Asked on 12 Jun 2019
Can CPF raise the SA limit above FRS for tax relief?
Extracted from iras website:
The maximum CPF Cash Top-up Relief per Year of Assessment (YA) is $14,000 (maximum $7,000 for self, and maximum $7,000 for family members).
We can get tax relief for cash top ups (capped at S$14k)
S$7k relief for yourself
S$7k relief for parents/ parents in law, grandparents/ grandparents in law, spouse or siblings
There are another two ways to getting additional tax relief while saving for retirement.
You could do voluntary contributions to your Medisave account subject to the Basic Healthcare sum and CPF Annual Limit. One advantage is when you hit the BHS, the usual MA contribution will go to your SA instead. Helps to accelerate your SA retirement savings.
You could also contribute to your Supplementary Retirement Scheme account. Tax relief amount is the actual amount contributed to SRS.
The rules for tax relief are specified
up to 7k relief for contributions of own SA
up to max 7k relief for contributions to spouse, parents grandparents and parents in law.
So one person maximum 14k relief (per tax year), but you can actually top up more than 14k, just no additional tax relief.
And to the second, if you top up minimum sum / SA / RA, if it leads to the SA / RA above FRS amount, I believe cpf will refund you the excess.
To navigate around this, I would think topping up earlier in the year helps if you wouldn't have hit the FRS in early part of year, and let regular contributions to SA from work continue to hit the balance above FRS, so you get to optimise the 7k relief.