Budget 2023: Child relief for working mothers will be in fixed amounts from 2024

• Working mothers will be allowed to claim a fixed amount of tax relief for children born or adopted next year

• Also from next year, paid paternity leave will be doubled from the current two weeks to four

• Parents of Singaporean children born from Feb 14, 2023 will receive an additional S$3,000 from the Baby Bonus Cash Gift

WORKING mothers will be allowed to claim a fixed amount of tax relief for children born or adopted next year – a change from the current structure, which is based on a percentage of their income.

The government will also permit the foreign domestic worker levy tax relief to lapse from the year of assessment 2025, which applies to income earned in 2024.

These adjustments to tax reliefs were announced by Finance Minister Lawrence Wong in his Budget statement on Tuesday (Feb 14), as part of efforts to ensure that more support is given to those with greater needs.

Alongside these tax changes, the minister, who is also Deputy Prime Minister, also unveiled a slew of measures aimed at supporting young parents with their child-rearing responsibilities, including doubling paid parental leave from the current two weeks to four, as well as increasing the Baby Bonus Cash Gift for parents with newborns by S$3,000.

Working mothers will be able to claim annual reliefs of S$8,000 on the first child born or adopted on or after Jan 1, 2024, S$10,000 on the second child, and S$12,000 for the third and subsequent child.

Currently, the amount mothers can claim is based on a percentage of their income: 15 per cent for the first child, 20 per cent for the second child, and 25 per cent for the third and subsequent child.

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The change means higher-income mothers would receive a lower amount of tax reliefs than before, while lower-income mothers could get more.

Unwed, single mothers are ineligible for this relief.

Wong added that the tax relief on the foreign domestic workers levy has been allowed to lapse because the government has introduced a migrant domestic worker levy concession of S$60 a month to provide more targeted support for families who need help caring for dependents.

There would be no change to the concessionary levy. 

The extra two weeks of paid paternity leave will be for married or divorced fathers whose children were born on or after Jan 1, 2024. For now, employers will offer this on a voluntary basis; employers who are ready to grant this additional leave will be reimbursed by the government.

Those who are self-employed for a continuous period of at least three months will also be eligible for these extra two weeks of leave. Wong said that the government intends to mandate this extension sometime in the future, but it will review it over time, to give employers more time to adjust, given the existing economic conditions and manpower and operational challenges many of them are facing.

Nevertheless, he said that the government’s message is clear: “We want paternal involvement to be the norm in our society, and we will stand behind all our fathers who want to play a bigger role in raising their children.”

Unpaid infant-care leave for each parent will also be extended from the current six days to 12 annually. This will apply to eligible working parents with Singaporean children under two years old from Jan 1, 2024.

Employers will have to grant all parents of Singaporean children this additional time off if they have worked for them for a continuous period of at least three months.

A Public Service Division spokesperson said that the public service will take the lead to extend paid paternity leave by two weeks – from the current two weeks to four, from Jan 1, 2024.     Unpaid infant-care leave is already provided in the public service, where employees can take additional unpaid infant-care leave of up to four weeks in the child’s first two years.  

The additional S$3,000 Baby Bonus Cash Gift will be given to parents of Singaporean children born from Tuesday, regardless of their birth order.

The government will also increase its contributions to the Child Development Account, which parents can draw on to directly offset preschool and healthcare expenses.

The Baby Support Grant of S$3,000, meant as a one-off payment for eligible Singaporean children born from Oct 1, 2020 to Sep 30, 2022 (during the pandemic), will be extended to include children born between Oct 1, 2022 and Feb 13, 2023. This will be disbursed in the second half of the year.

Under the new Baby Bonus Scheme, first- and second-time parents receive cash of between S$1,000 and S$3,000 in four disbursements spread over the first 18 months of their child’s life. When the child turns two, and until he or she turns six-and-a-half, a sum of S$400 would be given every six months.

The same disbursement schedule applies to parents for their third and subsequent child, except that the lump-sum payments over the first 18 months from birth are larger.

The National Population and Talent Division (NPTD), which comes under the Strategy Group in the Prime Minister’s Office, said that spreading out the cash over a longer period would ensure that parents get continuous support till their child enters primary school. 

It was also announced that the government will bump up its initial grant into the Child Development Account from S$3,000 to S$5,000 from Feb 14. Parents contributions’ to the account will be matched by the government at a higher cap of S$4,000 for the first child, and S$7,000 for the second child — an increase of S$1,000. The government will also deposit a matching sum into the development account for the third and fourth child, capped, unchanged, at S$9,000.

NPTD said that time is needed to effect these changes to the legislation, as well as the IT and payment systems. The increased financial support will be thus be paid from early 2024, even though it applies to Singaporean children born from Feb 14.

Said Wong: “To all young, married couples: Whether you already have a newborn, or are expecting a baby, or plan to have a baby, we have something to help you in your parenthood journey.”