In some cases, a follow-up email takes half an hour or longer to write, because a summary of that specific interaction is needed and some certain aspects needs to be highlighted and we need to decide which ones.
In some cases, a chat could use up all the spare time we have.
In some cases, emotional benefits needs to be provided, at the cost of acceptable quality loss
… …
It is easy to argue that none of this is necessary and we could better use the time and energy on work.
This could be very true and this could also be the biggest misunderstanding.
What use is work if it cannot solve the problem or it solves the wrong problem.
It is also easy to just skip doing this when under pressure and time constraints.
It is Dec. Have you secured your income tax relief for 2021?
If not, below are 3 things you should consider right now, because they “expire” after the last working day of the year and you will lose your chance to save on taxes.
First of all, let’s distinguish tax relief and tax rebate.
Tax relief means a portion of your income is not subject to tax.
For example, your annual income is 200KSGD and you can claim a tax relief of 40K. Now your taxable income is 160KSGD. According to the income tax rate 2019, you should pay 7,950 (For first 120K) + 6,000 (for additional 40K) = 13,950SGD in income tax.
Tax relief typically applies every year and we need to be mindful about the timing to enjoy some of them, such as various Top-up schemes
There is an overall tax relief cap of 80KSGD per year. I doubt I will ever hit that cap.
Tax rebate means a portion of your income tax is off-set and does not need to be paid by you.
For example, your income tax is 13,950SGD and you enjoy a tax rebate of 5000SGD. The actual income tax you need to pay is 13,950–5000 = 8,950SGD.
Tax rebate is typically one-time. Once you use it up, it is gone. And before you use it up, it will stay in your (or your partner’s) account and be automatically carried forward to next year. While it is advisable to use it up as soon as possible as the balance does not generate any interest, the risk of losing them is very low, unless you do not know about it at all or complete forget about it.
The tax rebate that applies to most of Singaporeans is Parenthood Tax Rebate (PTR), which is intended to support parents with children. It is 5K for 1st child, 10K for 2nd child and 20K for each child for 3rd and subsequent children. It is pretty generous as our government really loves babies and you and your partner can split it anyway you want.
1.Voluntary Contributions (Cash) to Medisave Account (VC-MA)
If you have not reached your Basic Health Sum (BHS) and you have not reached the annual CPF contribution cap (37,740SGD), you can top up your MA using cash and enjoy the tax relief
According to IRAS website, the amount of tax relief given is the lowest of the following:
Voluntary cash contribution directed specifically to Medisave Account
Annual CPF contribution cap for the year, less Mandatory Contribution (MC)
Prevailing Basic Healthcare Sum(BHS)^, less the balance in Medisave Account before the voluntary cash contribution.
The process is fairly straightforward. Just follow the CPF instructions. If you give CPF a call, they will also walk you through it step-by-step
Remember to use PAYNOW option to enjoy the almost immediate transfer. Wire or check is likely to miss the deadline, which is tomorrow.
Best time for doing this for me is late Jan every year to enjoy the max interest or when some Medisave money is used if you have reached BHS.
This requires you to have a reasonably good forecast of your annual CPF contribution though. But there is no need to worry too much. Excess contribution will be returned to you by CPF after a while (not sure how long) with no interest.
2.Top up (cash) your CPF Special account (SA, below age 55) or Retirement account (RA, age 55 and above)
You can top up your or your relatives’ SA or RA all the way to the Full Retirement Sum (FRS)
The tax relief would be the lower of your cash top-up amount and 7KSGD
You can also top up your relatives’ SA (Parents, ground parents, spouse or siblings) if they meet the requirements (basically low income) to enjoy additional tax relief, up to 7KSGD as well
Again, follow the CPF instructions and use PAYNOW
Best time for doing this for me is late Jan every year to enjoy the max interest
3.Top up (cash) Supplementary Retirement Scheme (SRS) account
You can open a SRS account with DBS, OCBC or UOB. Sometimes, they even provide cash benefits if you open an account with them. Do check and grab the “free” dollars.
The benefit of this account is that your contributions is tax free, up to 15,300SGD per year. You can invest the money. When you withdraw the fund upon or after retirement, only 50% of the withdraws are taxable
The potential down-side is that if you withdraw before retirement, 5% of penalty will be imposed. Therefore, it is advisable to open your SRS account now, to lock in the retirement age after which you can withdraw the fund from your SRS account without the penalty.
Once you open an account, the top-up is like any other bank transfer. However, it does take a few days for the account to be opened.
Best time for doing this for me is when my bulk of dividend has come in. This way, I can invest the dividend together with the new contribution to save fees. The fee to invest this account is not the best.
If you have done all 3, super! If you have not, please consider based on your actual situation. A dollar saved is a dollar earned.
We chatted for a long time, from work to life to investing to future plans.
My colleague was very talkative and he was a very confident man.
So when the topic came to retirement and financial wellbeing, he confidently elaborated his status.
He was in a very good position financially and he saw himself being able to retire with enough money before his planned retirement age.
He had a million dollar plus apartment, fully paid
He had stock investment with good performance, for which all he needed to do was not touch it until retirement, meaning he would not need to put in more money to it and it would be enough for his retirement.
He of course had cash
He also would have pension from his government after retirement, which would be enough to cover basic needs
So he was very confident and relaxed.
He would not be looking to make more money. Life style is more important to him. I think he would not be able to understand if I had told him that I was working the job and some extra commitment at the same time, pushing my average daily working hours to 14 hours.
He had some quite expensive toys.
He rented a 5k+ per month apartment here in Singapore.
Another observation I got was that he was generous.
One of the common colleagues of ours were out of the country and needed his apartment checked.
So he went. Apparently, the key had been passed to him.
I needed to shake all the steak anyway. So I went with him.
We walked and talked along the way.
When we reached the apartment, we were greeted by a lock out of battery.
We could not open the door.
We called the guy overseas, explained the situation and he promised to come back with the battery.
Would I have done it for the guy overseas?
Probably not and probably the guy would not trust me with the keys either.
They knew each other for much longer for sure and they almost always stood together against a common boss.
But that trust and commitment does not come easy.
I also think the culture plays a big part.
None of the local colleagues has relationship of that level with them. And I can imagine I could feel more comfortable doing that for a Chinese guy also.
But I do get a sense of sincerity and content out of it.
I am happy with my life
I have the spare emotional and physical capacity to help you
And I want to help you.
None of this would feel the same way if one is not happy with his life.
