You must make compulsory contributions to your Medisave Account after you receive a Notice of Computation (NOC) of CPF Contributions from IRAS if:
- You are a self-employed person;
- You are a Singapore Citizen or Permanent Resident; and
- 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 $12,000 | 4% | 4.5% | 5% | 5.25% |
| Above $12,000 to $18,000 | 4% 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.
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:
- Voluntary cash contribution directed specifically to Medisave Account or
- Annual CPF contribution cap for the year, less Mandatory Contribution (MC)* or
- Prevailing Basic Healthcare Sum(BHS)^, less the balance in Medisave Account before the voluntary cash contribution.
Basic Healthcare Sum (BHS)^
| Effective | Basic 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 |
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) |
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:
- FAQ 3 - What is a qualifying contract between the company and the self-employed person?
- FAQs 5, 6 and 13 - Tax treatment and filing requirements in respect of the self-employed persons
- FAQs 5, 12 and 14 - Tax treatment and filing requirements in respect of the companies