The CPF Act determines the amount of compulsory CPF contributions on Ordinary and Additional Wages that employers should make for their employees who are Singapore Citizens and Singapore Permanent Residents (SPRs).
Compulsory CPF Contributions relating to employment in Singapore are not taxable.
Employers may also make voluntary CPF contributions to an employee's CPF account.
Voluntary CPF contributions made by the employer relating to employment in Singapore are taxable . The employer must prepare Form IR8S if there is excess CPF contributions made in the current year and give the form to the employee.
If the excess employer's contributions have been brought to tax and the employer has claimed or is claiming a refund, the employee should forward the completed Form IR8S to IRAS. IRAS will then review the employee's assessment accordingly.
Singapore Permanent Residents (SPRs)
An SPR employee is required to make CPF contributions at a lower rate in the first two years after attaining PR status. After the two years, the full rates come into effect.
If CPF Board approves the application to pay full rates in the first two years after attaining PR status, the full-rate contributions made by the SPR and his employer would be treated as compulsory contributions.
Ordinary Wage (OW) refers to wages due or granted wholly and exclusively for an employee's employment in that month. OW includes allowances (e.g. food allowance and overtime payments) earned by an employee in the month. OW must be paid before the due date for payment of CPF contributions for that month.
Additional Wage (AW) refers to wages which are not granted wholly and exclusively for the month such as annual bonus, leave pay and incentive payments.
Please find more details in the Central Provident Fund (CPF) Board's website .
The AW Ceiling sets the maximum amount of AW that CPF contributions are payable.
The AW Ceiling from 2016 is as follows:
$102,000^ less Total Ordinary Wages subject to CPF for the year
^Equivalent to 17 months x $6,000
Period | OW Ceiling | AW Ceiling |
|---|
| 1 Jan 2016 onwards | $6,000 per month | $102,000 less Total OW subject to CPF ($102,000 = 17 months x $6,000) |
1 Jan 2012 to 31 Dec 2015 | $5,000 per month | $85,000 less Total OW subject to CPF ($85,000 = 17 months x $5,000) |
| | Actual OW and AW | Wages that are Subject to Compulsory CPF Contributions | Taxable Amount on CPF Contributions (assuming employer contributed CPF based on the actual OW & AW at the rate of 17%) |
|---|
| 1 | OW = $5,500 per month from Jan - Dec 2020 AW = $40,000 | Total OW subject to CPF contributions = $66,000 ($5,500 x 12 months) Total AW subject to CPF contributions = $36,000 ($102,000 - $66,000) | Taxable excess contributions on OW = Nil Taxable excess contributions on AW = $680 [($40,000 - $36,000) x 17%] |
| 2 | OW = $6,500 per month from Jan - Dec 2020 AW = $10,000 | Total OW subject to CPF contributions = $72,000 ($6,000 x 12 months) Total AW subject to CPF contributions = $102,000 - $72,000 = lower of $30,000 or $10,000 (actual AW) = $10,000 | Taxable excess contributions on OW =$1,020 [($6,500 x 12)-($6,000 x 12) x 17%] Taxable excess contributions on AW = Nil |
| 3 | OW = $4,500 per month from Feb to Dec 2020 AW = $50,000 | Total OW subject to CPF contributions = $49,500 ($4,500 x 11) Total AW subject to CPF contributions = $102,000 - $49,500 = lower of $52,500 or $50,000 (actual AW) = $50,000 | Taxable excess contributions on OW = Nil Taxable excess contributions on AW = Nil |