SINGAPORE - Couples who want to have children can expect to enjoy more financial benefits – from cash gifts to grants and reliefs – as well as more paternity leave, as the Government boosts support for families in the early years of raising children.
Deputy Prime Minister and Finance Minister Lawrence Wong on Tuesday announced in his Budget speech a slew of measures to strengthen support for Singaporeans on their parenthood journey, along with adjustments to existing tax relief schemes to support families with greater needs.
All these provisions will cost the Government an additional $240 million per birth cohort of children, he said. “I hope this will provide greater assurance to parents and parents-to-be as they think about starting and raising their families.”
1. Increased Baby Bonus cash gift
Married couples with Singaporean babies born on or after Tuesday will get $3,000 more in the form of the Baby Bonus cash gift.
This means that eligible first- and second-born children will receive $11,000, up from $8,000. And for the third child onwards, this will be increased from $10,000 to $13,000.
The funds will also be paid out over a longer period of time, until the child turns 6½ years old.
Currently, the Baby Bonus cash gift is disbursed in five instalments over the child’s first 18 months, to help defray child-raising costs during infancy.
Going forward, eligible parents can expect up to $9,000 in payouts in the first 18 months of a child’s life, and $400 every six months starting from when the child is two until he is 6½ years old.
“In this way, parents can receive continuous support all the way until their child enters primary school,” said Mr Wong.
2. More funds in Child Development Account (CDA)
Mr Wong said that the CDA First Step Grant will be increased by $2,000 for all children born from Tuesday.
The grant will go up from $3,000 to $5,000.
It is automatically credited into the CDA, which parents can use to directly offset pre-school and healthcare expenses.
The Government will also increase the co-matching cap for the CDA by $1,000 for couples’ first and second children.
Under the scheme, savings deposited by parents into the account are matched dollar for dollar by the Government up to a cap of $3,000 and $6,000 for first- and second-born children, respectively.
This will go up to $4,000 and $7,000.
Taken together with the higher Baby Bonus cash gift, each child will get $5,000 to $6,000 more in total from the Government, depending on his or her birth order, according to a joint news statement by the National Population and Talent Division and Ministry of Finance on Tuesday.
With these enhancements, parents will receive up to $24,000 in financial support for their first child, and up to $37,000 for subsequent children. This includes the MediSave grant for newborns, which supports healthcare expenses, said the statement.
The increased Baby Bonus Scheme benefits will be available from early 2024, to allow for sufficient time to make the required legislative and system changes, said Mr Wong. Parents will be notified when they can make the additional deposits into their child’s CDA for the enhanced government co-matching.
3. Extension of Baby Support Grant
Parents of babies born from Oct 1, 2022, to Feb 13, 2023, will be given the one-off Baby Support Grant of $3,000.
The grant was introduced during the Covid-19 pandemic for eligible Singaporean children born from Oct 1, 2020, to Sept 30, 2022, to encourage couples to proceed with their parenthood plans.
4. Working Mother’s Child Relief
The Working Mother’s Child Relief, which aims to encourage women to stay in the workforce after having children, will be changed from a percentage of the mother’s earned income to a fixed dollar relief, for Singaporean children born or adopted on or after Jan 1, 2024.
This will take effect from the Year of Assessment (YA) 2025.
Eligible working mothers will be able to claim $8,000 in tax relief for the first child, $10,000 for the second child, and $12,000 each for the third and subsequent child.
Mr Wong said: “Effectively, this will provide more government support for eligible lower- to middle-income working mothers.”
For working mothers of children born or adopted before Jan 1, 2024, there is no change to the tax relief that they can claim.
5. Foreign Domestic Worker Levy Tax Relief (FDWLR)
From YA2025, the FDWLR will lapse for all taxpayers. This tax relief was introduced in 1989 to support working married women, especially those with childcare needs, who required the help of a migrant domestic worker.
“This is because we already have a migrant domestic worker levy concession, which provides more targeted support for families who need help caring for their dependants, including young children below 16 years old,” said Mr Wong.
This concessionary levy of $60 per month – instead of the usual levy of $300 or $450 for the first and subsequent helper – was introduced to support working mothers, in particular those living with children below 16 years old, elderly people or people with disabilities requiring domestic help.
The levy is a more targeted and progressive way of supporting families who need caregiving help, including those who not pay income tax.
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