Hi, I am trying to reduce my income tax for next year. CPF VC MA relief? Any thoughts?

Hi Nick,

According to IRAS, this is how you compute the amount of MA relief:
Amount of Tax Relief VC-MA

The amount of tax relief given to the lowest of the following:

1. Voluntary cash contribution directed specifically to Medisave Account or

2. Annual CPF contribution cap for the year, less Mandatory Contribution (MC)* or

3. Prevailing Basic Healthcare Sum(BHS)^, less the balance in Medisave Account before the voluntary cash contribution.

Let's do the maths here:

If you have $6K/mth salary (ordinary wages) and $10K bonus (Additional wages) your CPF contributions would be $30.34K. Subtract this from the CPF annual limit gives you $7.4K. Your share of CPF contributions will be $16.4K. Add $7.4K to this and you have $23.8K of relief in total from CPF. Your calculations are correct.

You can use the calculators on the CPF website to calculate the amounts. The bonus will be considered as additional wages.

https://www.cpf.gov.sg/members/tools/calculators

Alternatively you could log in to your CPF account at the end of the year, to check the allowable contribution to your MA. Then top up.

Any extra voluntary contribution will be refunded back to you next year without interest. The tax relief on the extra amount is not recognized.