
(Source: Tra Nguyen/Unsplash)
I usually get my tax reliefs all sorted out during the year-end period but I have decided to embark on the exercise earlier this year. The key reason is the passing of the CPF Amendment Bill 2021 which affects income tax reliefs arising from cash top up made to CPF accounts. This inevitably cause significant changes to how I plan to maximise my personal income tax reliefs in 2022. While it was difficult to grasp in the first place, brain muscle memory soon kick in once I refer to my ever reliable excel spreadsheet to keep track of the eligible tax relief schemes. Doing the hard work now means less effort needed when the personal income tax filing season is eventually upon us. Here is Heartland Boy’s strategy to maximise his personal income tax reliefs in 2022.
1. Cash top up to own MediSave Account (‘MA’)
The Medisave account can be used for a variety of purposes, including payment for medical care and hospitalization expenses under certain circumstances. You can also use it to pay for the premiums of your integrated medical shield plans. Its wide usage suggests that it should be priortised as an income tax relief weapon.
Last year, I wrote that I reached a mini milestone of achieving Basic Healthcare Sum (‘BHS’) in my MA. Therefore, I have limited opportunities on how I can perform a cash top up to my MA. Nonetheless, I analyzed my CPF transaction history for 2021 and identified 4 instances as shown in Diagram 1.

Diagram 1: Heartland’s Boy 4 chances to perform cash top up to his MA
The window to perform a cash top up to MA is small because I need to do it before mandatory CPF contributions for the month is credited. Let’s see whether I managed to act fast enough for 2022.
a) Jan 1st– the higher BHS limit of $66,000 for Yr 2022 took effect. This is higher than last year’s BHS limit of $63,000. I promptly performed a cash top up of $3,000 as shown in Diagram 2.

Diagram 2: Cash top-up as new BHS limit takes effect
b) In Oct – there was a deduction in my MA to pay for CareShield Life’s premiums, which is a compulsory national severe disability insurance programme. This occurred on 15 Oct and my mandatory contribution came in on 17 Oct. Suffice to say that I wasn’t quick enough to capitalise.

Diagram 3: CareShield Life premium deduction from MA
c) During the year, there is also a deduction of my MediShield and Integrated Shield Plan’s premiums. This occurred around 1st week of July. Unfortunately, this slipped my mind and I will try my best to remember again next year.
d) Come end Nov, there will be a deduction of Olympia’s MediShield and Integrated Shield Plan’s premiums. Her MA yields 6% while my MA yields 4% so it makes financial sense to pay her premium using my CPF MA instead.
Finally, I blogged about my tonsillitis surgery done at a government hospital earlier this year and this was an unexpected opportunity to perform a cash top-up to my CPF MA as well.

Diagram 4: Medical expenses deduction from MA
Once again, this demonstrates the wider scope of use for MA compared to the Special Account (‘SA’). On the topic of SA, I did not top up much this year as I am in cash conservation mode.
A new digital enhancement on the CPF website that I appreciate is that it automatically informs you how much voluntary contributions you have made year to date and how much more tax relief you can possibly gain. Note that income tax reliefs for cash top up to own MA and SA is capped at $8,000 per annum. More details can be found in this article on the changes arising from the CPF Amendment Bill.
2. Cash Top up to loved ones’ CPF accounts
You will be pleased to learn that cash top up to loved one’s CPF accounts is also eligible for income tax relief for the giver, capped at $8,000 p.a. Do take note of CPF Retirement Sum Topping-Up Scheme (‘RSTU’)’s implications to the CPF withdrawal limits at age 55. Given the $8K tax relief limit, it is important to apply the right strategy.
My parents finally became Singaporeans this year and this was a gamechanger. This would entitle them to certain CPF relief schemes such as the Matched Retirement Savings Scheme since both of them have not achieved Basic Retirement Sum (‘BRS’) yet.
As my dad’s RA is closer to the BRS and considering that he is generally in a poorer state of health, I performed a cash top-up to his MA account. For my mum, I did a RSTU to her Retirement Account (‘RA’), which will help to boost her payouts from CPF Life in the future. Despite topping up to different CPF accounts, both types of cash top ups will allow me to enjoy tax relief that will reduce my chargeable income next year. Besides, both cash will be earning at least a guaranteed risk-free 4% per annum!
For young adults who have been giving their parents a monthly cash stipend, do consider utilizing the CPF cash top up schemes instead. This way, you fulfill your duty as a filial child and also qualify for tax deductibles! It is one of the most sensible ways to save on income taxes in Singapore!
3. Max out Supplementary Retirement Scheme (‘SRS’)
The SRS is a voluntary scheme that serves as a supplementary pillar to Singaporeans’ retirement funds. Account holder contributes cash into SRS and this contribution is capped at a maximum of S$15,300 per annum. Every dollar deposited into your account reduces your taxable income by a dollar. For instance, you save S$1,553 in income tax (11.5% X S$15,300) if your assessable income falls under that income tax rate. I have previously written a more detailed explanation on the workings of the SRS, indicating how the advantages clearly outweigh the disadvantages. Therefore, you still have time to head down to any of the 3 authorised local banks – DBS, UOB or OCBC to open and top up your SRS account. If that is too troublesome, simply open a SRS account online just like I did!
This year, maxing out the SRS account is an easy decision as I subsequently used the funds to subscribe for Singapore Savings Bonds. Not only do I enjoy income tax relief as explained earlier, my funds are working hard to earn me a risk-free rate of 3% p.a. I love it when I can kill 2 birds with 1 stone.
4. Qualifying Child Relief (‘QCR’)
As I am the higher income earner between the 2 of us, 100% of the qualifying child relief is allocated to me. Thankfully, my spouse is a reasonable person. QCR works out to $4,000 per child for the parent.
5. Donate to approved institutions
The Singapore government has given further incentive by allowing one to claim a tax relief of 250% if one donates to a charity accredited with Institute of Public Charter (‘IPC’). You may go to the Charity Portal to find all the charities with IPC status.
I have been donating to approved institutions ever since I have to pay income taxes. I get to perform a good deed and reduce tax at the same time, so why not? This year, I donated a small amount to New Life Stories. This is my wife’s preferred charity as she closely identifies with the beneficiaries, having worked with this group during her counselling sessions in the past.
Another automated way of donating to approved institutions is to do it via GIRO from the UOB One Account. We make $5 – $10 monthly GIRO donations to the Children Society, Singapore Heart Foundation and the Central Singapore CDC. Once again, this kills 2 birds with one stone as it is using part of the interest rate from the bank for a good cause as well as reducing our taxable income.
That concludes what I have done in 2022 to pay less taxes in 2023. Other reliefs such as Earned Income and NS Man reliefs are not mentioned as they are automatically awarded. Its not rocket science but do take note of how your income tax relief strategy will be affected by the CPF Amendment Bill passed in 2021.
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CASH TOP UP TO LOVED ONES’ CPF ACCOUNTS
does topping SA/MA to newborn have tax relief?
No it doesn’t.
If my VC exceeds the CPF Annual Limit, am I right to assume that I wouldn’t be able to make any cash contributions to my MA account to benefit from the tax relief?
Is it possible then to transfer my excess OA into my MA to hit the BHS quicker?
Hi JL,
You can click the button “Check allowable contribution” to confirm how much cash contribution you can make to your MA.