It’s official. GST will increase to 9%, up from the current rate of 7%.
However, this increase will not be immediate. Rather, it will take place from between 2021 to 2025, depending on the economy and some other factors.
Since GST is levied on all products and services in Singapore, this means we should be prepared for a slight increase in the cost of living once the GST hike kicks in.
Source: Singapore Budget 2018
Family with children can look forward to higher Edusave top-ups for their kids. The government announced that it will be increasing annual contributions from $200 to $230for primary school students, and from $240 to $290 for secondary school students. This will take effect from 2019.
The Proximity Housing Grant (PHG) is a grant introduced to encourage adult children to live with/or near their elderly parents.
The PHG has been increase from $20,000 to $30,000. This will apply for those who are buying a resale flat to live with their elderly parents/adult children.
For those who are buying a resale flat to live near their parents/adult children, the grant will remain at $20,000. However, the criterion with be expanded from within a 2km radius, to within a 4km radius, thus allowing more Singaporeans to qualify.
There will be a flat 10% increase in tobacco tax across all tobacco-related products. This means cigarettes, cigars and any other tobacco related products are going to cost more moving forward.
You can check out the current tax rates for tobacco and other dutiable goods in Singapore here.
All Singaporeans aged 21 and above will receive a one-off SG Bonus of up to $300, thanks to the surplus from Budget 2017.
This bonus will be based on assessable income. Those with an assessable income of $28,000 and below will receive $300; those with an assessable income of between $28,001 to $100,000 will receive $200, with the remaining higher income group of above $100,000 receiving $100.
This one-off SG Bonus is on top of the usual GST and U-Save vouchers.
For those who are unaware, there is a Buyer’s Stamp Duty (BSD) that applies each time we buy a property in Singapore, be it public or private. The BSD tax rates are progressive, meaning, you pay a higher tax rate as your property value becomes higher. You pay this BSD regardless of whether this is your first, second or subsequent property.
BSD will increase from 3% to 4% to all properties with a value of more than $1 million. Here’s how the tax will be calculated.
For example, in the past, a $2 million property will incur a BSD of $54,600. Under the revised rates, the same $2 million transaction will incur a BSD of $64,600, or about $10,000 more.
Read Also: Singapore Budget 2018 – Full Recap
Visit our special Singapore Budget 2018 page to read up on all the budget-related articles that have been written.
The post Singapore Budget 2018: Here Are 6 Important Changes That May Impact Our Lives appeared first on DollarsAndSense.sg.
I am not a expert in budget terms.
Any Good for common man? ( specific) - Need your review
I mean for the Middle-class ranged people!
GST is not the only thing on the rise after this year’s Budget announcement. Property buyers now also have to deal with paying up to 4% of the property purchase price in Buyer’s Stamp Duty if they’re paying more than $1 million for their new home. But this is actually not a major penalty on the super-rich, so who in Singapore is really affected by this?
Buyer’s Stamp Duty, or BSD, is a tax you pay when you buy property in Singapore. You can’t avoid it, but for most people, you don’t have to pay more than 2% of the property purchase price. As of Tuesday, 20th February 2018, properties with a purchase price or market value of more than $1 million have to pay a BSD of up to 4% of the property purchase price.
Here’s how BSD is calculated now:
|Purchase Price or Market Value of the Property||BSD Rates for residential properties||BSD Rates for non-residential properties|
This means that if your property costs exactly $1 million, there is no change to your BSD. It is still $24,600, just like before. However, if your property costs more than $1 million, you now have to pay 4% on the amount above $1 million, instead of 3%. A property costing $2 million, for example, would now incur $64,600 in BSD, $10,000 more compared to the $54,600 you would previously have paid.
It’s true – the more expensive your property, the more minuscule the BSD seems.
If you were buying some $6 million property in Sentosa Cove, for example, you would now have to pay $224,600 in BSD or 3.74% of your purchase price, compared to $174,600 or 2.91% previously. While that is an increase of $50,000, it’s only an additional 0.83% of your purchase price. What’s $50,000 more to someone who can afford a $6 million property?
But imagine you’ve exhausted all your financing options to pull together just enough funding to buy some modest condominium unit for $1.2 million instead. You’ve barely managed to accumulate the $60,000 in cash for the downpayment.
Now, thanks to the new change, you would now have to pay $32,600 in BSD or 2.72% of your purchase price, compared to $30,600 or 2.55% previously. That’s an increase of $2,000. $2,000 that could’ve helped with the renovations, or with paying your first utilities bill – what with the increase in electricity and water costs in 2018.
If you can afford a condominium unit in Singapore, even the most expensive resale flat will be well within your reach. Even in a relatively expensive district like Bishan, where 5-room resale flats can cost around $750,000 on average, it’s still a significant difference in price compared to a similar-sized condominium unit in the same area, which will typically cost you $1.25 million.
Just the difference in purchase price alone is already a hefty $500,000. Depending on your income level and whether you plan to stay near or with your parents, you could actually be eligible for up to $120,000 in housing grants. This is thanks to the increase in the Proximity Housing Grant, also recently announced at this week’s Budget.
That means a 5-room resale flat could now cost almost half the price of a similar-sized condominium unit in the same neighbourhood.
At first glance, the increase in the Buyer’s Stamp Duty may not seem like a big change. After all, it is only an increase in the marginal rate from 3% to 4% and will only affect properties that cost more than $1 million.
In the context of making our taxes more progressive, the increase in BSD is in line with other tax changes. Personal income tax rates were increased for top income earners in 2015, and income tax reliefs were capped in 2016. The purpose of these tax changes is to ensure that those who have more, contribute more back to society.
However, property taxes have a funny way of trickling down to those who don’t have as much.
By making it slightly more expensive to buy property above $1 million, the government is driving price-sensitive property buyers, who may have been on the fence about buying a condominium unit, towards relatively cheaper resale flats.
Property buyers in Singapore could then inadvertently find themselves in a self-fulfilling prophecy. If they anticipate that resale flat prices will rise, they may decide to rush to buy resale flats now. This increase in the demand for cheaper housing will then have the exact effect of pushing up the price of resale flats.
According to HDB’s Resale Price Index, resale flat prices have been on a downward trend since mid-2013. While the increase in the Buyer’s Stamp Duty may be seen by some as a hint that the property cooling measures are not going to be lifted anytime soon, it may have the unexpected effect of reversing the drop in resale flat prices.
And that is not good for property buyers in 2018.
Hope it's a wise dicision.
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Thanks for sharing. This is a heads up on what we'll be getting for this year 2018.