Budget 2023: What Does It Mean For Working Mums?

DPM Lawrence Wong delivered his Budget 2023 announcement on Valentine’s Day, with several new changes specifically targeted at families in Singapore. 

We unpack what all these really mean.

Working Mother’s Child Relief (WMCR)

The most significant change for working mothers in Singapore is the new changes to the WMCR scheme, which allows working mothers to claim income tax relief.

This is the government’s predominant scheme used to incentivise married women to remain in the workforce after having children and has arguably been fairly successful till date.

Budget 2023 stipulated that for children born on or after 1 January 2024, working mothers will now be given a fixed dollar relief regardless of how much they earn, rather than applying existing variable percentage on their earned income.

What does this effectively mean? Well, the change will result in higher-income mothers now receiving a lower amount of tax relief than before, while lower-income mothers may now pay less taxes.  

Under the old policy, working mothers who chose to have more than three children could benefit from 60% to 100% of income tax reliefs, capped at a maximum of $80,000. 

But once the new WMCR changes come into effect, working mothers who earn more than $4,200 will feel the impact.

Specifically, mothers who excel in the workplace and are drawing a higher salary will now likely have to pay more taxes. 

We ran the numbers, and after accounting for a $1,000 Earned Income Relief (which you can claim as long as you are a parent younger than 55 years old and you are gainfully employed), here are the new taxes payable: 

Note: This excludes any other income tax reliefs (e.g. Qualifying Child Relief, the Parenthood Tax Rebate, etc). In this calculation, we will assume that the one-time PTR has already been fully utilised, and the father is the one claiming for $4,000 QCR per child.

If you are already done with having children before the new changes take effect, then your WMCR will not be affected.

But if you’re still planning to have children, then note that you will likely be paying higher income taxes after this change. 

For instance, a mother of two who earns $5,500 monthly used to pay $683 under the old scheme, but will now have to pay $1,040 from 2024 onwards. However, if her first kid was born in this year or earlier, then her taxes will be $907 instead.

Will this have an impact on the child-rearing decisions of female high-flyers?

Only time will tell.

A more generous Baby Bonus

To encourage Singaporeans to have more children, the government has boosted the Baby Bonus scheme, which consists of three components – a Baby Bonus Cash Gift, the Child Development Account (CDA) First Step Grant and dollar-for-dollar matching for voluntary CDA top-ups.

Baby Bonus Cash Gift: $3,000 more 

The Baby Bonus Cash Gift has now been increased by $3,000, meaning that parents will receive $11,000 for their first and second children (up from $8,000 previously). For their third and subsequent children, the bonus will now be $13,000 (vs. $10,000 previously).

However, the payout schedule has been dragged out. In contrast to the older scheme where the full amount is disbursed by the child’s 18^th month birthday, parents will now receive up to $9,000 over the first 18 months of their child’s life, followed by $400 every six months until the child turns 6½ years old.

Child Development Account (CDA) First Step Grant

Parents will now receive $2,000 more for each child, as the CDA First Step Grant has been increased from $3,000 to $5,000 regardless of child birth order.

Government co-matching

In addition, for parents with two children or less, the government will also now match $1,000 more on voluntary top-ups.

Covid-19 Baby Support Grant 

There’s more good news if you have a child born between October 1, 2022 and February 13, 2023, as you will receive an additional Baby Support Grant of $3,000.

This was first introduced during the Covid-19 pandemic and has since been extended. 

Conclusion

Depending on how much you earn and how many children you have, you may or may not like the changes announced in Budget 2023.

Want to maximise your benefits under the new policies? Keep a lookout for our next article, where we’ll cover this in detail.

Dawn Cher is a mother of two boys and the founder of financial blog SG Budget Babe. Work aside, she is proudest about having lost 20kg in a year, becoming lighter than her pre-pregnancy days. She believes in fairytales (don't tell her otherwise!).