CPF (Central Provident Fund) Relief for Employees

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.

Who qualifies for CPF Relief?

Employees who are Citizens of Singapore or permanent residents may claim CPF Relief.

 

Qualifying and Non-Qualifying Contributions for CPF Relief

Contributions that Qualify for CPF Relief

• Compulsory employee CPF contributions under the CPF Act or contributions to an approved pension or provident fund;
• Voluntary contributions to your Medisave Account.

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.

 

Which contributions do not qualify for CPF relief?

• Voluntary contributions made in excess of the compulsory contributions under the CPF Act
• CPF contributions on additional wages that exceed the CPF cap on wages from related employers (employed concurrently by two or more related employers in a year)
• CPF contributions made in respect of your overseas employment, while you are seconded or sent overseas for work

 

What is the amount of CPF relief?

CPF relief is capped by the amount of compulsory employee CPF contributions made on ordinary wages and additional wages under the CPF Act.

 

What is meant by ordinary wages and additional wages?

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.

 

Ordinary Wage (OW) Ceiling

From 1 Sep 2011 to 31 Dec 2015	$5,000 per month
From 1 Jan 2016	$6,000 per month

Additional Wage (AW) Ceiling

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)

 

Excess / Voluntary CPF Contributions

When employee or employer CPF contributions have exceeded the OW Ceiling or AW Ceiling, the excess amount is considered voluntary CPF contributions.

 

Excess Employee CPF Contributions

These do not qualify for CPF Relief.

 

Excess Employer CPF Contributions

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.

 

Below are a couple of example computations of CPF Relief

 

Additional Wages (AW) Exceed the Ceiling

Mr Ling is 44 years old. His compulsory employee CPF contribution rate is 20%. He received the following income in 2015:

 

Example computations of CPF Relief 1

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:

 

Example computations of CPF Relief 2

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)

Ordinary Wages Exceed the Ceiling

Mr Hong is 61 years old. His compulsory employee CPF contribution rate is 7.5%. He received the following income in 2015:

Example computations of CPF Relief 3

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:

 

Example computations of CPF Relief 4

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

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