TAX ON INDIVIDUALS

Personal Income Tax

As our personal income tax rates remain competitive, I do not propose to alter the tax schedule. However, to reward individuals who have contributed to make the past year another successful one for Singapore, I have decided to give an across-the-board and one-off rebate of 5% on personal income tax for Year of Assessment 1991. The estimated revenue loss is $65 million.

Tax Deduction for Contributions to Edusave Scheme

In line with Government's commitment to invest in our people and to provide equal opportunities for each new generation, the Edusave Scheme will be introduced in January next year. Under the Scheme, funds will be made available for students to pay the second tier miscellaneous fees, as well as expenses for extra-curricular activities and enrichment programmes.

For this purpose, an initial sum of $1 billion from our surplus this year will be set aside to establish an Edusave Endowment Fund. The investment income from the Fund will be used to make annual contributions to the Edusave accounts of the first three children of a family. The initial amount per child will be $100. This will be increased to $500 eventually. Parents will be able to contribute the same amount to the Edusave account of their fourth child. This amount will be tax deductible. The tax deduction will take effect from Year of Assessment 1993.

Tax Relief for Handicapped Spouse

Government encourages families to look after their handicapped dependants by providing reliefs to taxpayers for supporting their handicapped parents, children and siblings. In this connection, I have decided to extend the handicapped dependant relief of $3,500 to include support of a handicapped spouse, provided the handicapped spouse does not have an income of more than $1,500 in that year. Where a husband is claiming handicapped dependant relief for his wife, he will not be able to claim normal wife relief. The new relief will take effect from Year of Assessment 1992. The revenue loss is expected to be about $1 million.

Tax Deduction for CPF Contributions of Self-employed Persons

Self-employed persons who have made voluntary contributions to CPF, including payments to Medisave, are currently allowed to deduct such contributions from their assessable income. In last year's Budget, the limit for such deductions was raised to 15% of the assessable income from self-employment, subject to a maximum of $10,800 per year. With the revision in the employer's CPF contribution rate to 16(r)% on 1st July, 1990, the tax deduction for voluntary contributions of self-employed will be raised to 16(r)% of assessable income, subject to a maximum of $11,880 per year, with effect from Year of Assessment 1992. This will be further increased to 17(r)% of assessable income, subject to a maximum of $12,600 per year with effect from Year of Assessment 1993, in line with the increase in employer's CPF rate to 17(r)% with effect from 1st July, 1991.