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Tax pros' institute recommends more social reliefs in Budget 2017
TAX professionals in Singapore have submitted several recommendations to the government for more help for lower-income Singaporeans and the elderly so as to ensure economic stability.
The recommendations, put forth by the Singapore Institute of Accredited Tax Professionals (SIATP) in anticipation of the announcement of Budget 2017 in February, largely focus on tweaks to the Central Provident Fund (CPF) cash top-up scheme, life insurance, reducing tax burden of low-income earners and helping older workers stay in the workforce.
"As Singapore steps into a year that is even more dynamic, with uncertainty ruling the way forward, putting in place initiatives to strengthen the support to Singaporeans, both at the individual level and at the workplace, will go a long way in ensuring continued stability," said SIATP chairman Gerard Ee.
To encourage lower-income Singaporeans to help their family members in retirement, SIATP recommended a CPF credit instead of tax relief for those who choose to top up their relatives' accounts with cash.
This credit can be pegged at a percentage of how much the person chooses to top up. It will then be capped at a maximum value, and may be credited directly into the individual's CPF account.
"The suggested change will achieve the objective of encouraging the lower income group to top-up their and/or their family members' CPF accounts. This change may also be revenue neutral as currently, only taxpayers with high income take advantage of this scheme."
SIATP also proposed the removal of the ceiling of S$5,000 per annum in CPF contributions for someone to be eligible for life insurance relief. This is so that more working Singaporeans can benefit.
In addition, to ensure that the low and middle-income groups can still benefit from the relief, SIATP suggested that the amount of relief claimable be capped at the lower of the life insurance premiums paid or S$5,000.
In terms of tax burden, SIATP suggested that the zero per cent band for taxable income be raised to S$30,000. "The increase in individual tax rates in the higher income brackets with effect from Year of Assessment 2017 should more than compensate for the expected reduction," it said.
As for the continued employment of older workers, SIATP recommended that offset rates for the Special Employment Credit be raised for workers in the higher age groups. An earned income relief of S$10,000 for taxpayers aged 65 and above can also be considered, it said.