Did you know that with one of the lowest personal income tax rates in the world, Singapore is considered a tax haven? Singapore follows a progressive resident tax rate and there is no capital gain or inheritance tax.
But that’s not what we’re here to talk about. In this article, we’ll be covering why you need to understand your taxes.
1) Better decision making
First and foremost, understanding taxes is not as difficult as it may seem. The math behind taxes is fairly simple—they rely mainly on addition and subtraction. When you understand your taxes, you get to reduce your tax burden and make sound financial choices.
For example, once you have fully understood how reportable income and deductible expenses work, you will be able to see which expenses are reasonable and which are unnecessary.
2) Avoid making mistakes
Having at least the basic knowledge of taxes can help you avoid difficulties such as missing deductions. Many people make mistakes not because they mean to do so, but because of ignorance—not wanting to understand their taxes. When you have a clearer understanding of your taxes, you can avoid making silly mistakes and even reduce your taxes.
3) Record keeping
If you don’t keep a record of your expenses, then how else would you know what you can and cannot claim on your taxes? Understanding taxes requires you to organise and categorise your receipts. Meaning you will need to know which record to keep track of. When you have the basic knowledge of doing taxes, you will find it easier to do this.
4) Review your finances
As mentioned above, keeping track of your expenses to determine what you can and cannot claim on your taxes will also help you to review your finances and financial position. When you review your tax documents, you will have a clearer view of how well you spend your money and encourage you to plan for your future finances as well.
5) Take control of your finance
Your knowledge of taxes can greatly benefit you in other aspects. For instance, understanding how your money is being taxed will further empower you to take control of your finances, set your financial goals and make smarter financial decisions. With a smart tax plan, you can take advantage of tax incentives and reduce the amount of tax you need to pay.
All in all, understanding taxes can greatly benefit you. So, if you think now is not the right time for you to learn about taxes, you might want to reconsider that thought. When you have a better understanding of your taxes, you will do a better job at managing your finances and make smarter financial decisions. And what this means for you is that you get to enjoy tax incentives and save more.
With the money that you saved, there are plenty of ways for you to grow that money and build your wealth. Speaking of growing your wealth, did you know that a career as a financial planner allows you to grow not only your own but your clients’ financial wealth as well? If this financially rewarding career path excites you, get in touch with us today! We are more than happy to guide you into becoming a successful financial planner.