Calculation Methodology
Transparency is key to trust. Below we detail the mathematical models, tax assumptions, and projection logic used in your SRS Wealth Planner report.
Tax Relief & Reinvestment Logic
One of the primary benefits of SRS is the immediate tax relief. Our model assumes that the tax savings generated from your SRS contribution are reinvested into a separate taxable investment account to maximize total wealth.
Calculation Steps:
- Determine Taxable Income: We take your Taxable Income or marginal tax rate.
- Calculate Pre-SRS Tax: Based on current IRAS progressive tax rates.
- Calculate Post-SRS Tax: Recalculate tax liability after deducting the SRS contribution amount (max $15,300 for Singaporeans).
- Derive Savings:
Tax Savings = Pre-SRS Tax - Post-SRS Tax
Pro Tip: Reinvestment Assumption
The model assumes these tax savings are reinvested at the same rate of return as your SRS portfolio, but without tax deferment benefits (i.e., dividends/gains are treated as standard taxable income where applicable, though capital gains are currently tax-free in SG).
Compounding Frequency
Our projection engine uses Monthly Compounding to reflect the reality of regular investment contributions and dividend reinvestments.
- Contributions are assumed to be made at the start of each month (DCA approach).
- Fees (Management & Platform) are deducted quarterly.
Reference Data
IRAS Income Tax Rates (Resident)
YA 2024| Chargeable Income | Rate (%) | Gross Tax Payable |
|---|---|---|
| First $20,000 | 0% | $0 |
| Next $10,000 | 2% | $200 |
| Next $10,000 | 3.50% | $350 |
| Next $40,000 | 7% | $2,800 |
| Next $40,000 | 11.5% | $4,600 |
| Next $40,000 | 15% | $6,000 |