Who needs to Contribute Compulsory Medisave Contributions
It is compulsory for you to make Medisave contributions if you are:
- a self-employed person; and
- a Singapore citizen or Singapore permanent resident; and
- earning a yearly net trade income# of more than $6,000.
# Net Trade Income is your gross trade income minus all allowable business expenses, capital allowances and trade losses as determined by IRAS.
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How Much Compulsory Medisave to Contribute
The amount of Medisave that you have to contribute for the year depends on your age and income level: Below are the Medisave contribution rates for self-employed persons for year 2011 and 2012:
| Yearly Net Trade Income |
Age as at 1 January
|
| Below 35 years |
35 to below 45 years |
45 years and above |
Above $6,000 to $12,000
|
2.33%
|
2.67%
|
3.00%
|
Above $12,000 to $18,000
|
2.33% to 7.00%
|
2.67% to 8.00%
|
3.00% to 9.00%
|
Above $18,000
|
7.00%
|
8.00%
|
9.00%
|
Maximum
|
$3,920/$4,200*
|
$4,480/$4,800*
|
$5,040/$5,400*
|
* Maximum applicable for 2012
Example 1: If you are 37 years old as at 1 Jan 2012 and your net trade income is $26,000, you are required to contribute $2,080 (i.e. 8% x $26,000) to your Medisave account.
For more details on the Medisave contribution rates, please refer to the CPF Board website.
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When to Contribute
You have to make contributions to your Medisave account 30 days from the date you receive a "Notice of Computation of CPF Contributions (Medisave)" (NOC) from IRAS if you are not on the GIRO payment scheme with the CPF Board. If you have an arrangement with the CPF Board to pay your Medisave contributions by GIRO, then the payment will be according to the instalment plan issued by the CPF Board.
Generally, you will receive the NOC from IRAS after your total income for the relevant Year of Assessment (YA) has been assessed.
You may also contribute to your Medisave account at any time during the year.
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How to Contribute
Please contact the CPF Board to arrange for the payment of your Medisave.
Voluntary Contributions to Medisave Account (VC-MA)
You may claim tax relief in respect of voluntary contributions to your Medisave Account (VC-MA) if:
- You are a Singapore Citizen / Singapore PR; and
- You have made voluntary contributions to your Medisave Account in the previous year.
This relief is allowed to any individual deriving any type of income (e.g. rental income, director's fees, etc.) in the year in which such voluntary cash contributions are made.
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Amount of relief allowed for Voluntary Contribution to Medisave Account (VC-MA)
The tax relief is limited to the lowest of the following:
- Voluntary cash contribution directed specifically to Medisave Account;
- Annual CPF contribution cap for the year less Mandatory Contribution (MC).
MC refers to compulsory contribution by employee and his employer and compulsory Medisave Account for self-employed individuals;
- Prevailing Medisave Contribution Ceiling (MCC), less the balance in Medisave Account before the voluntary cash contribution.
Medisave Contribution Ceiling Table (MCC)
With effect from
|
Medisave Contribution Ceiling |
1 Jul 2012
|
$43,500
|
1 Jul 2011
|
$41,000
|
1 Jul 2010
|
$39,500
|
1 Jul 2009
|
$37,000
|
1 Jul 2008
|
$34,500
|
Prior to 1 Jul 2008
|
$33,500
|
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Andrew is an employee who is 30 years old
|
YA 2012
|
YA 2013
|
Total Salary
|
$80,000 |
$80,000
|
Compulsory CPF contributions made by Andrew's employer
|
- Jan to Feb 11
15% x $76,500 cap x 2/12
= $1,912.50
Mar to Aug 11
15.5% x $76,500 cap x 6/12
= $5,928.75 Sep to Dec 11
16% x $79,333 cap x 4/12
= $4,231.10
Total = $12,072.35
|
16% x $80,000 cap
= $12,800
|
Compulsory CPF contributions by Andrew as an employee
|
(20% x$76,500 cap x 8/12) +
(20% x $79,333 cap x 4/12) = $15,488.90
|
20% x $80,000 cap
= $16,000
|
Total Contribution by Andrew and his employer
|
$12,072.35 + $15,488.90 = $27,561.25
|
$12,800 + $16,000 = $28,800
|
| Annual CPF contribution cap |
$30,600
|
$30,600
|
| Voluntary cash contribution directed by Andrew to his Medisave Account |
$4,700
|
$3,500
|
Maximum tax relief allowed on voluntary contribution made by Andrew to his Medisave Account
|
$3,038.75 ($30,600 - $27,561.25)
|
$1,800
($30,600 - $28,800)
|
| Total CPF relief allowable to Andrew |
$18,527.65
($15,488.90 + $3,038.75)
|
$17,800
($16,000 + $1,800)
|
Bernard is a self-employed person who is 30 years old.
|
YA 2012
|
YA 2013
|
Net trade income assessed by IRAS
|
$60,000 |
$60,000
|
Compulsory Medisave contributions by Bernard as a self-employed individual based on his age and income
|
$3,920
Lower of $3,920 or ($60,000 x 7%)
|
$4,200
Lower of $4,200 or ($60,000 x 7%)
|
Annual CPF contribution cap
|
$30,600
|
$30,600 |
CPF relief cap for Bernard as a self-employed individual
|
$21,600
Lower of $30,600 or (36% x $60,000)
|
$21,600
Lower of $30,600 or (36% x $60,000)
|
Voluntary cash contribution directed by Bernard to his Medisave Account
|
$16,680
|
$18,400
|
Maximum tax relief that Bernard can claim on his voluntary cash contribution to Medisave Account
|
$17,680 ($21,600 - $3,920 = $17,680)
|
$17,400
($21,600 - $4,200 = $17,400)
|
| Tax relief allowable on voluntary cash contribution made by Bernard to his Medisave Account |
$16,680 |
$17,400 |
| Total CPF relief allowable to Bernard |
$20,600
($3,920 + $16,680) |
$21,600
($4,200 + $17,400) |
Charlie is an employee who is also a self-employed person who is 30 years old.
|
YA 2012
|
YA 2013
|
Total Salary
|
$40,000
- Jan to Feb 11
= $5,000
- Mar to Aug 11
= $25,000
- Sep to Dec 11
= $10,000
|
$40,000
|
Net trade income assessed by IRAS
|
$20,000
|
$20,000
|
Compulsory CPF contributions made by Charlie's employer
|
- Jan to Feb 11
15% x $5,000 = $750
- Mar to Aug 11
15.5% x $25,000 = $3,875
- Sep to Dec 11
16% x $10,000 = $1,600
Total = $6,225
|
$6,400
(16% x $40,000)
|
Compulsory CPF contributions by Charlie as an employee
|
$8,000
(20% x $40,000)
|
$8,000
(20% x $40,000)
|
Compulsory Medisave contributions by Charlie as a self-employed individual based on his age and income
|
$1,400
Lower of $3,920 or ($20,000 x 7%)
|
$1,400
Lower of $4,200 or ($20,000 x 7%)
|
| Annual CPF contribution cap |
$30,600
|
$30,600
|
Voluntary contributions to CPF by Charlie as a self-employed individual
|
$14,975
($30,600 - $6,225 - $8,000 - $1,400)
|
$14,800
($30,600 - $6,400 - $8,000 - $1,400)
|
Voluntary cash contribution directed by Charlie to his Medisave Account
|
NIL
|
$5,000
|
CPF relief cap for Charlie as a self-employed individual
|
$7,200
Lower of $30,600 or (36% x $20,000)
|
$7,200
Lower of $30,600 or (36% x $20,000)
|
Tax relief allowable on voluntary contribution to CPF made by Charlie as a self-employed individual
|
$5,800 restricted to ($7,200 - $1,400 = $5,800) or amount contributed ($14,975), whichever is lower
|
$5,800
restricted to ($7,200 - $1,400 = $5,800) or amount contributed ($14,800), whichever is lower
|
| Total CPF relief allowable to Charlie |
$15,200
($8,000 + $1,400 + $5,800) |
$20,200
($8,000 + $1,400 + $5,800 + $5,000) |
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Voluntary Contribution to Medisave Account (VC-MA) by companies
Companies (e.g taxi companies) who have qualifying contracts (see FAQ 3) with self-employed persons (e.g taxi drivers) may make and claim tax deduction on, qualifying voluntary cash contribution to the Medisave Accounts (VC-MA) of the self-employed persons, subjects to conditions.
For the tax treatment and filing requirements in respect of:
(a) the self-employed person, see FAQs 5, 6 and 13; and
(b) the company, see FAQs 5, 12 and 14.
For more information on VC-MA made by companies, read the FAQ.