Last updated on March 16th, 2018 at 12:06 pm
It’s the tax filing season and if you are also confused by the life insurance relief, it’s common and don’t worry.
Spoiler alert: And It’s unlikely you can claim… sorry to give away so quickly.
This post is to shed some light on this relief.
A) If you are a FULL TIME employee with CPF contribution, this relief almost does not apply.
When will relief apply for employee?
- Maybe when you are aged55 and above?
- Instances such as when you didn’t work a full year. Then, check if you earned at least $25k for the year. If you did, likely the relief does not apply again.
But if you earned less than $20k, you are tax free anyway.
Their “Lets use the case study by IRAS” seems a very rare employed person circumstance from my analysis.
B) If you are self employed with NET PROFIT above $60k, this relief likely does not apply.
This is because you would have contributed medisave under the “Self employed scheme” and have gotten relief there.
When does relief likely apply for self-employed?
- When your medisave contributions for last year was less than $5k because maybe you are on monthly giro for example.
- When your net profit is between $20k to $60k
Tip to compute possible relief (according to the 2 conditions by IRAS). For simplicity, use only your
- Term plans
- Whole-life plans
Next, follow the formula on how to calculate the claimable amount and abide to the cap.
From IRAS: Amount of Relief
You are not eligible for Life Insurance Relief for YA 2018 if your total compulsory employee CPF contribution, self-employed Medisave/Voluntary CPF contribution and voluntary cash contribution to your Medisave account in 2017 was $5,000 or more.
If your total compulsory employee CPF contribution, self-employed Medisave/Voluntary CPF contribution and voluntary cash contribution to your Medisave account was less than $5,000 in 2017, you may claim the lower of:
- the difference between $5,000 and your CPF contribution; or
- up to 7% of the insured value of your own/your wife’s life or the amount of insurance premiums paid.
That’s it. Hit the like and share with other friends =)