The parent tax relief serves as a form of recognition of taxpayers who look after parents who have no income of their own. Strictly speaking, only those whose parents do not have any income at all would be eligible to claim the relief. The Government decided to adopt a less stringent income threshold of $2,000 a year so that those whose parents have incidental income would still qualify for the relief. It was not to penalise elderly parents who choose to work, as suggested by Mr Goh.

As the parent relief is not aimed at compensating the taxpayer for the costs of maintaining his parents, it is not pegged directly to inflation or the cost of living. However, the Government has made major moves to reduce personal income tax burdens.

Over the last 20 years, taxpayers have benefited from a substantial reduction in tax rates across all income brackets, including a reduction from 33 to 20 per cent in the top marginal rate. The exemption of the first $20,000 of income from tax, introduced in 2002, has also meant that 60 per cent of Singaporean workers pay no income tax.

Chin Sau Ho
Director (Corporate Communications and Services)
Ministry of Finance