Care For Aged Parents (Higher Tax Relief)

Date: 14 September 2009

Question No. 111 (by Ms Ellen Lee Geck Hoon, MP for Sembawang GRC):

To ask the Minister for Finance: whether an even higher amount of tax relief or incentive can be granted to children who look after their aged parents so as to incentivise and encourage children to look after their elderly parents.

Reply by Finance Minister Tharman Shanmugaratnam:

We grant taxpayers a tax relief of $3,500 or $5,000 for supporting each parent, depending on whether the taxpayer and parent are living apart or together. There is an additional relief of $3,000 if the taxpayer’s parent is handicapped.

Like other reliefs, the parent relief was not conceived to actually defray the cost of looking after parents nor to incentivise children to look after their parents. The Government’s tax policies, like its social policies, are premised on preserving a society where children care for their parents regardless of the tax reliefs that the Government offers. The parent relief is a gesture towards recognising taxpayers who put effort and resources into supporting their aged parents. Besides this relief, a taxpayer can also receive an additional tax relief of up to $7,000 for cash top-ups to the CPF Minimum Sum of their parents.

The Government recognises that in an ageing society and with families becoming smaller, the responsibility of caring for parents will fall on fewer children. What the Government has done is to continually keep the tax burden low for all individuals. In fact, Singapore has one of the world’s lightest personal income tax burden, and we have reduced the personal income tax rates over the years from the top marginal rate of 28% in 2001 to 20% currently. Currently, our allowable reliefs and high income threshold mean that about 60% of our resident labour force do not have to pay any income tax at all.

Nonetheless, we will continue to review the parent relief as part of our periodic holistic review of the personal income tax system.