This new blog post has an old theme and that is how we can pay less income tax even as we increase our income.
I have received my income tax notice of assessment. Tax payable: $1,606.02.
This is much more than what I paid last year which was $1,133.23. About 41.7% more, in fact! Why is this so? It has to do with the missing generous income tax rebate which was given in the year before.
Well, considering that my income in 2013 was almost twice as much as my income in 2012, $1,606.02 is not too much to pay, I suppose.
How is such a low income tax possible? After all, someone who makes $250,000 per annum would very likely have to pay an income tax of more than $20,000, wouldn't he?
OK, regular readers can skip the following pointers but if you are new to my blog, here are a few things you can consider doing:
1. Invest to receive non-taxable income. (For those who have the temperament and the know-how, trading could make some good money too.)
2. Start a Supplementary Retirement Scheme (SRS) account and make annual contributions to reduce taxable earned income. (For those who have yet to max out their CPF-SA, consider voluntary contributions up to a maximum of $7,000 a year. To avoid confusion, this is called a Minimum Sum Top Up or MSTU.)
3. Donate more to charitable organisations recognised by the government and enjoy 2.5x tax deduction, if we can afford to do so.
Mystery is solved.
The tools to help us build our wealth are out there and if we are able to help the less fortunate in the process, we should do it.
Don't say we don't have enough money or are not wealthy enough to help the poor. If we have some spare money to invest in the stock market, we are more fortunate than many out there. Even a $50.00 donation can do wonders. Not a big sum to most of us but it could mean a lot to the needy. If you don't know where to start, here is a suggestion: Singapore Children's Society.
Everyone's life should be better. If we do the right things, everyone's life could turn out better. Paying less income tax even as we increase our income will certainly help.
Reference: IRAS income tax rates.
1. Make more money, do good, pay less tax.
2. Ways to reduce income tax.
3. Voluntary contributions to CPF.
4. SRS- A brief analysis.
5. Build a bigger retirement fund: CPF-SA.