Perhaps one of the most anticipated announcements of Budget 2020 was that of the Goods and Services Tax (GST) in Singapore. In Budget 2018, Finance Minister Heng Swee Keat announced plans to increase the GST rate to 9 per cent by 2025, and since then, we've waited with bated breath…
Note: Since the Unity Budget 2020, there have been 2 more announcements: the Resilience Budget and Solidarity Budget 2020. This article reflects the updated information.
Key GST Announcements of Budget 2020
Here are the key Budget 2020 updates regarding GST (and of course, GST vouchers) in Singapore. I've also added in the bits about the Care and Support Package cash payout and U-Save utilities rebates.PHOTO: MoneySmart
1. GST will remain at 7 per cent in 2021, but must eventually increase to 9 per cent
First and foremost, Mr Heng announced that the GST rate will not be increasing in 2021 (i.e. it will stay at 7 per cent for this year and the next). This comes after 2018's vague announcement that GST will be increased by 2 percentage points to 9 per cent "sometime from 2021 to 2025".
Mr Heng stated that the GST increase is inevitable, and that the raise cannot be put off indefinitely. He added that the government will "assess carefully the appropriate time for the increase and will provide Singaporeans sufficient lead time".
2. More GST Vouchers for Singaporeans, especially retirees and lower-income households
Now onto the most important thing… GST vouchers.
In light of the imminent GST increase, Mr Heng announced an enhancement of the current permanent GST voucher scheme. This applies to most Singaporeans, in particular, retirees and lower-income households.
The GST Voucher payout will fully offset GST for the lower half of retiree households, and "significantly offset" it for the upper half. For lower-income households with no elderly, the GST vouchers will offset about half of the GST.
Additionally, the government will continue to absorb GST on healthcare and education, and will roll out a new $6 billion Assurance Package when GST is eventually raised.
3. Most Singaporeans will receive $700 to $1,600 over 5 years
So how much in GST vouchers will the rest of us get?
Well, all adult Singaporeans will receive a cash payout of $700 to $1,600 over the course of 5 years under the $6 billion Assurance Package. For most, the cash payouts will cover at least 5 years worth of additional GST expenses, going up to 10 years' worth for those living in smaller, 1 to 3-room HDB flats.
Here's the example cited:
A family of four with a combined income of $6,000, living in a 4-room HDB flat can receive in total about $7,000 in offsets over 5 years. Including about $4,000 cash.
Do note that this is for when the GST hike is actually in effect (not yet).
4. Up to $900 cash payout and doubled U-Save rebates under the Care and Support Package
For now, to help Singaporeans with the general economic slowdown, the government has also announced a $1.6 billion Care and Support Package.
Care and Support Package - cash payout
|Assessable income (2019)||Cash payout|
|$0 to $28,000||$900 (previously $300)|
|$28,001 to $100,000||$600 (previously $200)|
|$100,001 and up (or owns >1 property)||$300 (previously $100)|
Under the package, all Singaporeans age 21 and above in 2020 will receive a one-time cash payout of $300, $600 or $900, depending on their income.
Those with an assessable income of up to $28,000 in 2019 will get $900, those who earn $28,001 to $100,000 get $600, and those earning over $100,000 (or who own more than 1 property) will get $300.
This was previously $100, $200 and $300, but was revised during the supplementary budget 2020 announcement on 26 Mar 2020 in light of the COVID-19 situation.
Update (6 Apr 2020): the Care and Support Package - cash payout will be brought forward. The first $300 will be paid together with the Solidarity Payment in April 2020. The rest will be paid in June instead of August 2020.
GST-U-Save Vouchers for FY2020
U-Save rebates will also be double through the U-Save Special Payment, which is a one-off GST Voucher for eligible households.
|HDB Flat type||Regular GST Voucher (U-Save)||U-Save Special Payment GST Voucher||Additional U-Save Rebate GST Voucher||Total U-Save GST Voucher for FY2020|
|All eligible households||Larger households|
|1- and 2-room||$400||+$400||+$200||$800 or $1,000|
|3-room||$360||+$360||+$180||$720 or $900|
|4-room||$320||+$320||+$160||$640 or $800|
|5-room||$280||+$280||+$140||$560 or $700|
|Executive and 3Gen flats||$240||+$240||+$120||$480 or $600|
On a related note, the Service and Conservancy Charges Rebate will be extended for another year. Eligible households can get between 1.5 to 3.5 months in rebates.
5. $300 cash payout for Singaporeans with kids, and $100 PAssion Card cash top-up for seniors
To help families with children and elderly, Mr Heng also shared that Singaporeans with at least 1 Singaporean child (under 20 years old in 2020) will get an extra $300 cash payout on top of everything else announced.
This $300 is the revised amount announced during the supplementary budget 2020 (previously $100).
In the Budget 2020 announcement, it was also announced that the Pioneer and Merdeka Generation seniors will receive $100 PAssion Card top-up for them to use on groceries, activities and facilities at community clubs, and more. This $100 will now be issued as cash instead.
Large families with 5 or more members will get additional GST voucher rebates, as well as 2.5X their regular U-Save rebates (up to $1,000, depending on flat type).
Update (Apr 6, 2020): the extra cash payout for parents and elderly will be paid out in June instead of August 2020.
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This article was first published in MoneySmart.