What is SRS?
SRS is a voluntary scheme to encourage individuals to save for retirement, over and above their CPF contributions. In Peter’s case, he can enjoy tax deferment on his SRS contributions. Each dollar of SRS contribution will reduce his taxable income by a dollar. The annual SRS contribution cap is currently set at $35,700 for foreigners (the cap is $15,300 for Singapore citizens and permanent residents).
Estate Planning
Estate planning is the process of anticipating and arranging, during a person’s life, for the management and disposal of that person’s estate during the person’s life and at and after death, while minimizing gift, estate, generation skipping transfer, and income tax.
Investment Planning for Trustees
Under Section 6 of the Trustees Act,
trustee is required to ensure duty of care
while investing the fund for the benefit of
beneficiary“a trustee shall, before
exercising any power of investment,
whether arising under this Part or
otherwise, obtain and consider proper
advice about the way in which the power
should be exercised, having regard to the
standard investment criteria.”
Creating Passive Income for the Next Generation
This article assumes the parent sets up a fixed trust for the benefit of the child, hence the property income is taxed at the child’s income tax rate. If the trust structure is a discretionary one, then the rental income will be taxed at the trustee level, which is 17% currently.
If he set up a trust for his baby and buys the property in trust, then he will not need to pay for the Additional Buyer’s Stamp Duty(ABSD) and rentals earned from the property will be taxed based on the baby’s income tax rate.
