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Wage Credit Scheme (WCS)

Under the Scheme, the Government will co-fund 40% of wage increases given to Singapore Citizen employees earning a gross monthly wage of $4,000 and below in 2013 – 2015. Only Employers are eligible for the co-funding.

To give firms more time to adjust to rising wages in the tight labour market, the Government will extend the WCS for two more years, i.e. 2016 and 2017, with reduced level of co-funding.

Over the period of 2016 to 2017, the Government will co-fund 20% (instead of 40%) of wage increases given to Singaporean employees earning a gross monthly wage of $4,000 and below. In addition, for wage increases given in 2015 which are sustained in 2016 and 2017 by the same employer, employers will continue to receive co-funding at 20% for 2016 and 2017.

All other qualifying conditions will be unchanged.

Refer to the Quick Guide on the WCS Extension for more information.

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Qualifying Conditions

Who qualifies for WCS

All employers paying wage increases in 2013 - 2017 to Singaporean Singapore Citizen employees who:

Are earning a gross monthly wage of $4,000 and below;
Received CPF contributions from a single employer for at least 3 calendar months* in the preceding year^₁;
Have been on the employer's payroll for at least 3 calendar months* in the qualifying year^₂ (i.e. employer must have paid employee CPF contributions for at least three calendar months* in qualifying year); and
Have at least $50 gross monthly wage increase.
Must not also be the business owner of the same entity (i.e. sole proprietor of the sole proprietorship, or a partner of the partnership, or both a shareholder and director of a company)

*The three months minimum employment duration need not be continuous.

¹Preceding year refers to the year before the Qualifying Year (i.e. 2012, 2013, 2014, 2015 and 2016)

²Qualifying year refers to the year for which Wage Credit is computed, based on the wage increases given in that year. There are 5 qualifying years, i.e. 2013, 2014, 2015, 2016 and 2017.

Local government agencies, international organizations and businesses that are not registered in Singapore do not qualify for WCS.

See the full employer exclusion list.

Additional Eligibility Conditions

An employer is not eligible for a payout under any of the circumstances below:

o The employer is an entity that has no substantial trade or business;

o The employer had given, in IRAS' opinion, false or misleading information to IRAS in order to obtain a payout or a higher amount of payout;

o The employer (either singly or with another person) had used, in IRAS' opinion, one or more artificial, contrived or fraudulent steps in order to obtain a payout or a higher amount of payout;

o The employer was convicted in the qualifying or preceding year for making CPF contributions to Singaporeans who were not actively employed by the firm

An employer is not eligible for a payout for a wage increase for a particular employee who:

o Did not carry out any substantive work for the employer;

o Effectively controls the employer (i.e. controls decision making power and management of the business or company)

If the total wages paid by an employer for a period is not commensurate with the volume or nature of activity carried out by the employer in that period, then the employer is only eligible for an amount of payout that, in IRAS' opinion, corresponds to the increase in the total wages paid for that period that commensurate with such volume or nature of activity.

If the total wages paid by an employer to a particular employee for a period is not commensurate with the volume or nature of work carried out by the employee in that period for the employer, then the employer is only eligible, in respect of that employee, for an amount of payout that, in IRAS' opinion, corresponds to the increase in the total wages paid to that employee for that period that is commensurate with such volume or nature of work.

If an employer fails to give to IRAS, by the time specified by the IRAS, any information requested by IRAS for the purpose of determining the employer's eligibility for a payout or the amount of payout the employer is eligible for, with respect to one or more employees, then the employer will not be given the payout for these employees.

How much of wage increases qualify for co-funding

Under the extended Scheme, i.e. 2016-2017, the Government will co-fund 20% (instead of 40%) of qualifying wage increases up to a gross monthly wage level of $4,000.

In addition, gross monthly wage increases of at least $50 - given in 2015 that is sustained in 2016 /2017 by the same employer, and given in 2016 that is sustained in 2017 by the same employer; will continue to be co-funded at 20%.

Also, gross monthly wage increases must be at least $50 to qualify.

Computation of Wage Credit

Wage Credits on each qualifying employee can be computed as follows:

Wage credits computations

A sample illustration can be found below.

Assume a new employee was hired since 2012 until Sep 2017; and was given gross monthly wage increases of $200 in 2013, $300 in 2014, $100 in 2015, $200 in 2016 and $500 in 2017.

WCSGrossMonthlyWages

See more Worked Illustrations (PDF 1.5MB) on how Wage Credit is computed.

Example

Gross Monthly Wage = Total wages (basic salary and additional wages such as overtime pay and bonuses) paid by the employer to the employee in a calendar year / Number of months in which CPF contributions were made.

Receiving Wage Credit

Application is not required. IRAS will notify eligible employers by post of the Wage Credit payable to them by 31 March 2014, 2015, 2016, 2017 and 2018.

When is the payout

Payouts will be given to employers by 31 March 2014, 2015, 2016, 2017 and 2018.

How do employers receive the payout

Payouts will automatically be credited to employers' GIRO bank account for Income Tax/GST, or by cheque.

Is the Wage Credit payout taxable?

The Wage Credit payout is a government grant that co-funds wage increases and hence it is a revenue that is taxable in the hands of the employers. The payouts will be taxed in the relevant Year of Assessment corresponding to the year you received the payouts. Payouts may be used to offset any of your outstanding tax.

Individuals (including sole-proprietors) and partnerships are not required to declare the Wage Credit Scheme payout received in their income tax returns (Form B/B1 or Form P) as this will be automatically included by IRAS in their tax assessment for the relevant YA.

Companies are however, still required to declare the Wage Credit Scheme payout received in their income tax return (Form C/Form C-S) for the relevant YA.

What if the cheque has expired or I have misplaced the cheque?

Please submit your request for a re-issuance here.

Submitting a Request for Wage Credit Breakdown

Employers may request for a breakdown of the total Wage Credit by employee in the year of payout.

How to submit a request

Employers may submit an online request via myTax Portal.

When to submit

Employers have from the last week of March till 31 October of the year of payout (2014, 2015, 2016, 2017 and 2018) to submit their request.

How much

Processing fees apply for qualifying employee records exceeding 100.

$100 for records more than 100 but not exceeding 200
$150 for records exceeding 200

How to pay

Payment is via cheque only, made payable to "Commissioner of Inland Revenue" and paid upon collection of the CD at IRAS.

How will employers receive the records

Employee records not exceeding 100 will be mailed to the business's registered address by ordinary mail within 7 working days.

Employee records exceeding 100 will be provided in a CD. IRAS will contact the employer for payment and collection of CD at IRAS within 10 working days.

What do the records contain?

The records will provide you with the breakdown of Wage Credit for existing employees. If you have new hires who qualify, only their names will be provided as disclosure of the new employees' individual Wage Credits may enable the wages from their previous employment to be derived.

For IRAS to provide you with their individual Wage Credits, each new employee is required to sign a Consent Form (86KB). To declare that consent had been obtained, please complete and submit a Declaration Form (61KB) to wcs@iras.gov.sg

Appealing for Wage Credit Adjustment

In any payout year, employers can only appeal on Wage Credit payout for that year.

Appeals under the following situations may be considered based on the merits of the case:

Merger of companies;
Conversion of business entity, or change in UEN;
Overseas Singaporean employees for whom CPF contributions were not made but whose salaries were nonetheless paid.

How to submit an appeal

Employers who decide that they have eligible ground for appeal should complete the Appeal Form (PDF, 81KB) and submit it to IRAS with supporting documents.

When to submit

Employers have until 30 June of the year of payout (2014, 2015, 2016, 2017 and 2018) to submit their appeal.

Abuse of WCS

The Government takes a serious view of any attempt to abuse the WCS and will take firm action against those involved in such cases.

Learn more about how to report any suspected abuse or fraud to IRAS

Background and Contact Information

Background of the Scheme

The Wage Credit Scheme (WCS) is part of the 3-Year Transition Support Package introduced in Budget 2013.

As announced in Budget 2015, the Government will extend the WCS for two more years, i.e. 2016 and 2017, to give firms more time to adjust to rising wages in the tight labour market.

Through WCS, businesses affected by economic restructuring will receive Government support to manage rising labour costs. The payouts will allow businesses to free up resources to make investments in productivity and to share the productivity gains with their employees.

Contact IRAS

Email us: wcs@iras.gov.sg
Call us: 1800-3524727 (8am to 5pm from Mon to Fri)

FAQs

A. General Questions on the Scheme (8)
- What is the Wage Credit Scheme and its objectives?
  
  In Budget 2013, the Wage Credit Scheme was introduced as a three-year scheme under which the Government co-funds 40% of the wage increases given to Singaporean employees earning a gross monthly wage of not more than $4,000 over the period 2013 to 2015.
  In Budget 2015, it was announced that the Scheme would be extended for two more years, i.e. 2016 and 2017. Wage increases given to Singaporean employees earning a gross monthly wage of not more than $4,000 in 2016 and 2017 will be co-funded at 20% instead of 40%. In addition, wage increases given in 2015 that are sustained in 2016 and 2017 by the same employer will continue to be co-funded at 20% in 2016 and 2017.
  During this period of economic restructuring, businesses could face a tight labour market with rising wages. Through the Scheme, the Government provides businesses with co-funding support for wage increases made to their employees. This would allow businesses to free up resources to invest in productivity, and to share productivity gains with their employees.
- Who will qualify for the Wage Credit Scheme?
  In any calendar year from 2013 to 2017, employers qualify for Wage Credits if they fulfil the following:
  1. Gave at least a $50 increase in gross monthly wage to Singapore Citizen employees earning up to $4,000;
  2. Made CPF contributions for these employees for at least three months in the year of the wage increase ("qualifying year"); and
  3. The employees who received the wage increase must have received CPF contributions for at least three months with one employer in the preceding year.
  *The three months minimum employment duration need not be continuous.
- Why is the Wage Credit Scheme extended by two more years to 2017? What are the changes under the extended Scheme?
  
  The Scheme is extended for two years i.e. 2016 to 2017 to give businesses more time to adjust to rising wages in the tight labour market and to phase out the wage support gradually before the Scheme ends.
  Under the extended Scheme, wage increases given in 2016 and 2017 will be co-funded at 20% instead of 40%. In addition, any wage increase given in 2015 that is sustained in 2016 and 2017 by the same employer will also continue to be co-funded at 20% in 2016 and 2017.
- Is the Wage Credit Scheme a permanent scheme?
  
  The Wage Credit Scheme aims to provide transitional support to businesses during this period of economic restructuring. It is not a permanent scheme. The Scheme which is now extended will end in 2017, with the last payout to be made in March 2018.
- How does the Government know the wages that I pay my employees? Is it necessary for the company to give a wage increment to the employees?
  
  The wages are derived from the compulsory CPF contributions that the employer makes for the employee.
  Where there are irregular or significant changes to the CPF contributions made, IRAS may carry out investigation before or after the payouts, to check on the authenticity and correctness of any employee and the wages. Any attempt by the employer to abuse the Scheme to receive Wage Credit payout or to gain from excessive payout will be dealt with seriously.
  Wages are determined by the market. It is ultimately for the employers to decide how much pay increase, if any, to give, and to consider the sustainability of the increased wage in subsequent years.
- Why is the co-funding only at 40% from 2013 to 2015 and 20% from 2016 to 2017?
  
  A 40% co-funding for wage increases given from 2013 to 2015 will provide significant help to employers, while ensuring that they bear a sufficiently large portion of the increase in the long term beyond the Scheme.
  The co-funding will be further reduced from 2016 to 2017, to phase out the wage support gradually before the Scheme ends.
- If I meet the qualifying conditions, am I legally entitled to a payout?
  
  Wage Credit is a cash grant to employers who meet the Scheme's qualifying criteria. It is not paid pursuant to any legislation or in connection with any legal obligation of the Government, and hence no employer has an absolute right to any cash payment under the Scheme.
- How does the Government help to ensure that the wage increases I give my employees can be sustained after the Scheme ends?
  
  Under the Scheme, the larger proportion of the wage increase is borne by the employer to ensure sustainability of the increased wage in subsequent years. We encourage businesses to take advantage of the suite of productivity measures offered by the Government to improve their productivity. The Wage Credit payouts help businesses upgrade and retain their workers before their productivity investments take off. This would help businesses ensure that the wage increases given to their employees are sustainable over the longer term.
B. How the Scheme Works (8)
- Why is the Wage Credit computed based on the gross monthly wage instead of basic wage of an employee? Why is the qualifying wages only up to $4,000?
  
  Consistent with the flexible wage system, employers can choose whether to increase wages through the basic or variable components of salary, or both. Businesses, especially SMEs, welcome the flexibility as they practise diverse compensation approaches.
  The wage level of $4,000 represents the 70th percentile of all Singaporean income earners. Hence the Scheme would benefit the majority of the lower and middle income group of Singapore Citizens.
- If my employee’s gross monthly wage was reduced in 2015 but subsequently increased in 2016, would I be eligible to receive the Wage Credit payout in 2017?
  
  Yes, provided the increase in the gross monthly wage from 2015 to 2016 was at least $50.
- If my employee has worked for me for four months in 2016, how is his gross monthly wage computed and how is the Wage Credit computed?
  
  His gross monthly wage will be calculated from the total wages that you paid him in 2016 divided by 4, which is the number of calendar months in which his CPF contributions were made by you in 2016. If there is any increase, of at least $50, in the gross monthly wage over his gross monthly wage in 2015, you will receive Wage Credit for the qualifying year 2016 (to be paid in March 2017) based on 20% of his increase in gross monthly wage, for the period of 4 months.
- My employee joined the company in November 2015 but left in February 2016. As he had been employed by the company for a total of four months, will my company qualify for Wage Credit in qualifying years 2015 and 2016?
  
  No, your company will not qualify for Wage Credit in qualifying years 2015 and 2016 as the employee was employed by your company for less than three months in 2015 and less than three months in 2016.
- I have recruited a new employee from February 2016 who had worked with two different employers in 2015 (each more than 3 months). How would the Wage Credit be computed assuming his gross monthly wage in 2016 is $2,500 and the gross monthly wages in 2015 was $2,000 under employer A and $2,100 under employer B?
  
  As there were more than one gross monthly wages in the preceding year, the highest of the gross monthly wages will be used to compute the Wage Credit, which in this case is $2,100 under employer B.
  Wage Credit in 2016 = 20% of ($2,500 - $2,100) X 11 months = $880
- If I pay my employee a bonus for his 2015 performance in 2016, the bonus will be used to compute my employee’s gross monthly wage for which year – 2015 or 2016?
  
  The bonus will be reflected in the employee's gross monthly wage for 2016, i.e. the year in which the payment was made.
- I have increased the hourly wage of my hourly-rated employee who has now chosen to work fewer hours each month. How would the Wage Credit be computed?
  
  Wage Credit is computed based on the increase in the gross monthly wage. For hourly-rated employee, the gross monthly wage has to take into account the hourly wage and the actual number of hours worked. Hence even if the hourly wage might have increased, there might not be an increase in the gross monthly wage if the employee has chosen to work fewer hours each month.
- My employee worked for another firm that gave him a $300 raise in gross monthly wage since January 2015 to a revised gross monthly wage of $2300. I paid him the same gross monthly wage of $2,300 when he joined me in 2016. Will I be entitled to the Wage Credit on the ‘sustained’ gross monthly wage increase of $300 in 2016?
  
  No, because the $300 gross monthly wage increase was given by a different employer. There was no sustained wage increase given by you.
C. Eligibility Criteria for Employees (8)
- Are part time and contract workers covered by the Scheme?
  Yes, all part-time, hourly rated, contract and full-time employees are covered by the Scheme, as long as they are paid CPF contributions by their employer.
- I own a business and am paying CPF contributions to myself. Will I qualify for the Wage Credit?
  No. The following individuals will not qualify as employees under the Wage Credit Scheme:
  - Sole proprietors and partners of general partnerships/ limited liability partnerships/ limited partnerships.
  - Employees who are both shareholders and directors (as defined in Section 4(1) of the Companies Act) of the company they are employed in, or employees who are both members and directors in the case of a company limited by guarantee.
  - Self-employed individuals including but not limited to commission agents, taxi-drivers, owners of professional practices.
  The Wage Credit Scheme aims to encourage employers to share productivity gains with their employees. As the individuals listed above are also owners/ members/ directors of the company or business, they are not considered employees for the purpose of the Wage Credit Scheme.
- I am a self-employed or a business owner. If I were to work for another firm next year, will the firm be able to benefit from the Wage Credit by employing me?
  You will be a new hire with no previous employment to compute the preceding year's gross monthly wage. Hence, no Wage Credit can be derived in the first year of employment with the firm.
- My new employee previously worked for an employer who is on the employer exclusion list. Will I be able to qualify for Wage Credit?
  Yes, you will be able to qualify for Wage Credit based on the increase in the gross monthly wage over his previous year's gross monthly wage, even though his previous employer was on the employer exclusion list.
- Will employers qualify for Wage Credit for new hires?
  
  The Government recognizes that there will be job switching during the qualifying years period. Employers hiring new employees will benefit from the Scheme in the year of hire as long as the employee had worked for at least 3 calendar months with the same employer (need not be you) in the previous year, and the new employer pays him a gross monthly wage of at least $50 more than his previous employer in the previous year. This wage increase will be computed automatically based on the employee's CPF contribution records, and Wage Credit will be paid out to the employer if all conditions of the Scheme are met.
- My employee was hired in January 2014 and she was on no pay leave for the whole year in 2015 before returning to work in 2016. Will I be able to qualify for Wage Credit in qualifying year 2016?
  
  Yes, you will qualify for Wage Credit in qualifying year 2016 based on the wage increase you gave the employee in 2016 over 2014. This is provided that the employee had worked with you for at least 3 calendar months in 2014 and 2016 and did not seek active employment while on no-pay leave.
- Our company has a Singaporean employee who is working at an overseas branch of my company, or has been seconded to another company in Singapore. Will our company be eligible for the Wage Credit?
  
  The payout will be given to the employer who has made the CPF contribution for the said employee. The same applies to any other employment arrangements. The payout will only be given to the employer who has made the CPF contribution based on the CPFB's record.
  So long as your company is not on the employer exclusion list, you may appeal for Wage Credit for your Singaporean employees who are posted to an overseas branch or seconded overseas, even though the company does not have to pay CPF contributions for these employees.
- Will I qualify for Wage Credit if I receive Special Employment Credit (SEC) for an employee?
  
  Yes, an employer may qualify for both SEC and WCS for an employee. The two schemes serve different purposes. The SEC Scheme provides businesses with support to hire older Singaporean workers while the WCS helps businesses raise wages of their employees as they restructure in a tight labour market over the period of 2013-2017.
D. Eligibility Criteria for Employers (5)
- Are non-profit organisations registered in Singapore eligible for the Scheme?
  Yes, public companies limited by guarantee, societies and charities and institutions of a public character are eligible for the Scheme if they make CPF contributions for their employees.
- Are companies co-funded by the Government eligible for the Scheme?
  Yes, if they are not listed in the exclusion list.
- Will I qualify for Wage Credit if the training for employees is funded by WDA?
  Yes, as long as the employer had made CPF contributions to the employee for the wages paid to the employee, and the rest of the eligibility criteria are satisfied, the employer will qualify for Wage Credit for this employee.
- I gave a wage increase to my employee in the qualifying year 2016, but my business was closed down during the year. Will I be receiving the WCS Payout in March 2017?
  
  The gross monthly wage and the Wage Credit for the qualifying year 2016 can only be computed after the end of the year 2016, and the payout will only be disbursed to the registered business entity in March 2017. If your business entity had already been deregistered in March 2017, it will not be receiving the WCS payout.
- If I engage a third-party contractor to hire my workers, will I benefit from the WCS? Can the contractor transfer the Wage Credit to me?
  
  The Wage Credit is paid to the employer registered with CPF Board, and is taxable.
  If the third-party contractor is the registered employer, he will receive the WCS payout. Whether the Wage Credit is to be shared between you and the third-party contractor is a private arrangement between both parties.
  If the contractor transfers part or all of the Wage Credit to you, the amount received by you would correspondingly reduce your manpower cost allowed for tax deduction.

E. What Employers Need to Do (8)

Do I need to apportion the gross monthly wage if the employee is remunerated based on the working days?
No. The gross monthly wage is computed based on the CPF contributions you make for the employee.
What is the cut-off date for employers to make CPF contributions to qualify for Wage Credit?

As per CPF requirements, CPF contributions for each month are due at the end of each month. However, employers have a grace period of 14 days to pay CPF contributions after the end of the month. If the 14^th day falls on a Saturday, Sunday or Public Holiday, the grace period will be extended to the next working day.
Employers should thus ensure that all CPF contributions on wages are paid by the 14th of the following month.

Will late CPF contributions and adjustments to CPF contributions be accepted for the Scheme?

For each qualifying year, the deadline for late contributions/ adjustments in relation to wages paid in the qualifying year is 14th January of the subsequent year. If 14^th January falls on a Saturday, Sunday or Public Holiday, the deadline will be extended to the next working day. All late contributions/adjustments paid after this deadline will not be used in the computation of Wage Credits. The usual penalties apply to late CPF contributions.

For the calendar year 2012, an exception is made such that all late contributions/ adjustments in relation to wages paid in the period Jan-Dec 2012 will be considered if they are made before 14 Jan 2014. The deadlines for late contributions/ adjustments for each assessment period are summarised in the table below:

Assessment Period	Deadline for late contributions/adjustments
Jan - Dec 2012	14 Jan 2014
Jan - Dec 2013	14 Jan 2014
Jan - Dec 2014	14 Jan 2015
Jan - Dec 2015	14 Jan 2016
Jan - Dec 2016	16 Jan 2017
Jan - Dec 2017	15 Jan 2018

Is there a minimum Wage Credit before payment is made?

As employers find it cumbersome to bank in cheques for small amounts, IRAS will not mail the cheque if the Wage Credit is less than $5. The employer will receive a letter informing him of his Wage Credit, but the amount will be paid with subsequent year's payout. The employer may however contact IRAS to mail the cheque, if he prefers to receive the cheque. At the end of 5 years, IRAS will pay employers any outstanding Wage Credit, even if the amount is still less than $5.
For employers who have a GIRO bank account with IRAS (for Income Tax or GST), their Wage Credit will be credited directly into the account regardless of amount.
Is the Wage Credit taxable? Why?

The Wage Credit payout is a government grant that co-funds wage increases and hence, it is a revenue that is taxable in the hands of the employers. This is aligned with the Special Employment Credit Scheme (SEC).
When will the Wage Credit be taxed and do I need to declare the Wage Credit received in my Tax Return?

The payouts will be taxed in the relevant Year of Assessment corresponding to the year you received the payouts. Payouts may be used to offset any of your outstanding tax.
Individuals (including sole-proprietors) and partnerships are not required to declare the Wage Credit Scheme payout received in their income tax returns (Form B/B1 or Form P) as this will be automatically included by IRAS in their tax assessment for the relevant YA.
Companies are however, still required to declare the Wage Credit Scheme payout received in their income tax return (Form C/Form C-S) for the relevant YA.
Will the Wage Credit first be used to offset the employer’s tax arrears?
Yes. The Wage Credit may be used to offset outstanding tax arrears of the employer before the remaining amount, if any, is paid out.
What if my company name changes during the 5 years?
If the UEN of the business is unchanged, Wage Credit will automatically be paid out to the same UEN. If the UEN of the business changes, the business can appeal to IRAS to amalgamate the records of the old UEN with the new UEN. The employer may submit an appeal and it will be considered on a case-by-case basis, to establish if there is indeed a transfer of rights and obligations.

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Wage Credit Scheme (WCS)

Qualifying Conditions

Who qualifies for WCS

How much of wage increases qualify for co-funding

Computation of Wage Credit

Receiving Wage Credit

When is the payout

How do employers receive the payout

Is the Wage Credit payout taxable?

What if the cheque has expired or I have misplaced the cheque?

Submitting a Request for Wage Credit Breakdown

How to submit a request

When to submit

How much

How to pay

How will employers receive the records

What do the records contain?

Appealing for Wage Credit Adjustment

How to submit an appeal

When to submit

Abuse of WCS

Background and Contact Information

Background of the Scheme

Contact IRAS

Related

Calculators

Forms

Guides

Pages

FAQs

A. General Questions on the Scheme (8)

B. How the Scheme Works (8)

C. Eligibility Criteria for Employees (8)

D. Eligibility Criteria for Employers (5)

E. What Employers Need to Do (8)

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