Before year ends, Reminder on Tax Relief

Before the year ends, here’s a gentle reminder on tax saving for your next year’s tax relief.

(1) To contribute to your Supplementary Retirement Scheme (SRS) account

(2) To top-ups to our CPF Special Account (or Retirement Account if we are above 55) via the Retirement Sum Topping Up (RSTU) Scheme

How Much You Can Save On Taxes

For those contributing to their CPF Special Account (SA) via the RSTU scheme, we only receive dollar-for-dollar tax deductions on the first $8,000 each year. We can also receive up to another $8,000 for contributing to our loved one’s Special Account via the RSTU. We can always choose to make further top-ups to our Special Account or Retirement Account, up to the Full Retirement Sum (FRS), but will not receive any tax relief beyond the first $8,000.

The SRS gives us a dollar-for-dollar tax deduction on top-ups of up to $15,300 (and $35,700 for foreigners) a year. This is also the maximum we can top-up to our SRS account each year as well.

Besides thinking about taxes when we are making our top-ups, we also need to consider the tax implications when withdrawing our funds to use in retirement.

In our retirement, we will withdraw our CPF Special Account (or Retirement Account) top-ups via the CPF LIFE scheme. These monthly payouts will not be subject to taxes.

However, we have to pay taxes on the withdrawals of our SRS savings after our statutory retirement age (currently 63-years-old, but will rise to 65 by about 2030). We get a 50% tax concession, which means that we only pay taxes on 50% of our SRS withdrawals. For example, if we withdraw $40,000 in the year, we will have to pay taxes on only $20,000 – and we may end up not paying any tax if that’s our only taxable income in the year.

Of course, there is a risk that we build other taxable income such as investment property rentals for our retirement and may end up paying taxes as well.

Another constraint for the SRS is that we have to make withdrawals within a 10-year period. This means if we have more than $400,000 in our SRS account at the point we start making withdrawals, we may end up paying some income tax.

What Can You Do With Your CPF Top-Ups And SRS Top-Ups?

When we make RSTU top-ups to our CPF Special Account, our top-ups start earning a minimum of 4% per annum. This means we start earning a relatively decent interest rate from the moment we make a CPF top-up.

While we can invest our CPF Special Account monies, we cannot invest the portion that comes through topping up. This means, if we want the flexibility of investing in stocks or other investments, we may want to consider topping up our SRS account instead.

On the other hand, when we make top-ups to our SRS account, our funds will simply earn a negligible interest rate provided by the bank. This means we must invest our SRS top-up monies in order to earn a better return.

Reaping the joy of adopting a cause as a family, or a group of friends and saving on taxes would be a nice way to end the year strong. What a win win situation! So drop me a Whatsapp message to find out more about tax savings, how to invest SRS monies or just to chat and we will be more than happy to help.

Your relationship is important to me, and hope to strengthen it in the coming year. Best Christmas wishes and a prosperous 2023 New Year  go out to you and your family.

Important: The information and opinions in this article are for general information purposes only. They should not be relied on as professional financial advice. Readers should seek independent financial advice that is customised to their specific financial objectives, situations & needs. This advertisement or publication has not been reviewed by the Monetary Authority of Singapore.

Published By:

Lisa Ling 林惠萍

As a wealth management coach, I’m passionate about helping people achieve the financial stability and freedom they deserve. After more than two decades in the finance industry, I left my Private Banking career to pursue a new opportunity as a Financial Advisory Manager at Financial Alliance. I specialize in creating personalized insurance and investment strategies tailored to each clients’ individual needs. 

I take pride in being able to provide customers with tailored solutions that best fit their needs. (Refer to my clients testimonials on their experiences) My main aim is to make sure my clients are provided with the tools they need to achieve financial independence and success with confidence.

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根据《个人数据保护法》,鑫盟理财私人有限公司征求您的同意向您收集并使用您的个人信息。鑫盟理财将根据公司的个人数据保护政策所阐述的用途使用您的个人资料(例如姓名,证件号码,联系电话,邮寄地址,电邮地址和照片)。 该政策可在本公司网站上查寻,网址为 https://fa.com.sg/data-protection-policy/.

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  • 我已阅读并理解鑫盟理财私人有限公司的个人数据保护政策,并同意鑫盟理财私人有限公司根据个人数据保护政策所阐述的用途使用我的个人资料。
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  • I have not been directly contacted or approached by any representative or employee of FAPL with an offer or solicitation to apply for any financial products not offered in my home country.
  • 鑫盟理财私人有限公司的代表或员工并未直接与我联系或提出要约或招揽购买我原居住国境内所不提供的任何金融产品.
  • Financial Alliance Pte Ltd ( “FAPL”) is licensed by the Monetary Authority of Singapore (“MAS”) and allowed to conduct financial advisory activities in accordance with the Financial Advisers Act (Cap. 110) (“FAA”) and the Securities & Futures Act (Cap. 289) (“SFA”) within the jurisdiction of the Republic of Singapore and in accordance with the licenses granted by MAS
  • 鑫盟理财私人有限公司( “鑫盟理财”)持有由新加坡金融管理局(“MAS”)所颁发的牌照,并许可在新加坡共和国境内依据财务顾问法(第110章)和证券与期货交易法(第289章)进行财务咨询等相关业务
  • Any services provided by FAPL to persons not ordinarily resident in Singapore are provided solely on an offshore basis from Singapore, resulting from direct enquiry on the part of the foreign residents.
  • 鑫盟理财为非新加坡居民所提供的任何服务仅限于直接向鑫盟理财发出咨询请求的国外居民。
  • As an integral part of the provision of such services, FAPL may from time to time make available to such residents, documents and information making reference to capital markets products (for example, in connection with the provision of fund management or investment advisory services outside of the foreign jurisdiction).
  • 作为提供此类服务的一部分,鑫盟理财会不时向此类咨询者提供有关产品的参考文件和信息(例如,关于海外司法管辖区以外的资金管理或投资咨询服务等信息)。
  • Such documents and information are provided by Financial Alliance Pte Ltd (“FAPL”) is for general information only and is not intended for anyone other than the recipient.
  • 此类由鑫盟理财所提供的文件和信息仅供收件人做一般信息参考。
  • It does not take into account the specific investment objectives, financial situation or particular needs of any particular person.
  • 此类文件和信息不会把-个人投资目标,财务状况或其特定需求等考虑在内。
  • It does not constitute the making available of, or an offer or solicitation by FAPL to buy or sell or subscribe for any such capital markets product or to enter into a transaction or to participate in any particular trading or investment strategy nor an advice or a recommendation with respect to such financial products.
  • 鑫盟理财向该人士提供此类文件和信息将不构成要约或招揽购买或出售或认购任何此类资本市场产品,或达成交易或参与任何特定的投资策略,也不构成有关此类金融产品的建议或推荐。
  • These documents may not be published, circulated, reproduced or distributed in whole or in part to any other person without FAPL’s prior written consent.
  • 未经鑫盟理财的事先书面同意,不得将这些文件全文或部分发布,传播,复制或分发给其他人。
  • This document is not intended for distribution to, publication or use by any person in any jurisdiction, where such distribution, publication or use would be contrary to applicable law or would subject FAPL and its related corporations, connected persons, associated persons and/or affiliates to any registration, licensing or other requirements within such jurisdiction.
  • 鑫盟理财无意在分发,出版或使用此类文件可能违反当地法律,或本公司及关联公司或关联人士需要注册,获得许可或符合规定的司法权区向当地人士分发、出版此类文件或供其使用。
  • You shall ensure that you have and will continue to be fully compliant with all applicable laws in your home country when entering into discussion or contracts with FAPL.
  • 在与鑫盟理财进行讨论或签订合约时,您应确保您已完全遵守并将继续遵守您所在原居住国的所有适用法律及条规。

In compliance with the Personal Data Protection Act, Financial Alliance Pte Ltd (“FAPL”) seek your consent to collect and use your personal data (e.g. name, NRIC, contact numbers, mailing addresses, email addresses and photograph) for the purposes of and in accordance with FAPL’s Data Protection Policy, which can be found on FAPL’s website at https://fa.com.sg/data-protection-policy/.

根据《个人数据保护法》,鑫盟理财私人有限公司征求您的同意向您收集并使用您的个人信息。鑫盟理财将根据公司的个人数据保护政策所阐述的用途使用您的个人资料(例如姓名,证件号码,联系电话,邮寄地址,电邮地址和照片)。 该政策可在本公司网站上查寻,网址为 https://fa.com.sg/data-protection-policy/.

By submitting this form, you are deemed to have read and understood FAPL’s Personal Data Policy.

提交此表格,即表示您已阅读并理解鑫盟理财私人有限公司的个人数据政策