The Tax Relief Leveraging on CPF (As per 19 Dec 2017)
Year end is coming and hence I am looking how to reduce my tax. I have been searching ways how to reduce my tax and dig further about CPF Retirement Sum Top Up Scheme which I found below and I am not aware before.
Key Note is CPF Retirement Sum Top Up is not a guarantee for Tax Relief as there is a few conditions specified
1. You must not hit the FRS.
2. If you top up your loved one, he or she should not have income exceeding $4000
3. You must not hit $80,000 personal income tax relief.
So for those who use the scheme as a mean for income tax relief please take note else, encourage you to top up for your retirement :)
Another side of thought is if we transfer our OA to SA, this is a good thing to earn more Interest but indirectly we will also increase our SA to reach the FRS faster.
I guess all boiled down to our objectives.
Quoted from CPF Website , link here
Top Up For My Self
The cap is based on current FRS, rather than the Enhanced Retirement Sum (ERS), to keep tax benefits focused on supporting basic retirement needs. Cash top-ups beyond the above caps will not be eligible for tax relief.
Personal income tax relief cap of $80,000, which will apply from Year of Assessment 2018. This cap applies to the total amount of all tax reliefs claimed, including any relief on cash top-ups made under the Retirement Sum Topping-Up Scheme, made on or after 1 Jan 2017.
To My Loves One
On top of the condition above, below condition are apply as well
To qualify for tax relief for cash top-ups made to your spouse's/siblings' CPF accounts, your spouse/siblings must meet either of the following conditions:
a. Income (e.g. salary or tax exempt income such as bank interest, dividends and pension) not exceeding $4,000 in the year preceding the year of top-up*; or
b. Handicapped**.
*"Income" of a person would include income from all sources, such as tax exempt income (e.g. bank interest, dividend and pension) and foreign-sourced income remitted into Singapore. Hence investment income/rental income/directorship income etc, are considered to be income of a person.
** A handicapped person is one who has been incapacitated mentally or physically. Some examples are visual-impairment, loss of hearing, loss of limb and dementia.
Year end is coming and hence I am looking how to reduce my tax. I have been searching ways how to reduce my tax and dig further about CPF Retirement Sum Top Up Scheme which I found below and I am not aware before.
Key Note is CPF Retirement Sum Top Up is not a guarantee for Tax Relief as there is a few conditions specified
1. You must not hit the FRS.
2. If you top up your loved one, he or she should not have income exceeding $4000
3. You must not hit $80,000 personal income tax relief.
So for those who use the scheme as a mean for income tax relief please take note else, encourage you to top up for your retirement :)
Another side of thought is if we transfer our OA to SA, this is a good thing to earn more Interest but indirectly we will also increase our SA to reach the FRS faster.
I guess all boiled down to our objectives.
Quoted from CPF Website , link here
Top Up For My Self
only cash top-ups within the following caps will be eligible for tax relief:
| Recipient below age 55 | Current FRS less the sum of Special Account (SA) savings and net SA savings withdrawn under CPF Investment Scheme for investments that have not been completely disposed of. |
| Recipient age 55 and above | Current FRS^ less Retirement Account (RA) savings# |
The cap is based on current FRS, rather than the Enhanced Retirement Sum (ERS), to keep tax benefits focused on supporting basic retirement needs. Cash top-ups beyond the above caps will not be eligible for tax relief.
Personal income tax relief cap of $80,000, which will apply from Year of Assessment 2018. This cap applies to the total amount of all tax reliefs claimed, including any relief on cash top-ups made under the Retirement Sum Topping-Up Scheme, made on or after 1 Jan 2017.
- Which mean if I already hit the personal income tax relief, I will not be entitled for tax relief
To My Loves One
On top of the condition above, below condition are apply as well
To qualify for tax relief for cash top-ups made to your spouse's/siblings' CPF accounts, your spouse/siblings must meet either of the following conditions:
a. Income (e.g. salary or tax exempt income such as bank interest, dividends and pension) not exceeding $4,000 in the year preceding the year of top-up*; or
b. Handicapped**.
*"Income" of a person would include income from all sources, such as tax exempt income (e.g. bank interest, dividend and pension) and foreign-sourced income remitted into Singapore. Hence investment income/rental income/directorship income etc, are considered to be income of a person.
** A handicapped person is one who has been incapacitated mentally or physically. Some examples are visual-impairment, loss of hearing, loss of limb and dementia.
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