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 following CPF reliefs 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. How much CPF relief you get is based on your (i) Ordinary Wage (OW) and (ii) Additional Wage (AW). This section outlines how to calculate your CPF relief.
Step 1. Calculate Your Ordinary & Additional Wages
Your Ordinary Wage (OW) is how much you made in a year before CPF deduction. Additional Wage (AW) consists of extra payments that are not your monthly salary - for example, year-end bonuses.
Step 2. Find Out Your Annual Wage Ceilings
(i) Ordinary Wage Ceiling (OWC): $6,000 a month / $72,000 a year
(ii) Additional Wage Ceiling (AWC): Differs based on your salary
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.
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.
Example of CPF Relief Calculation
Catelyn is a 29-year-old employee. In 2019, she earned $7,000 a month (before CPF). That year, she also received a year-end bonus of $14,000.
OW & AW
The following table shows Catelyn's OW, AW and the respective ceiling amounts.
|Ordinary Wage (OW)||Ordinary Wage Ceiling (OWC)||Additional Wage (AW)||Additional Wage Ceiling (AWC)|
$7,000 x 12 months (No. of Months Worked)
$6,000 x 12 months (No. of Months Worked)
$102,000* - $84,000 (Catelyn's Ordinary Wage)
*This amount is the same for everyone
(i) With an OW of $84,000, Catelyn exceeded the $72,000 OWC.
Hence, she can only claim 20% of $72,000.
(ii) Catelyn's Additional Wage did not surpass the $18,000 AWC.
Hence, she can claim 20% of her Additional Wage amount.
Gross Amount Claimable
The following table shows how much Catelyn is entitled to claim.
|Ordinary Wage||Additional Wage|
|Gross Amount Claimable||Catelyn can claim a CPF Relief valued at $17,200.|
20% x $72,000 (Ordinary Wage Ceiling)
20% x $14,000 (Catelyn's Additional Wage)
CPF Relief for Self-employed - Up to S$37,740*
* The CPF relief cap for self-employed persons are capped at 37% of S$102,000.
Self-employed persons will be automatically considered for this relief if they have an accessible net income for the year.
|Type of Self-Employed Person||Terms||Can Claim||Cannot Claim|
|Fully Self-employed||CPF/ Medisave Contribution||Must have contributed to their employee CPF and/or Medisave||If you have no net income for the Year of Assessment.|
|Claimable Amount||Amount to be capped at whichever is lower:
(i) 37% of net trade income
(ii) 37% of $102,000 - $37,740
(iii) Amount contributed to CPF/Medisave in cash
|Self-employed but also an employee||CPF/ Medisave Contribution||Must have contributed to the following:
(i) Compulsory employee CPF contribution
(ii) Compulsory Medisave contribution (as a self-employed person)
(iii) Voluntary CPF contributions
|Claimable Amount||Up to $37,740||If your:
Compulsory employee CPF contribution + Compulsory Medisave contribution (as a self-employed person)
is more than $37,740.
References / Citations
- “CPF (Central Provident Fund) Relief for Employees”. IRAS. Accessed on 12 March 2020.
- “CPF (Central Provident Fund) Relief for Self-Employed”. IRAS. Accessed on 13 March 2020.