Compulsory and Voluntary Medisave Contributions

Self-employed persons must make compulsory Medisave contributions upon receipt of the Notice of Computation (NOC) of CPF Contributions from IRAS. Voluntary Medisave contributions may be claimed as tax reliefs to reduce the amount of tax payable.

Compulsory Medisave Contributions

You must make compulsory contributions to your Medisave Account after you receive a Notice of Computation (NOC) of CPF Contributions from IRAS if:

  1. You are a self-employed person;
  2. You are a Singapore Citizen or Permanent Resident; and
  3. Your net trade income# is more than $6,000.

#Net trade income is your gross trade income minus all allowable business expenses, capital allowances and trade losses.

Amount of Compulsory Medisave Contributions

The Medisave amount that you have to contribute yearly depends on your:

  • age;
  • income level; and
  • net trade income for the previous year.

The Medisave contribution amount is generally a percentage of your total business trade income subject to a maximum cap.

Medisave Contribution Rates for Year 2016

Yearly Net Trade Income Age as at 1 Jan 2016         
  Below 35 35 to below 45   45 to below 50 years 50 years and above
 Above $6,000 to $12,0004%4.5%5%  5.25%
 Above $12,000 to $18,0004% to 8% 4.5% to 9%5% to 10% 5.25% to 10.5% 

Above $18,000

8%9% 10% 10.5% 

Maximum

$5,760$6,480$7,200$7,560 

Example: 37 year-old with net trade income of $65,000 in 2016

Age as at 1 Jan 2016

37 years old

Net Trade Income in 2016

$65,000

Medisave Contribution Rate

9%

Maximum Cap for Age Group

$6,480

Amount of Medisave Contribution Payable

$5,850 
Lower of $6,480 or (9% x $65,000)

For more Medisave contribution rates, please refer to the  CPF Board website .

Making Compulsory Medisave Contributions

Contributions must be made within 30 days of the date stated in the Notice of Computation (NOC) of CPF Contributions from IRAS. The NOC would state clearly how much you have to contribute.
IRAS sends the NOC after assessing your income i.e. after you have filed your income tax return and received your Notice of Assessment. You do not have to wait for the NOC to make your contributions. Contributions may be made throughout the year.

Alternatively, you may also make your contributions through GIRO Instalment Plans . The payments will be according to the instalment plan issued by the Central Provident Fund (CPF) Board.  Please contact the CPF Board directly to arrange for the payment of your Medisave.

Voluntary Contributions to Medisave Account (VC-MA)

You may also make voluntary contributions to your Medisave account and claim tax reliefs to lower your taxes.

Tax Relief for Voluntary Contributions

You may claim tax relief for your voluntary Medisave contributions if:

  • You are a Singapore Citizen or Permanent Resident;
  • You have made voluntary contributions to your Medisave account in the previous year; and
  • You derived any source of income (e.g. from rental, director's fees, etc.) in the year you made the voluntary contributions.

Please note that there will be a personal income tax relief cap of $80,000, which will apply from the Year of Assessment (YA) 2018. This cap applies to the total amount of all tax reliefs claimed, including any relief on voluntary CPF contributions made on or after 1 Jan 2017.

There will be no refund for accepted voluntary CPF contributions. As such, taxpayers who make voluntary CPF contributions on or after 1 Jan 2017 should take note of the overall personal income tax relief cap. You should evaluate whether you would benefit from tax relief on your voluntary CPF contributions and make an informed decision accordingly.

Amount of Tax Relief VC-MA

The amount of tax relief given to the  lowest  of the following:

  1. Voluntary cash contribution directed specifically to Medisave Account or
  2. Annual CPF contribution cap for the year, less Mandatory Contribution (MC)* or
  3. Prevailing Basic Healthcare Sum(BHS)^, less the balance in Medisave Account before the voluntary cash contribution.

*MC refers to compulsory contribution by employee and his employer, and compulsory Medisave Account for self-employed individuals

Basic Healthcare Sum (BHS)^

EffectiveBasic Healthcare Sum (BHS)^
 1 Jan 2016 $49,800
 1 Jul 2014$48,500 
1 Jul 2013$45,500
1 Jul 2012$43,500
1 Jul 2011$41,000

^With effect from 01 January 2016, the Medisave Contribution Ceiling (MCC) has been renamed as Basic Healthcare Sum (BHS). To find out more about BHS, please refer to CPF Board Website.

Example 1: Andrew, 30 year-old employee


Andrew is an employee who is 30 years old.

 YA 2017

Total Wages (OW+AW)

 $80,000

Compulsory CPF contribution made by Andrew's employer

17% x $80,000 

$13,600

Compulsory CPF contribution by Andrew as an employee

20% x $80,000 

$16,000

Total Contribution by Andrew and his employer

$13,600 + $16,000 =  $29,600

Annual CPF contribution cap

$37,740

Voluntary cash contribution directed by Andrew to his Medisave Account

$9,000

Maximum tax relief that can be allowed on his voluntary cash contribution made to his Medisave Account

$8,140

($37,740 - $29,600)

Total CPF Relief allowable to Andrew

$24,140

($16,000 + $8,140)

 

Example 2: Bernard, 30 year-old who is self-employed

Bernard is a self-employed person who is 30 years old.YA 2017
Net trade income assessed by IRAS$65,000

Medisave Contribution Rate

8%
Maximum Medisave cap based on his age and net trade income $5,760

Compulsory Medisave contribution by Bernard as a self-employed individual based on his age and net trade income

$5,200

Lower of $5,760 or ($65,000 x 8%)
Annual CPF contribution cap$37,740

Voluntary contribution by Bernard as a self-employed person:

  • Voluntary cash contribution directed by Bernard to his Medisave Account = $22,540
  • Voluntary cash contribution directed by Bernard to his OA, SA & MA = $10,000
 $32,540
($37,740 - $5,200)
CPF relief cap for Bernard as a self-employed individual

$24,050

Lower of $37,740 or (37% x $65,000)

Total CPF relief allowable to Bernard:

    $37,740

    •  CPF relief cap for Bernard as a self-employed person
    $24,050 
     $13,690

    Lower of $22,540 or ($37,740 - $24,050)

    Example 3: Charlie, 30 year-old who is both an employee and self-employed

    Charlie is an employee and also a self-employed person who is 30 years old.

    YA 2017

    Total Salary (OW + AW)

    $40,000

    Net trade income assessed by IRAS$20,000
    Compulsory CPF contribution made by Charlie's employer

    $6,800

    (17% x $40,000)
    Compulsory CPF contribution by Charlie as an employee

    $8,000

    (20% x $40,000)
    Maximum Medisave cap based on his age and net trade income$5,760
    Compulsory Medisave contribution by Charlie as a self-employed individual based on his age and net trade income

    $1,600

    Lower of $5,760 or ($20,000 x 8%)
    Annual CPF contribution cap$37,740

    Voluntary contribution by Charlie:

    • Voluntary cash contribution directed by Charlie to his Medisave Account = $5,000
    • Voluntary cash contribution directed by Charlie to his OA, SA & MA = $16,340

    $21,340
    ($37,740 - $6,800 - $8,000 - $1,600)

    CPF relief cap for Charlie as a self-employed individual

    $7,400
    Lower of $37,740 or (37% x $20,000)

      Total CPF relief allowable to Charlie: $20,400 
    • Compulsory CPF contribution by Charlie as an employee
    $8,000
    • Compulsory Medisave contribution as a self-employed person
    $1,600
    • Voluntary contributions as a self-employed person
    Capped at $5,800
    ($7,400 - $1,600)
     $5,000
    Lower of $5,000 or ($37,740 - $6,800 - $8,000 - $1,600 - $5,800) 

    Voluntary Contributions to Medisave Account (VC-MA) by Companies

    Companies (e.g. taxi companies) which have qualifying contracts with self-employed persons (e.g. taxi drivers) may make voluntary cash contribution to the Medisave Accounts (VC-MA) of the self-employed persons and claim tax deductions on such contributions, subject to conditions.

    For more information, please read the FAQs on Voluntary Medisave Contributions by Companies to Self-Employed Persons:

    1. FAQ 3 - What is a qualifying contract between the company and the self-employed person?
    2. FAQs 5, 6 and 13 - Tax treatment and filing requirements in respect of the self-employed persons
    3. FAQs 5, 12 and 14 - Tax treatment and filing requirements in respect of the companies
    • Can I obtain a refund of the voluntary CPF contributions I made in year 2017, if for YA 2018, the total amount of personal relief which I can claim is more than $80,000, even without any tax relief on voluntary CPF contributions I made?

      There will be no refunds for accepted voluntary CPF contributions. As such, taxpayers who make voluntary CPF contributions on or after 1 Jan 2017 should note that the overall personal income tax relief cap of $80,000 applies from YA 2018 (when the income earned in 2017 is assessed to tax). Hence, you should evaluate whether you would benefit from tax relief on your voluntary CPF contributions, and make an informed decision accordingly.

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