Is SRS worth for foreigners?

[jennycheung88]

I have lived here for 5 years now and plan to stay long-term though my PR application just got rejected.

I don’t think we will ever get PR but will stay in SG as long as we have employment. Both my husband and I are considered high income earner. I don’t plan to retire here but I am exploring options to reduce payable tax as well as some savings.

I wanna ask if it’s worth investing in SRS? Thank you in advance!

[PNGMK]

SRS is fabulous. If you're high income (I'll assume above $320,000 pa) you're saving 22% x $15,300 using SRS as a SPR and double that if not a SPR (i.e. $3366 in tax) plus of course any gains with your SRS deductions are tax free. You actually can start SRS before obtaining PR by the ways.

[malcontent]

Key factors to consider when assessing how much SRS benefits are worth:

Tax bracket - higher the better, ideally, at least mid-teens to make it worthwhile.

Career span - generally better for mid to late career, reduces risk of tax on compounded returns.

Investment choices - higher fees versus non-SRS investments can eat up ALL of the tax savings if investing over many decades. Your broader portfolio allocation needs play into this.

Withdraw method - resident versus non-resident, after 10 years or at retirement age, spread out or lump sum… these will impact how much tax comes out in the end. Typically, a minimum 7.5% should be assumed if retiring outside Singapore.

Future tax residency - if you will eventually move to a jurisdiction that does not have a territorial tax regime like Singapore, that can be an important consideration as well.

[midlet2013]

SRS is fabulous. If you're high income (I'll assume above $320,000 pa) you're saving 22% x $15,300 using SRS as a SPR and double that if not a SPR (i.e. $3366 in tax) plus of course any gains with your SRS deductions are tax free. You actually can start SRS before obtaining PR by the ways.

Hey PNGMK ,

You mean a savings of around 3000$ for PR if salary >300k.

What's the easiest way to start with SRS??

[malcontent]

SRS is fabulous. If you're high income (I'll assume above $320,000 pa) you're saving 22% x $15,300 using SRS as a SPR and double that if not a SPR (i.e. $3366 in tax) plus of course any gains with your SRS deductions are tax free. You actually can start SRS before obtaining PR by the ways.

Hey PNGMK ,

You mean a savings of around 3000$ for PR if salary >300k.

What's the easiest way to start with SRS??

It’s impossible to pin down an exact number unless we know all the reliefs you claim, etc…but it’s around there.

Open an account at DBS, UOB or OCBC and hand them a check.

[malcontent]

Let me just add… for SRS to be worth it, you thread the needle just right.

It is not a complete no brainer, because profits on SRS deductions can become taxable under the right conditions. In a way, you are opting for your profits to be potentially taxability (profits that would be tax-free outside SRS). Combine that tax risk with the investment restrictions on SRS investments which often come at a higher fee… and now you’ve got something that needs to be evaluated carefully to see if there are really benefits.

The only way it’s a complete no brainer is if you definitely retire in Singapore, have little other taxable income in retirement, spread withdrawals over the 10 years and don’t have too large of an SRS balance.

And, perhaps most importantly (and often overlooked), the fee differential between your SRS vs non-SRS investments must be sufficiently small or nonexistent, such that the tax savings aren’t gobbled up by the additional fees.

[Wd40]

SRS is not worth it for foreigners. Just pay your taxes as a contribution to nation building, it is so low anyways. You can invest your money freely outside SRS and beat SRS returns. Remember SRS withdrawals are taxable, including gains. While Singapore doesn't tax capital gains, weirdly putting money into SRS subjects your capital gains to be taxed.

It is okay for locals, because they can withdraw during their retirement in small chunks at zero tax. Foreigners will be taxed at 15%.

So just forget about it. The only thing you can do is open an SRS account and put $1 in it and then wait for 10 years. You can then deposit towards 8th 9th or 10th years and do a full withdrawal just before leaving this country.

[malcontent]

SRS is not worth it for foreigners. Just pay your taxes as a contribution to nation building, it is so low anyways. You can invest your money freely outside SRS and beat SRS returns. Remember SRS withdrawals are taxable, including gains. While Singapore doesn't tax capital gains, weirdly putting money into SRS subjects your capital gains to be taxed.

It is okay for locals, because they can withdraw during their retirement in small chunks at zero tax. Foreigners will be taxed at 15%.

So just forget about it. The only thing you can do is open an SRS account and put $1 in it and then wait for 10 years. You can then deposit towards 8th 9th or 10th years and do a full withdrawal just before leaving this country.

That is exactly what I did from 2001 onwards when SRS was first introduced - thanks, but no thanks.

In hindsight, I should have deposited $1 because since 2020, my employer started contributing and I’ve now got to wait until at least 2030 to pull it out. I long suspected my employer might do something like that (replacing our old defined benefit plan) but I was hoping it would happen after I left.