Majority of the people thinks that their have paid a lot for insurance premium and when it come to declaration of Tax where there is this column for Life Insurance Relief, they feel "relief" that at least it is tax deductible but they are only half right!
An extract from IRAS Website on the subject matter as follows:
"You are not eligible for life insurance relief if your total compulsory employee CPF contribution in the previous year is $5,000 or more.
If your CPF contribution is less than $5,000, you can claim the lower of
- The difference between $5,000 and your CPF contribution.
- Up to 7% of the insured value of your own/your wife's life or the amount of insurance premiums paid, whichever is lower."
Conclusion:
Majority of the population are not eligible for Life Insurance Tax Relief unless you are self-employed without CPF contribution or low income earner where total annual CPF contribution is less than $5000 a year.
Note:
The current tax-filing system cannot detect whether you are eligible to enjoy Life Insurance Tax Relief and will not disallow any input in the Life Insurance Tax Relief column subject to a maximum of $5,000 even if you are not eligible. It is up to you to file and is your own responsibility to know how much to file. If you have been over declaring, you can write to IRAS to do an adjustment.
You can click on the following link to know more about the subject matter:
http://www.iras.gov.sg/irasHome/page04.aspx?id=208
P.S. Tax matter changes from time to time and I am not a tax consultant, hence please consult your tax consultant or IRAS if in doubt.
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