Income tax question: what will you do in this situation?

Hi anon,

I think you meant that you were going to top up 7K in SA instead of MA?

Based on your figures, your taxable income after reliefs is approximately $106.5K. If it was me, I would just work to bring myself out of the 11.5% tax bracket, and hence contribute what is necessary to do so ($26.5K). Once I'm out of that tax bracket, it feels less straining to me to meet my tax obligations.

In this case I would use a combination of SRS ($15.3K), CPF SA top up ($7K) to bring me to $22.3K and then make up the rest from donations ($1.68K). Alternatively, you can also do CPF SA top up to a loved one ($4.2K) to bring yourself out of the tax bracket.

This is based on my belief that

• CPF is the cornerstone of my retirement and I should strive to have a decent sum in it
• I intend to use SRS for long term investments and only withdraw after 62

A 7% rate of tax is still acceptable to me. I'm actually getting yields from my investments to meet my income tax obligations, and a 7% yield is more realistic (REITs, high yield bonds) than trying to get an 11.5% yield.

Hopefully you will an alternative perspective after reading my thoughts.

If you have queries feel free to reply to this post.

Personally, I would top up to my SRS first followed by donations.

That's assuming your budget allows.