Central Provident Fund Relief is given to individuals as an encouragement to save for their retirement. The amount of CPF relief is capped to ensure that CPF is not used as an inappropriate tax shelter.
Employees who are Citizens of Singapore or permanent residents may claim CPF Relief.
Please note that there is a personal income tax relief cap of $80,000, which will apply from the Year of Assessment (YA) 2018. This cap applies to the total amount of all tax reliefs claimed, including any relief on compulsory/ voluntary CPF contributions made on or after 1 Jan 2017.
There will be no refund for accepted voluntary CPF contributions. As such, taxpayers who make voluntary CPF contributions on or after 1 Jan 2017 should take note of the overall personal income tax relief cap. You should evaluate whether you would benefit from tax relief on your voluntary CPF contributions and make an informed decision accordingly.
CPF relief is capped by the amount of compulsory employee CPF contributions made on ordinary wages and additional wages under the CPF Act.
Ordinary wages are wages due or granted for employment. They include allowances (e.g. food allowance and overtime payments) earned by an employee in the month. Ordinary wages must be paid before the due date for payment of CPF contributions for that month.
Additional wages are income supplements which are not granted wholly and exclusively for the month. These include your annual bonus and leave pay.
You can only claim CPF relief if your employee CPF contributions have not exceeded the ordinary wage ceiling and additional wage ceiling.
| From 1 Sep 2011 to 31 Dec 2015 | $5,000 per month |
| From 1 Jan 2016 | $6,000 per month |
| From 1 Jan 2012 to 31 Dec 2015 | $85,000 less Total Ordinary Wages subject to CPF ($85,000 = 17 months x $5,000) |
| From 1 Jan 2016 | $102,000 less Total OW subject to CPF ($102,000 = 17 months x $6,000) |
When employee or employer CPF contributions have exceeded the OW Ceiling or AW Ceiling, the excess amount is considered voluntary CPF contributions.
These do not qualify for CPF Relief.
These are taxable as your employment income because they form part of gains or profits from employment.
Excess or voluntary contributions while on Secondment or overseas If the excess or voluntary amount of employer CPF contributions is made while you are seconded or sent overseas for work, this amount is not taxable.
Mr Ling is 44 years old. His compulsory employee CPF contribution rate is 20%. He received the following income in 2015:
| Employment Period: 1 Jan 2015 to 31 Dec 2015 | Ordinary Wage (OW) | Additional Wage (AW) |
| Total wages for 2015 | $4,000 x 12 months = $48,000 | $45,000 |
| OW & AW Ceiling | $5,000 x 12 months = $60,000 | $85,000 - (A) = $85,000 - $48,000 = $37,000 |
| Wages subject to compulsory CPF contributions | $48,000 (A) The OW ($48,000) is subject to compulsory CPF contributions as the total OW for the year has not exceeded the OW Ceiling ($60,000). | $37,000 The AW ($45,000) exceeds the AW Ceiling ($37,000). The AW subject to compulsory CPF contribution is capped at $37,000. |
Mr Ling's CPF Relief for the Year of Assessment (YA) 2016 is computed as follows:
| CPF Relief on | Amount |
| OW | $48,000 x 20% = $9,600 |
| AW | $37,000 x 20% = $7,400 |
| Total CPF Relief allowed for YA 2016 | = $17,000 ($9,600 + $7,400) |
Mr Hong is 61 years old. His compulsory employee CPF contribution rate is 7.5%. He received the following income in 2015:
| Employment Period: 1 Jan 2015 to 31 Dec 2015 | Ordinary Wage (OW) | Additional Wage (AW) |
| Total wages for 2015 | $6,000 x 12 months = $72,000 | $10,000 |
| OW & AW Ceiling | $5,000 x 12 months = $60,000 | $85,000 - (A) = $85,000 - 60,000 = $25,000 |
| Wages subject to compulsory CPF contributions | $60,000 (A) The OW ($72,000) has exceeded the OW Ceiling ($60,000). OW subject to compulsory CPF contribution is capped at $60,000. | $10,000 The AW ($10,000) is subject to compulsory CPF contributions as the AW has not exceeded the AW Ceiling ($25,000). |
Mr Hong's CPF Relief for YA 2016 is computed as follows:
| CPF Relief on | Amount |
| OW | $60,000 x 7.5% * = $4,500 |
| AW | $10,000 x 7.5% * = $750 |
| Total CPF Relief allowed for YA 2016 | = $5,250 ($4,500 + $750) |
*Because Mr Hong is aged between 60 & 65 he is subject to the 7.5% employee CPF contribution rate.
For additional information please refer to IRAS - CPF
