Withholding tax on SRS

When a foreigner or Singapore Permanent Resident (SPR) withdraws from his SRS account, the withdrawal is subject to withholding tax.  There is no withholding tax on SRS withdrawals made by Singaporean account holders.

Tax Treatment of Withdrawal

 

 Type of withdrawalAmount subject to tax5% penalty imposed?
Penalty-Free withdrawal

Withdrawal on or after prescribed retirement age

(withdrawal can be spread over 10 years from the date of first penalty-free withdrawal)

50% of withdrawal sum

No
Withdrawal in the form of annuities50% of annual streamNo

Withdrawal on medical ground

(e.g. physical/mental incapacity and partial withdrawal on grounds of terminal illness)

50% of withdrawal sum

No

Withdrawal in full on terminal illness

50% of full withdrawal sum less exemption*

No

In the event of bankruptcy100% of withdrawal sumNo

Withdrawal in one lump sum by a foreigner (excluding PR)

He/She must have maintained the SRS account for at least 10 years from the date of first contribution and have been a non-Singaporean for a continuous period of 10 years before date of withdrawal.

50% of lump sum

No
Other WithdrawalsEarly withdrawals before retirement age100% of withdrawal sum Yes

*From Year of Assessment 2016, a specified amount of SRS funds withdrawn in full on the grounds of terminal illness would be exempt from tax.

For more details, please refer to the Tax on SRS withdrawal.

Paying Withholding Tax and Penalties to IRAS

When a foreigner or Singapore Permanent Resident (SPR) withdraws from his SRS account, the withdrawal is subject to withholding tax.

The SRS operator will:

  1. Withhold an amount of tax at the prevailing non-resident tax rate of 22% at the point of withdrawal. This amount will be remitted to IRAS. (Prior to 1 Jan 2016, the withholding tax rate was 20%.)
  2. Deduct a 5% penalty on premature withdrawals. The 5% penalty is non-refundable and is separate from the withholding tax.
  3. Electronically transmit the information on the withdrawal to IRAS.

Prevailing Withholding Tax Rate

1. The prevailing withholding tax rate is 22%. The amount of withholding tax is 22% of the amount of the withdrawal subject to tax. (Prior to 1 Jan 2016, the withholding tax rate was 20%.)

If a foreigner or SPR has $300,000 in his SRS account by the retirement age of 62 and decides to withdraw the whole amount, he will be taxed on half of the amount withdrawn.

Amount withdrawn

= $300,000

Amount subject to tax

= $50% x $300,000 = $150,000

Withholding tax at 22%

= 22% x $150,000 = $33,000

Net  amount received from SRS operator

= $300,000 - $33,000 = $267,000

Concessionary Withholding Tax Rate

Effective 1 Jul 2014, the concessionary withholding tax rate of 15% will apply if the following conditions are met:

  1. Cumulative amount withdrawn by the foreigner / SPR  SRS account holder in the calendar year does not exceed $200,000; and
  2. The foreigner/SPR SRS member does not have any other income besides the SRS withdrawal(s) during the calendar year when the withdrawal(s) is/are made. 

To enjoy this concession, the SRS account holder must declare that he fulfills the two conditions above using the Form IR37B(1) (63KB).

A foreigner or SPR has $100,000 in his SRS account by the retirement age of 62. He does not have any other income in that year and decides to withdraw the whole amount. He will be taxed on half of the amount withdrawn under the 50% tax concession rule.

Amount withdrawn

= $100,000

Amount subject to tax

= $50% x $100,000 = $50,000

Concessionary Withholding tax at 15%

= 15% x $50,000 = $7,500

Net  amount received from SRS operator

= $100,000 - $7,500 = $92,500

Withholding tax is not the final tax payable

If the foreigner or SPR is a Singapore tax resident, the actual tax payable on the SRS withdrawal will be based on the progressive resident rates .

For a non-resident, the actual tax payable on the SRS withdrawal will be 15% or the progressive resident rates , whichever is higher.

Applying for a Refund

Tax withheld on the withdrawal is a tax credit that will be used to offset your actual tax liability. Any unused tax credit will be refunded to you.

In example 1, assuming the actual tax rate applicable for the SRS withdrawal is finally determined to be 15% and you have no other tax liability, the refund you will receive is calculated as follows:

SRS withdrawn

= $300,000

Amount subject to tax

= 50% x $300,000 = $150,000

Withholding tax at 22%

= 22% x $150,000 = $33,000

Actual tax rate applicable: 15%

= 15% x $150,000 = $22,500

Amount to be refunded

= $33,000 - $22,500 = $10,500

Please email your request for a tax return to fc@iras.gov.sg and provide details of your name, Tax Reference No. and forwarding address.

Seeking Tax Clearance

When seeking tax clearance, a standardized SRS Statement of Contribution/Withdrawal (for tax clearance) (61KB) is to be obtained from the SRS operator. The operator will undertake to withhold tax at the prevailing non-resident tax rate should the SRS account holder needs to withdraw the current year's SRS contribution within the year of tax clearance.

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