Central Provident Fund (CPF) Relief for employees
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. These refer to contributions made by the employer in excess of the compulsory CPF contributions.
Voluntary CPF contributions made by the employer relating to employment in Singapore are taxable.
Reporting Voluntary CPF Contributions
If the excess employer CPF contributions have been taxed and the employer has claimed, or is claiming a refund, the employee should clarify the details with the employer.
IRAS will review the employee’s tax assessment based on the amended income information submitted by the employer via the Auto-Inclusion Scheme or the updated Form IR8A provided.
Check the section below to see the reporting requirements for employers, based on whether they are under AIS.
The employee does not need to report the excess CPF contributions in their Income Tax Return. The employer will submit the employee’s employment income details to IRAS directly.
If there is any discrepancy in the employment income information, the employee should check with the employer and inform them to submit the correct income information to IRAS.
The employee should report the taxable excess employer CPF contributions in their Income Tax Return based on the Form IR8A provided by the employer.
If the employer subsequently amends the details due to a refund of excess contributions, the employee should use the updated Form IR8A when filing their Income Tax Return. If the employee has already filed, the employee should provide the updated Form IR8A to IRAS.
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) 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
| 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 |
| 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 2025 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 = $8,100 per month from Jan - Dec 2025 AW = $10,000 | Total OW subject to CPF contributions = $88,800 ($7,400 x 12 months) Total AW subject to CPF contributions = $102,000 - $88,800 = lower of $13,200 or $10,000 (actual AW) = $10,000 | Taxable excess contributions on OW = $1,428 [($8,100 x 12) - ($7,400 x 12) x 17%] Taxable excess contributions on AW = Nil |
| 3 | OW = $4,500 per month from Feb to Dec 2025 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 |