Learn about the tax treatment of CPF contributions made by employers, including the differences between compulsory and voluntary contributions, and how to calculate excess CPF contributions that are subject to tax.
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Tax Treatment of Employers’ CPF Contributions (Summary Table)
| Nature | Taxable or Not Taxable | |
|---|---|---|
| 1 | Compulsory CPF Contributions relating to employment in Singapore | Not taxable |
| 2 | Voluntary CPF Contributions relating to employment in Singapore, i.e. amount in excess of compulsory contributions to be made by employer | Taxable |
| 3 | Contributions made from 1 Jan 2004 relating to employment outside Singapore | Not taxable since the contribution is a foreign-sourced income |
| 4 | Contributions relating to Director's Fees | Taxable |
Compulsory CPF Contributions
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.
Voluntary CPF Contributions
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 .
If the employer makes excess CPF contributions in the current year, the employer must prepare Form IR8S and provide it to the employee.
If your employer is participating in the Auto-Inclusion Scheme, you do not need to report the excess CPF contributions. Your employer will transmit your employment income details to us directly.
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 this period, the full CPF contribution rates will apply.
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) and Additional Wage (AW)
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
Amount of OW and AW Subject to CPF Contributions
| Period | OW Ceiling | AW Ceiling |
|---|---|---|
| 1 Jan 2016 to 31 Aug 2023 | $6,000 per month | $102,000 less Total OW subject to CPF
|
| 1 Sep 2023 to 31 Dec 2023 | $6,300 per month | |
1 Jan 2024 to 31 Dec 2024 | $6,800 per month | |
| 1 Jan 2025 to 31 Dec 2025 | $7,400 per month | |
| On or after 1 Jan 2026 | $8,000 per month |
Examples on Determining the Taxable Amounts on OW and AW
| 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 2024 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 = $7,500 per month from Jan - Dec 2024 AW = $10,000 | Total OW subject to CPF contributions = $81,600 ($6,800 x 12 months) Total AW subject to CPF contributions = $102,000 - $81,600 = lower of $20,400 or $10,000 (actual AW) = $10,000 | Taxable excess contributions on OW = $1,428 [($7,500 x 12) - ($6,800 x 12) x 17%] Taxable excess contributions on AW = Nil |
| 3 | OW = $4,500 per month from Feb to Dec 2024 AW = $50,000 | Total OW subject to CPF contributions = $49,500 ($4,500 x 11 months) 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 |