporate Tax Savings in Singapore – You should never attempt to get into any tax evasion but we all know that tax planning is completely legal.

So what are some of the ideas and methods that you can take to help you to save on taxes in Singapore and how does that affect you as a business owner.

Singapore Corporate Income Tax rates: https://www.iras.gov.sg/irashome/Quick-Links/Tax-Rates/Corporate-Tax-Rates/

Tax planning basically means, making plans for the year ahead and having some means to lower taxes in place before the work year starts and before it is over to save taxes through legal means.



Ideas for Corporate Tax Savings in Singapore

1. File in all your operational expenses 

Operational expenses are what you incur to make that particular revenue.

This is something that most businesses owners do not really bother with but can end up helping you save quite an amount of taxes.

When you are traveling due to work, you can include expenses for deduction through transportation expenses.

Your name cards can be part of marketing expenses.

Did you buy your client a drink or two? This could be entertainment expenses.

As long as the amount of expenses claimed are reasonable. You could include them for deductions.

Always remember to record them in for expenses and keep your receipts so that they do not go missing.

Little amounts adds up and can actually save you a ton of money.

 

2. Record losses where they are due, that can be carried forward

Not every year is a good year. Especially so for businesses that are starting up.

Startups usually will incur a few months or years of losses before they turn profitable.

So when you are experiencing losses at the start of the journey. Be sure to keep them on the books

So when you are making profits in the future, you can cut down on taxes.

 

3. Pay attention to your tax exemptions

Tax exemptions are available for startup companies in their first 3 years of operation.

This is something that is used to incentivize businesses starting up in Singapore.

The amount of tax exemptions can be quite lucrative if you add them up.

Also, from time to time the government of Singapore gives out good tax exemptions, especially during times of downturn.

Make sure to have a good Singapore Tax Consultant and Advisory Services Company to assist you with that.

 


K Cloud Accounting is a Singapore based Bookkeeping Services firm, assisting startups and SMEs with their business needs.

Speak to us for help in this fields. We also work closely with our friends from Avant Consulting to provide Singapore Business Loan Brokering and Advisory Services.

 

Ideas for Corporate Tax Savings in Singapore

How to legally save/reduce your Singapore personal income taxes in 2019

How to legally save/reduce your Singapore personal income taxes in 2019 – Common question asked by many people in Singapore especially since the year has ended for the year of 2018 and we have about 3 months plus to start worrying about how much taxes you are needed to contribute to the building of our nation!

According to the IRAS website: https://www.iras.gov.sg/irashome/web/pages/taxCalendarListing.aspx , the due date for your personal income tax is 18 April 2019, for those who are not into e-filing, 15 April 2019 is the deadline for paper filing! So remember this date and do your filing as soon as possible, preferably now!

If you are filing through e-filing, here is the link: https://mytax.iras.gov.sg/ESVWeb/default.aspx

With the links provided and aside, lets start on the ways of How to legally save/reduce your Singapore personal income taxes in 2019, while we explain how Singapore’s tax works.

singapore personal income tax rate

Singapore personal income tax rate from IRAS website

Singapore follows a progressive income tax system where the lower income group pay little or no income tax whereas the rich will pay more of a percentage of their income as taxes. Taxes contribute to the public goods that everyone in Singapore uses. Singapore mainly derives her tax revenue from personal income tax, corporate tax and goods and services tax.

So based on this chart for those who make an income below $20,000 is exempted from paying any tax.

Whereas someone with an income above $320,000 pays 22% of the subsequent amounts in personal income taxes.

So lets take a scenario where you are a desk bound job holder working in the CBD making $3,500 per month.

Based on that figure: $3,500 x 12 = $42,000, your tax rate will be ($550 for the first $40,000) + (7% x the remaining $2,000) = $690

*did you know you do not need to pay your income taxes at one go and instead could pay through GIRO monthly? Use this link to do it: https://www.iras.gov.sg/irashome/Quick-Links/Payments/Applying-for-GIRO/*


So for someone who makes in excess of $40,000, the tax rate starts to climb sharply and there are legal ways to reduce taxes, this is very different from evading taxes! Do not confuse the two different terms. Also note that the best way to reduce taxes is actually to do your tax planning earlier on in the year. Your tax is calculated from the 1st of January of the year to the 31st of December of the the year being assessed. So even if you missed out on doing some of this moves in 2018, read this article and do something about reducing taxes in 2019! You can work with us as your SME Accounting Services firm in Singapore.

So lets begin.

1. Contribute more into your personal or your parent’s CPF account

Everyone in Singapore who holds a full time job in Singapore contributes to their on personal Central Provident Fund savings. (CPF) So this is also one of the main means of savings for your retirement.

The ordinary wages limit for contribution is $6000 for CPF. And the annual voluntary contribution limit is $37,740.

You could contribute to your parent’s CPF accounts to increase that limit because remember, when you contribute to CPF, you get to get some relief from it.

 

2. Donating to a charitable cause

Not every charitable cause is tax deductible. For those that are clear cut deductible, make sure they are institutions of public character: https://www.charities.gov.sg/setting-up-a-charity/Pages/About-Charities-And-IPCs.aspx

Donations can be counted as relief for you to reduce your tax burdens for the year.

So make more donations to causes you care about today! Oh and don’t forget the official receipt as proof.

3. Claim NSmen relief if you’re married

If the husband is a key appointment holder, you can claim up to $5,000 of relief, and for the married person, wives can claim $750 relief on their income.

Of course the relief amounts are higher for Key Appointment holders and also when they are active. For those who are not familiar, here is the link to learn more about NSmen relief and also spouse relief for NSmen: https://www.iras.gov.sg/irashome/Individuals/Locals/Working-Out-Your-Taxes/Deductions-for-Individuals/NSman-Relief–Self–Wife-and-Parent-/

 

4. Working mother child relief

For anyone who has studied Singapore taxes and tax relief, the working mother child relief (WMCR) is definitely the single most effective and powerful tax relief anyone can get.

As the name implies, you need to be a mother and have a child. Either you own, or adopted. Sorry gentlemen, this doesn’t apply for you.

So according to the link on IRAS website for this relief: https://www.iras.gov.sg/irashome/Individuals/Locals/Working-Out-Your-Taxes/Deductions-for-Individuals/Working-Mother-s-Child-Relief–WMCR-/

The Working Mother’s Child Relief (WMCR) is given to:

  • Reward families with children who are Singapore Citizens
  • Encourage parents to take up Singapore citizenship for their children
  • Encourage married women to remain in the workforce after having children

Single or male taxpayers are not eligible for this relief.

Child Order WMCR Amount
1st 15% of mother’s earned income
2nd 20% of mother’s earned income
3rd and beyond 25% of mother’s earned income

So the amount of a mother’s income that can be deducted can be seen from the table above. For the first child you get to deduct 15% of the amount of earned income to be taxed, the second child you add another 20% and 25% for the 3rd child onward. Do note that there is a cap on the amount of relief you can claim on a child and also the amount you can claim personally, so there is a limit to this!

5. There is a relief cap for total tax relief

Currently the tax relief is capped at $80,000. So the ones that are affected will be those who are definitely making more than $80,000 a year and able to claim a relief of more than $80,000.

Here is the link for the relief information: https://www.iras.gov.sg/irashome/Individuals/Locals/Working-Out-Your-Taxes/Deductions-for-Individuals–Reliefs–Expenses–Donations-/#title7

 


Here are 5 easy ways to help you legally reduce taxes if you’re making an income from either a salaried job or a directorship.

For self employed persons or business owners, there are ways where you could use the startup tax exemptions of Private limited companies to reduce taxes legally as well. There are also expenses that can be legally claimed if you decide to start up a business at home and contribute towards corporate taxes instead of personal taxes.

K Cloud Accounting Pte Ltd is a full suite Singapore SME Bookkeeping services company that works with companies from all kinds of industry in Singapore. We work closely with Startups to provide the best advise for their growth and work along side them to grow their companies and capabilities.We are Singapore Xero Advisors and Xero Partner.

If you are keen to get some assistance on tax advisory services or tax planning services, do set up a meeting for discussion.

How to legally save/reduce your Singapore personal income taxes in 2019