How is SRS tax rebate ~$1000? From what I recall, one can contribute $15,300/year (more if on EP). Contribution is fully tax deductible, subject to the $80,000 deduction limit, and interest/gains are tax free. After that, penalty free withdrawals are only after 62, and 50% subject to tax (be it lump sum or annuity). Agreed that its not presented too clearly on CPF etc websitesPNGMK wrote: Personally I find the SRS tax rebate of ~$1000 far more attractive than the CPF relief as there is no variation and it's easy to do on the last few days of the year (drop a cheque into your SRS account). Google SRS if you don't know what it is. It's a fantastic rate of return.
You're absolutely right about SRS and I apologize. I don't know why I had that number in my head. I dug up my last NOA to check and I was given a $15,300 deduction off my taxes which at the top marginal rate I was taxed at (19.5%) = $2,983.50 in savings. It's considerably more than I thought and is an effective 19.5% straight line return (but of course less on the total I have which is ~$150,000 - there it's worth 2%. Perhaps I had a figure in mind from 15 years ago when I started with SRS and calculated the tax savings.) Note for a foreigner tax resident the amount claimable is more than doubled ($35,700)and if you're in a high band like 20% that's whopping $7,140 tax deduction. In fact it may pull you down a tax bracket....GSM8 wrote:How is SRS tax rebate ~$1000? From what I recall, one can contribute $15,300/year (more if on EP). Contribution is fully tax deductible, subject to the $80,000 deduction limit, and interest/gains are tax free. After that, penalty free withdrawals are only after 62, and 50% subject to tax (be it lump sum or annuity). Agreed that its not presented too clearly on CPF etc websitesPNGMK wrote: Personally I find the SRS tax rebate of ~$1000 far more attractive than the CPF relief as there is no variation and it's easy to do on the last few days of the year (drop a cheque into your SRS account). Google SRS if you don't know what it is. It's a fantastic rate of return.
Of course all the above is worth squat if one holds a US passport. Speak of dog in the manger
https://www.drwealth.com/srs-singapore/brian_singapore wrote:Thanks, this was very helpful.
I was planning on contributing to an SRS this year as well. I didn't realize the tax treatment was different to that of CPF.
Brian
Speaking of SRS, we are looking for investment options for some amount lying "idle" in our (my wife and my) SRS accounts and had a few doubts:PNGMK wrote:You're absolutely right about SRS and I apologize. I don't know why I had that number in my head. I dug up my last NOA to check and I was given a $15,300 deduction off my taxes which at the top marginal rate I was taxed at (19.5%) = $2,983.50 in savings. It's considerably more than I thought and is an effective 19.5% straight line return (but of course less on the total I have which is ~$150,000 - there it's worth 2%. Perhaps I had a figure in mind from 15 years ago when I started with SRS and calculated the tax savings.) Note for a foreigner tax resident the amount claimable is more than doubled ($35,700)and if you're in a high band like 20% that's whopping $7,140 tax deduction. In fact it may pull you down a tax bracket....GSM8 wrote:How is SRS tax rebate ~$1000? From what I recall, one can contribute $15,300/year (more if on EP). Contribution is fully tax deductible, subject to the $80,000 deduction limit, and interest/gains are tax free. After that, penalty free withdrawals are only after 62, and 50% subject to tax (be it lump sum or annuity). Agreed that its not presented too clearly on CPF etc websitesPNGMK wrote: Personally I find the SRS tax rebate of ~$1000 far more attractive than the CPF relief as there is no variation and it's easy to do on the last few days of the year (drop a cheque into your SRS account). Google SRS if you don't know what it is. It's a fantastic rate of return.
Of course all the above is worth squat if one holds a US passport. Speak of dog in the manger
The investment choices for SRS are limited by govt regulations and also what the bank will let you do. I ended up buying into trusts from Great Eastern with mine about 5 years ago. The returns are so-so. For about 10 years I treated SRS as purely a zero return cash reserve against deflation. (And yes, Great Eastern front loaded commissions are also about that much plus there's a spread between bid and sell. SRS is really only good for a long buy and hold strategy).GSM8 wrote:Speaking of SRS, we are looking for investment options for some amount lying "idle" in our (my wife and my) SRS accounts and had a few doubts:PNGMK wrote:You're absolutely right about SRS and I apologize. I don't know why I had that number in my head. I dug up my last NOA to check and I was given a $15,300 deduction off my taxes which at the top marginal rate I was taxed at (19.5%) = $2,983.50 in savings. It's considerably more than I thought and is an effective 19.5% straight line return (but of course less on the total I have which is ~$150,000 - there it's worth 2%. Perhaps I had a figure in mind from 15 years ago when I started with SRS and calculated the tax savings.) Note for a foreigner tax resident the amount claimable is more than doubled ($35,700)and if you're in a high band like 20% that's whopping $7,140 tax deduction. In fact it may pull you down a tax bracket....GSM8 wrote: How is SRS tax rebate ~$1000? From what I recall, one can contribute $15,300/year (more if on EP). Contribution is fully tax deductible, subject to the $80,000 deduction limit, and interest/gains are tax free. After that, penalty free withdrawals are only after 62, and 50% subject to tax (be it lump sum or annuity). Agreed that its not presented too clearly on CPF etc websites
Of course all the above is worth squat if one holds a US passport. Speak of dog in the manger
1. The banker at UOB said that our SRS funds can only be invested in unit trusts (aka mutual funds) and insurance (but not in stocks or fixed deposits) - this doesn't seem intuitive, is this correct?
2. We are considering unit trust investment for my wife (although I can not, being American and hence subject to PFIC due to CBT). For such unit trusts, the bank online portal says the front end sales load is 5%, but the banker at the branch said they are allowed to sell them at a concessional 3% load - but even this number seems high when in US the norm is zero load (even in India it is zero load I understand). I did see some online portals in Singapore that claim to let clients invest for zero sales fee but there didn't seem to be any way to do SRS investments with them. Are we bound by front end load via the bank then?
Appreciate any tips from people who've encountered similar.
Thanks for sharing that info, PNGMK. One thing that strikes me about SRS though is that in certain scenarios it may end up not being a tax saving vehicle at all - Granted one takes a deduction of the entire $15.3K contribution and it grows tax free till withdrawal after 60. But at that point, 50% of the appreciated amount is taxable as ordinary income. Say returns were good and the value has, say, tripled by then (actually, anything more than doubled) - in such a case 22.95K of income (i.e. 0.5 x 3 x 15.3) would be taxable in the year of withdrawal - of course this takes into account several simplifications like lump sum withdrawal and one time contribution etc. But my point is that SRS is not a sure shot tax saving vehicle compared to a non-tax sheltered account given that interest, dividends and cap gains are all non-taxable in Singapore. Please correct me if there is an error in this reasoning.PNGMK wrote: The investment choices for SRS are limited by govt regulations and also what the bank will let you do. I ended up buying into trusts from Great Eastern with mine about 5 years ago. The returns are so-so. For about 10 years I treated SRS as purely a zero return cash reserve against deflation. (And yes, Great Eastern front loaded commissions are also about that much plus there's a spread between bid and sell. SRS is really only good for a long buy and hold strategy).
Agreed, my example was a tad edge case. But the reasoning still appears to hold since per IRAS, most interest and dividends (including from REIT, unit trusts, ETF) are non-taxable in SingaporePNGMK wrote:Interest and dividends are taxable though. I doubt I'll make enough returns on my SRS to make it an issue. It's a form of forced savings for me.
I did not know that. Interesting. I feel ashamed for not having researched it better. I should have realized that sensible Singapore will not double tax dividends (as a dividend is a post tax payment by the corporation anyways) or interest on Singapore banks.GSM8 wrote:Agreed, my example was a tad edge case. But the reasoning still appears to hold since per IRAS, most interest and dividends (including from REIT, unit trusts, ETF) are non-taxable in SingaporePNGMK wrote:Interest and dividends are taxable though. I doubt I'll make enough returns on my SRS to make it an issue. It's a form of forced savings for me.
https://www.iras.gov.sg/irashome/Indivi ... Dividends/
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