Income Tax in Singapore: Calculating Your CPF Relief (2020)
This entry is one of three Income Tax Guides for Singaporeans on Wiki.sg. Part One explains how you should calculate your income tax. Part Two complies the Income Tax Reliefs that can potentially reduce how much tax you pay. Part Three explains how to calculate your CPF Reliefs.
Tax residents in Singapore who make compulsory contributions to their CPF accounts are eligible for CPF Reliefs. This entry highlights the Terms and Conditions of the CPF relief and how to calculate the claimable amount.
CPF Relief for Employees
This relief is for employed individuals who have made the compulsory monthly contributions to their CPF accounts.[1] How much CPF relief you get is based on your (i) Ordinary Wage (OW) and (ii) Additional Wage (AW). The following sections illustrate the steps in calculating CPF reliefs.
Step 1. Calculate Your Ordinary & Additional Wages
Your Ordinary Wage is how much you made in a year before CPF deduction. Additional Wage consists of extra payments that are not your monthly salary - for example, year-end bonuses.
For Example
Catelyn is 29 years old. In 2019, she earned $7,000 a month (before CPF) in 2019. That year, she received a year-end bonus of $14,000. Her OW and AW for 2019 are as such.
| Ordinary Wage | Additional Wage | |
|---|---|---|
| Amount | $84,000 | $14,000 |
| Formula |
$7,000 x 12 months (No. of Months Worked) |
- |
Step 2. Find Out Your Annual Wage Ceilings
This will affect whether your relief will be limited to the wage ceiling. If your OW or AW exceed their respective wage ceilings, you are limited to a CPF relief amounting to 20% of the annual wage ceiling.
(i) Ordinary Wage Ceiling: $6,000 a month
(ii) Additional Wage Ceiling: Differs based on your salary
For Example
Considering that Catelyn worked for the whole of 2019, her OWC and AWC are as such.
| Catelyn's Ordinary Wage | Ordinary Wage Ceiling | Catelyn's Additional Wage | Additional Wage Ceiling | |
|---|---|---|---|---|
| Amount | $84,000 | $72,000 | $14,000 | $18,000 |
| Formula | - |
$6,000 x 12 months (No. of Months Worked) |
- |
$102,000* - $84,000 (Catelyn's Ordinary Wage) *This number is the same for everyone |
| Conclusion | OWC exceeded | AWC not exceeded | ||
With an OW of $84,000, Catelyn exceeded the $72,000 OWC. However, she did not surpass the AWC.
Step 3. Calculate Your Total Relief Amount
Your total CPF relief amount is the sum of what you can claim for your OW and AW.
For Example
| Ordinary Wage | Additional Wage | ||
|---|---|---|---|
| Terms | Catelyn's Ordinary Wage exceeds the Ordinary Wage Ceiling | Catelyn's Additional Wage did not exceed the Additional Wage Ceiling. | |
| Amount Claimable | $14,400 | $2,800 | |
| Formula |
20% x $72,000 (Ordinary Wage Ceiling) |
20% x $14,000 (Catelyn's Additional Wage) | |
| Gross Amount Claimable | Under the above conditions, Catelyn is allowed to claim a CPF Relief valued at $17,200. | ||
| Formula |
$14,400 (Amount Claimable for OW) + $2,800 (Amount Claimable for AW) | ||
CPF Cash Top-up Relief - Up to S$14,000
You are eligible for this relief if you:
(i) Hold a Singapore NRIC
(ii) Have made cash top-ups into your Special Account or Retirement Account
(iii) Have made case top-ups into your family member's Special Account or Retirement Account
The amount claimable is capped at $7,000 for self top-up and $7,000 for family top-up. More information can be found on the IRAS website.
References / Citations
- ↑ “CPF (Central Provident Fund) Relief for Employees”. IRAS. Accessed on 12 March 2020.