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PR surrender and CPF withdrawal

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neconomist
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PR surrender and CPF withdrawal

Postby neconomist » Mon, 25 Apr 2016 12:30 pm

Hi All,

I am planning to leave Singapore by the end of the year, however I am not sure whether I might come back in the short-term (just in case the new job being in some remote emerging market would not work out well).

My PR is expiring next year in July and I would like if possible to request a renewal. At the same time I am not sure whether it is the best choice to leave the CPF contributions where they are (as I heard some people do so) or it's better to withdraw them all at the moment I am leaving, and therefore to cancel my PR.

So my question for the community are:
1) Can I leave the country for a new job experience without cancellation of PR? Should I just make sure I clear my taxes with IRAS?
2) If my PR is expiring next year in July and I move out of the country by Dec-16, will I be able to renew the PR, maybe with a proof of coming to Singapore once in a while? I heard from a friend that they usually ask if you have any Singapore owned property or husband/wife.
3) If I need to cancel the PR the moment I leave the country, is it true I can leave the CPF where it is and can withdraw the balance in a future stage? Will the funds still mature interest?
4) In case I withdraw the CPF balance, how much taxes should I pay and if ever I would like to come back to Singapore, should I return back all the amount plus interest earned until my original withdrawal?

I know I should ask these questions directly to the CPF/IRAS bodies but I wonder if anyone here already faced these issues and is willing to share their thoughts. In fact,

Thanks a lot for your help,
mario

bro75
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Re: PR surrender and CPF withdrawal

Postby bro75 » Mon, 25 Apr 2016 1:08 pm

1. Yes
2. You can renew your REP online 3 months before the expiry date. I am not sure if there is any other way to renew your REP.
3. Yes, you can leave your cpf as is and it will continue to generate interest.
4. If you have withdrawn your cpf before and want to come back as a PR, you will need to re-apply for PR. I heard (not first hand though) that you will need to restore your previous cpf balance before PR can be approved. But if you just want to work on an EP, then restoring your cpf balance is not required.

BBCWatcher
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Re: PR surrender and CPF withdrawal

Postby BBCWatcher » Mon, 25 Apr 2016 1:30 pm

One recent "complication" -- starting on November 1, 2015 -- is that citizens and PRs, no matter where they live in the world, must continue paying MediShield Life premiums (taxes) unless they qualify for a waiver. In short, it's not free to maintain PR status. If you think there is a reasonable likelihood that your PR status will be valuable to you, then you should try to retain your status. If not, then given the "running cost" you should probably terminate your PR status.

The decision to withdraw CPF funds is a separate decision. In my view most ex-PRs should not withdraw their CPF funds unless and until they need them (in retirement preferably). CPF SA is paying over 4% nominal interest Singapore tax free, and the real interest rate is even higher since Singapore currently has negative inflation (deflation). CPF's interest rate is inflation adjusted, so if inflation ever returns to Singapore the interest rate will go up. That's all really quite extraordinary for a AAA-rated government, especially for an account that an ex-PR can withdraw at any time (i.e. the funds are "on demand" callable). I'd let that deal ride "into the sunset."

One exception to this general advice is if you're moving to a country with a tax code that would heavily penalize CPF holdings. For example, if that country's tax code requires paying a high tax on the total value of the account, e.g. upon withdrawal. That's quite rare but possible. In that rare circumstance you have to be very careful how you handle your withdrawal, especially with respect to timing. Taking a wild guess ("Mario"?), Italy is probably not one of those countries, although in Italy you would have to declare the account on Form RW, pay income tax on the interest each year, and (probably) pay wealth tax (IVAFE) each year on the total value of the account. Nonetheless, CPF would still be a good deal for a resident of Italy.

neconomist
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Re: PR surrender and CPF withdrawal

Postby neconomist » Mon, 25 Apr 2016 3:14 pm

Thank you for the advises.

In fact I just checked and the medishield life premium is $310. In my case with the current balance and the average interest earned on these accounts I believe it is not such a big issue. This insurance would also give me some kind of guarantee if ever I would need some hospitalization or treatments and I would be willing to have them in Singapore.

In regards to the withdrawal I also agree, some of my friends told me that they would rather leave the funds here as a retirement/emergency fund.
Yes, if I'd come back to Italy I'd rather need to verify with the local Tax Authority what would be the treatment of the CPF funds, being that I did not pay any tax on those contributions yet again they have been mandatory deposits which are imposed by a local sovereign system. In accordance with the current rule all financial assets which are owned abroad by Italian resident are subjected to the IVAFE rate of 0.2%.
I have an additional doubt, if I make a withdrawal, what would be the tax rate in Singapore for the full amount of CPF balance?

BBCWatcher
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Re: PR surrender and CPF withdrawal

Postby BBCWatcher » Mon, 25 Apr 2016 4:48 pm

CPF is Singapore tax free on all fronts: contributions, interest, and withdrawals.

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singaporeflyer
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Re: PR surrender and CPF withdrawal

Postby singaporeflyer » Mon, 25 Apr 2016 7:23 pm

neconomist wrote:
2) If my PR is expiring next year in July and I move out of the country by Dec-16, will I be able to renew the PR, maybe with a proof of coming to Singapore once in a while? I heard from a friend that they usually ask if you have any Singapore owned property or husband/wife.


Practically, you need to be employed in Singapore and residing permanently in Singapore when your REP is being renewed. If you are overseas and not getting paid in Singapore, then the chances of REP renewal will reduce.

SF


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