A Sole-proprietor or Self-employed Person Needs to Contribute to His Medisave Account
If you are:
- a self-employed person;
- a Singapore citizen or Singapore permanent resident; and
- you earn a yearly net trade income of more than $6,000,
it is compulsory for you to make Medisave contributions.
Net Trade Income is your gross trade income minus all allowable business expenses, capital allowances and trade losses as determined by IRAS.
How Much to Contribute
The amount of Medisave that you have to contribute is as follows:
From year 2007 onwards
| Yearly Net Trade Income |
$6,000 and Below |
Above $6,000 to $12,000 |
Above $12,000 to $18,000 |
Above $18,000 |
| Age |
Contribution rate |
Contribution rate |
Contribution rate |
Contribution rate |
| Below 35 years |
Voluntary contributions at 2.17% |
2.17% |
Between 2.17% and 6.5% |
6.5% (up to a max. of $3,510) |
| 35 years to below 45 years |
Voluntary contributions at 2.5% |
2.5% |
Between 2.5% and
7.5%
|
7.5% (up to a max. of $4,050) |
| 45 years and above |
Voluntary contributions at 2.83% |
2.83% |
Between 2.83% and 8.5% |
8.5% (up to a max. of $4,590) |
For more details on the Medisave contribution rates, please refer to the CPF Board website.
From year 2004 to 2006
| Yearly Net Trade Income |
Above $6,000 |
| Year 2004 |
Year 2005 |
Year 2006 |
| Age |
Contribution rate |
Maximum contribution amount |
Contribution rate |
Maximum contribution amount |
Contribution rate |
Maximum contribution amount |
| Below 35 years |
6% |
$3,960 |
6% |
$3,600 |
6% |
$3,240 |
| 35 years to below 45 years |
7% |
$4,620 |
7% |
$4,200 |
7% |
$3,780 |
| 45 years and above |
8% |
$5,280 |
8% |
$4,800 |
8% |
$4,320 |
When to Contribute
You have to contribute to your Medisave account 30 days from the date you receive a "Notice of Computation for CPF Contributions (Medisave)" from IRAS.
Generally, we will send you this notice after assessing your total income for the relevant Year of Assessment (YA).
You may also contribute to your Medisave account at any time during the year.
How to Contribute
You may contact the Central Provident Fund Board to arrange for the payment of your Medisave.
Relief for Medisave / Voluntary CPF Contributions
CPF relief is allowed based on the date of payment. For example, to claim for the CPF relief in the YA 2010, you must have made the contribution by 31 Dec 2009.
If you have made Medisave / voluntary CPF contributions during the year, IRAS will allow the relief automatically in the following year. However the amount that will be allowed is subject to conditions. Please see the following two examples.
Example 1:
If you are a self-employed person who have made Medisave and voluntary CPF contributions in the year 2009
You may claim tax relief for your Medisave and voluntary CPF contribution of up to 34.5% of your net trade income assessed, or the CPF relief cap of $26,393 (for the YA 2010), or the actual amount contributed by you, whichever is lower.
No CPF relief will be allowed in respect of your compulsory Medisave or voluntary CPF contributions made in 2009 if you have no assessable net trade income for the Year of Assessment 2010
Please see the table below for the CPF relief caps for the different YAs.
Example 2:
If you are an employee and you are also a self-employed person
There are two scenarios:
- Your combined compulsory CPF contribution as an employee and your compulsory Medisave contribution as a self-employed person is less than the CPF relief cap for self-employed persons
Tax relief will be allowed for the voluntary CPF contributions, up to the CPF relief cap. See table below for the CPF relief caps for different YAs.
However the total tax relief that may be allowed in respect of your Medisave and voluntary CPF contributions as a self-employed person will be restricted to 34.5% of your net trade income (for the YA 2010). For CPF contribution rates for other YAs, please refer to the table below.
- Your combined compulsory CPF contribution as an employee and your compulsory Medisave contribution as a self-employed person is more than the CPF relief cap for self-employed persons
Tax relief will only be allowed for the compulsory contributions made. You cannot claim relief for the voluntary CPF contributions.
Table: CPF Relief Cap for Self-Employed Persons
| Year of Assessment |
2002 |
2003 |
2004 |
2005 |
2006 |
2007 |
From 2008 |
| Net Trade Income Ceiling |
$72,000 |
$72,000 |
$72,000 |
$66,000 |
$85,000 |
$76,500 |
$76,500 |
| CPF contribution rate |
36% |
36% |
36%
(1.1.03 to 30.9.03)
33%
(1.10.03 to 31.12.03)
|
33% |
33% |
33% |
34.5% |
| CPF Relief Cap |
$25,920 |
$25,920 |
$25,380 |
$21,780 |
$28,050 |
$25,245 |
$26,393 |
Relief for Voluntary Contribution to Medisave Account (VC-MA)
With effect from Year of Assessment 2009, If you were a Singaporean or Singapore Permanent Resident in the preceding year and derived any type of income (e.g. rental income, director’s fees, etc), you may claim your voluntary cash contribution within the annual CPF contribution cap (17 months x $4,500 x 34.5% = $26,393) and within the Medisave contribution ceiling ($34,500 from 1 Jul 2008), that is specifically directed by you to be paid to your Medisave Account, provided that such voluntary contribution has not been claimed by you as a self-employed person. Please refer to example in Q1 (Scenario 2) below.
FAQ's (Including specific cases and scenarios)
Mr T is 30 years old. He is a salaried employee as well as a self-employed person. His employment income and net trade income for the year 2008 are as follows:
| Employment Income |
= $40,000 |
| Net Trade Income |
= $20,000 |
In the year 2008, he contributed CPF as an employee and as a self-employed person as follows:
Compulsory CPF contributions by his employer
|
= $5,800 (i.e. 14.5% x $40,000) |
His compulsory CPF contributions on employment income
|
= $8,000 (i.e. 20% x $40,000) |
His compulsory Medisave contributions on net trade income
|
= $1,300 (for his age group, he must contribute 6.5% of his net trade income, up to a maximum of $3,510) |
His voluntary contributions as self-employed individual
|
= $11,293 |
| His total CPF contributions |
= $20,593 (i.e. $8,000+$1,300+$11,293) |
However, the allowable CPF relief will be capped at $14,900 as follows:
| (a) Compulsory CPF contributions as an employee |
$8,000 |
| (b) Compulsory Medisave contribution as a self-employed |
$1,300 |
| (c) Voluntary CPF contribution as a self-employed |
$5,600* |
| |
$14,900 |
* $5,600 = $6,900 - $1,300.
The allowable CPF contribution for Mr T’s net trade income is capped at $6,900 ($20,000 x 34.5%) or $26,393 whichever is lower.
Scenario 1
Mr X is 30 years old. He is a salaried employee as well as a self-employed person. His employment income, net trade income and CPF contributions for 2008 are as follows:
Employment income = $40,000
Net Trade income = $20,000
Compulsory CPF contributions by his employer = $5,800 (i.e. $40,000 x 14.5%)
His compulsory CPF contributions on employment income = $8,000 (i.e. $40,000 x 20%)
His compulsory Medisave contributions on net trade income = $1,300 (For his age group, he must contribute 6.5% of his net trade income i.e. $20,000 x 6.5%)
His voluntary contributions as a self-employed individual = $11,293 (i.e. $26,393-$5,800-$8,000-$1,300 = $11,293).
He has specifically directed an amount of $2,000 from his voluntary contributions to be paid to his Medisave Account.
His total CPF contributions = $20,593 (i.e. $8,000+$1,300+$11,293)
With the new tax treatment for VC-MA, the total allowable CPF relief for Year of Assessment 2009 will be capped at $16,900 as follows:
| (a) Compulsory CPF contributions as an employee |
$8,000 |
| (b) Allowable CPF contributions as a self-employed ($20,000 x 34.5% or $26,393, whichever is lower)# |
$6,900 |
| (c) New tax relief for VC-MA* |
$2,000 |
|
$16,900 |
Scenario 2
Mr X’s employment income, net trade income and CPF contributions for 2008 are same as Scenario 1 except that the amount of voluntary contribution that he has specifically directed to be paid to his Medisave Account is $5,693.
With the new tax treatment for VC-MA, the total allowable CPF relief for Year of Assessment 2009 will be capped at $20,593 as follows:
| (a) Compulsory CPF contributions as an employee |
$8,000 |
(b) Allowable CPF contributions as a self-employed ($20,000 x 34.5% or $26,393, whichever is lower)#
|
$6,900 |
| (c) New tax relief for VC-MA* |
$5,693 |
|
$20,593 |
In both scenarios:
#The allowable CPF contributions as a self-employed person is inclusive of Medisave contributions of $1,300.
*The voluntary cash contribution to Medisave Account is within the annual CPF contribution cap of $26,393 and within the Medisave contribution ceiling and it is not claimed under (b).
Yes, even if you are already making CPF contributions as an employee, you are still required to make Medisave contributions as a self-employed person if your net trade income is more than $6,000 a year.
You may contact the Central Provident Fund Board at 1800-227 1188 to arrange for the payment of your Medisave.