aiya its just small money…so lazy to read and understand
Currently, Singapore has 4 Tax Scheme;
- Area representative Scheme – If u work out of Singapore often & you’re hired by a foreigner that pays u remuneration to your foreign bank account.
- Non-Ordinary Resident (NOR) Scheme – Mainly for foreigners
- Supplementary Retirement Scheme (SRS) – for everyone earning above 30k/Yearly
- Angel Investor Tax Reduction Scheme (AITD) – for investors
It’s a voluntary retirement scheme initiated by the government that allows u to park your cash (a part of ur salary) to reduce your chargeable income (reduce tax to be paid) yet at the same time allow u to invest without paying tax on your returns (In your SRS account)
- The maximum amount that you can put inside is $15,300
- In order to attain full tax exemption, you can only withdraw at retirement age 62
- 5% penalty on total sum, if withdrawal is done before retirement age
- Reduce your opportunity cost (refrain from paying smaller tax)
Eg: You’re earning $40k per anum (means you’re liable to $550 tax). Knowing SRS benefits, you choose to park $15.3k (Max per year) into the scheme. This will then bring your total income to $24.7k, hence putting you in a spot where you do not have to pay any tax on your total income. 10 years of that saves you $5.5k, 20 years would be $11k.
You can open a SRS account through most of the Banks in Singapore
In an SRS nutshell, this is a really good scheme that will definitely expedite my journey to financial independence but there are still some considerations to be considered, such as time value of money and other opportunity costs….. but I will soon be subscribing to the scheme:)