An example of a family with 3 children if did not claim reliefs for 8 years with an annual income of $120k, how much will the family save in terms of taxes in Singapore

Let's break this down step by step:

Assumptions:

• One parent earns $120,000 per year.

• Did not claim any reliefs for the past 8 years.

• The family has 3 children.

• The mother is working (eligible for Working Mother’s Child Relief (WMCR)).

• Reliefs are applied retrospectively for the last 8 years.

Taxable Income Without Reliefs:

Without claiming reliefs, taxable income = $120,000.

Based on Singapore’s personal income tax rates, the annual tax payable would be calculated as:

Chargeable Income ($)	Tax Rate	Tax Payable ($)
First 20,000	0%	0
Next 10,000	2%	200
Next 10,000	3.5%	350
Next 40,000	7%	2,800
Remaining 40,000	11.5%	4,600
Total Tax Payable		$7,950

So, without reliefs, annual tax = $7,950.

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Applying Reliefs (Tax Savings)

1. Qualifying Child Relief (QCR)

• Each child = $4,000 relief.

• 3 children = $12,000 relief.

2. Working Mother’s Child Relief (WMCR)

• 1st child: 15% of income = $18,000

• 2nd child: 20% of income = $24,000

• 3rd child: 25% of income = $30,000

• Total WMCR = $72,000

3. Earned Income Relief

• Assumed working parent gets $1,000.

Total Reliefs Applied

• QCR: $12,000

• WMCR: $72,000

• Earned Income Relief: $1,000

• Total Reliefs = $85,000

New Taxable Income

$120,000 – $85,000 = $35,000

Using tax rates:

Chargeable Income ($)	Tax Rate	Tax Payable ($)
First 20,000	0%	0
Next 10,000	2%	200
Remaining 5,000	3.5%	175
Total Tax Payable		$375

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Total Tax Savings Per Year

• Before reliefs: $7,950

• After reliefs: $375

• Annual tax savings = $7,575

Tax Savings Over 8 Years

$7,575 × 8 years = $60,600 in tax savings!