Review of Criteria for Working Mother's Child Relief Claims

Mr Zainal Sapari asked the Minister for Finance (a) whether income declared for a child by a working mother to claim for Working Mother's Child Relief (WMCR) can exclude (i) the National Service allowance as this should be treated as recognition given to NSmen and their families and (ii) income earned through internships or attachments to encourage the child to learn beyond the classroom; and (b) whether the annual income ceiling of $4,000 of the child for WMCR can be reviewed to keep pace with the rising cost of living and current wage levels.

To qualify as a dependant for tax reliefs, such as Working Mother’s Child Relief, the dependant should be financially dependent and not be earning any income. However, as a concession, we have allowed dependants who derive incidental income to qualify as a dependant for tax relief purpose, if their income is not more than $4,000 a year.

This income condition applies to all dependants, including parents and spouses, and not just children who work part-time or are NSFs. We do not exclude any category of income from this threshold in determining whether the dependant's income exceeds $4,000, so as to be consistent and equitable in the treatment of all income of dependants.

The income threshold for the relief was last doubled to $4,000 in Budget 2010. We will review this threshold from time to time.