We highlight and explain the changes wrought by Budget 2018 with the most immediate and discernible impact on everyday Singaporeans.
Budget 2018 was announced yesterday, and it covers many different aspects. While all the information can be overwhelming, don’t worry – we’ve filtered out the main issues that will impact everyday Singaporeans, and which have immediate relevance to you. Here’s what you need to know right away:
1. Singles Can Now Receive the Proximity Housing Grant (PHG)
Previously, the PHG provided families a payout of S$20,000, if they bought a resale flat near their parents. Singles could not get the grant (although they could get a PHG of S$10,000 for living in the resale flat with their parents).
Now, singles who buy resale flats near their parents can also get a PHG, of S$10,000. Singles who live in the same resale flat with their parents can get a PHG of S$15,000.
(Families will still get the usual PHG of S$20,000 for living near parents, and a PHG of S$30,000 for living with their parents).
In addition, the definition of “near” has been simplified. It now means living within four kilometres of your parents (previously there were many different criteria that had to be fulfilled, for your resale flat to count as being “near”).
2. One-time “Hong Pao” for All Singaporeans Aged 21 or Above
Sometime at the end of the year, all Singaporeans aged 21 or above will receive a cash payout of S$100 to S$300. The amount is dependent on income.
Singaporeans earning S$28,000 per annum or below will get S$300. Singaporeans earning between S$28,001 to S$100,000 per annum will get S$200. Singaporeans earning more than that will get S$100.
This will come around the end of the year, so it should be a big help in buying presents next Christmas.
3. There Will be a New E-tax on Imported Services
The e-tax that most concerns the average Singaporean are the ones on digital streaming services. This refers to services such as Netflix and Spotify, which will be subject to GST.
In general, any overseas company providing such services – which has an annual turnover of $1 million or more, and which makes at least S$100,000 per annum in Singapore – will be required to pay GST.
Thus far, there is no e-tax applied on ecommerce for physical items, such as when buying shoes or clothes online. However, the usual GST rates still apply on purchases of S$400 or more.
(Note: there is another e-tax on imported, business-to-business services, but this doesn’t directly affect regular Singaporeans).
4. Increase of 1% in Buyers Stamp Duty For Properties Exceeding $1 million
The Buyers Stamp Duty (BSD) for residential properties is being increased. For any such properties above S$1 million, the BSD is now:
- One per cent on the first S$180,000
- Two per cent on the next S$180,000
- Three per cent on the next S$640,000
- Four per cent on any amount in excess of S$1 million
For example, say you purchase a residential property for S$1.5 million. The BSD would be:
- First $180,000 (1%) = S$1,800
- Next $180,000 (2%) = S$3,600
- Next S$640,000 (3%) = S$19,200
- Amount exceeding S$1.5 million (in this case, 4% of S$500,000) = S$20,000
- Total BSD = S$44,600
These new rates apply from 19th February onward. However, for buyers who currently hold an Option to Purchase (OTP), they can still get the old rates, if they exercise the option by 12th March 2018.
5. Increase of 10% in Tobacco Tax
The excise duty on all tobacco products is being raised, from S$352 per kilogram to S$388 per kilogram. That’s a not-insignificant increase in the tax levied upon tobacco suppliers.
The tax on cigarette sticks will rise to 42.7 cents per gram, up from the old rate of 38.8 cents per gram. Homogenised or reconstituted tobacco products, along with tobacco substitutes, will incur an excise duty of S$427 per kilogram.
If you haven’t started smoking, it’s a good idea to keep it that way!
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By Ryan Ong
Ryan has been writing about finance for the last 10 years. He also has his fingers in a lot of other pies, having written for publications such as Men’s Health, Her World, Esquire, and Yahoo! Finance.