American questions about getting PR

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sundaymorningstaple
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Post by sundaymorningstaple » Tue, 14 Mar 2006 10:52 pm

Your CPF contributions are only payable on Earnings here in Singapore. If you are posted overseas, you are not working in Singapore. Even if you were to leave Singapore for lets say 2 years out of the 5 years (length of normal re-entry permit) and just come back to work for the last year and resume working here then no problem. Even if you were to give up your PR but left the funds here for the interim and came back in 10 years time and re-applied for PR your CPF funds would still be here drawing interest during the interim just like a CD. When you give up your PR you are not automatically given your CPF back, you have to apply to have it refunded (a relatively painless process that only will take about 3 weeks. They will deposit it into any bank that you nominate (if you are no longer in Singapore) worldwide. Don't know of anybody who has ever had a problem with that.

The only problem that generally crops up is after lets say 10 years as a PR and you are making in excess of 4.5K/month (normally I would hope! :D ) 4.5K/mo is maximum contribution amount. 4.5K x 12 = 17,820 year x 10 years = 178,200 plus interest. Seems a pity not to be able to invest it somewhere else for a higher return (albiet riskier - the apples & oranges I was talking about in my earlier post). So people baulk at that though. The normal argument I hear on these forums is "we could get higher returns investing elsewhere". My answer to that is "Sure you can!" Providing which you have a lot of experience in investment instruments and the time to babysit those investments. (Don't forget, we're working stiffs and not retired punters). And frankly speaking, the professionals haven't got the most impressive track records over the past 8 years either. How is average Joe supposed to do it? Anyway, that's why I try to keep it as apples with apples.

sms
SOME PEOPLE TRY TO TURN BACK THEIR ODOMETERS. NOT ME. I WANT PEOPLE TO KNOW WHY I LOOK THIS WAY. I'VE TRAVELED A LONG WAY, AND SOME OF THE ROADS WEREN'T PAVED. ~ Will Rogers

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Post by sundaymorningstaple » Tue, 14 Mar 2006 11:01 pm

Oh yeah, Wham, as the average westerner (engineer or better) makes between 6 - 9K USD/year. Let's relook at the percentages.

Lets us 7K USD x 1.60 = $11,200. (Employer will not pay CPF contributions so his portion which you end up paying is $585/mo (Total is $1485/mo CPF).
We'll just use 1500/mo CPF contributions for round numbers.
Now, instead of 33% of your income it is now 1500/11,200 = 13.4% of your income. It makes the total withholdings a bit better and has you automatically saving almost 18K/year as a good interest rate.
SOME PEOPLE TRY TO TURN BACK THEIR ODOMETERS. NOT ME. I WANT PEOPLE TO KNOW WHY I LOOK THIS WAY. I'VE TRAVELED A LONG WAY, AND SOME OF THE ROADS WEREN'T PAVED. ~ Will Rogers

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Post by fx8fx » Sun, 19 Mar 2006 3:05 am

I still doubt there is a cons :

As it's not a PR but a 5 years Resident

You have to meet some criterias to extend the PR at the 5th year end ?
In case you work/live outside Singapore more than 183 days each year, there is no tax contribution to Singapore gov...........
Then whether the PR status could be renewed ?


Am I wrong in this point ?

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Post by Carpe Diem » Sun, 19 Mar 2006 11:04 am

sundaymorningstaple wrote:Oh yeah, Wham, as the average westerner (engineer or better) makes between 6 - 9K USD/year. Let's relook at the percentages.

Lets us 7K USD x 1.60 = $11,200. (Employer will not pay CPF contributions so his portion which you end up paying is $585/mo (Total is $1485/mo CPF).
We'll just use 1500/mo CPF contributions for round numbers.
Now, instead of 33% of your income it is now 1500/11,200 = 13.4% of your income. It makes the total withholdings a bit better and has you automatically saving almost 18K/year as a good interest rate.
Can you please elaborate more? I find your calculations not clear.
(thinking about PR too, after 4 years on EP :wink: )
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Post by sundaymorningstaple » Sun, 19 Mar 2006 11:28 am

fx8fx wrote:I still doubt there is a cons :

As it's not a PR but a 5 years Resident

You have to meet some criterias to extend the PR at the 5th year end ?
In case you work/live outside Singapore more than 183 days each year, there is no tax contribution to Singapore gov...........
Then whether the PR status could be renewed ?


Am I wrong in this point ?
I'll take the two posts separately if I may.

fx8fx,

When Permanent Residence is granted it is not subject to expiry in the normal sense of the word. If I am given PR, win the Hong Bao CNY Totto draw of 10 million, and never leave the island I'm home free. End of Story.

However, if I want to leave the Republic and go to another country, separate rules apply. In order to leave and return you must have a re-entry permit. If you leave without a re-entry permit, you are telling SISIR that you are giving up your PR and the only way you can come back into the Republic is on a Tourist or other type of visa. (There are cases of people having their re-entry permits expire while overseas and paying a minor fine and having it renewed on arrival so all is not lost.)

If you are under 50 years of age, you need to be gainfully employed in order to renew you re-entry permit. Over 50 do not have to be employed (as I have posted earlier - been there and done that in March this year and also renewed my re-entry permit for "10" years which should see me through to retirement back to the farm).

If you are gainfully employed (in Singapore) for the year prior to renewal you should not have any real problems however I am NOT privvy to the inner working of the point allocation system that they would almost have use to determine this. I would sincerely doubt that it is Income based alon as their is too wide a spread in earning capabilities between former holders of EP's (forerunners of PR's) e.g., Q vrs P1 passes. Also, with 3 recessions in 8 years I would think this could have put too many managers with PR at a risk at renewal time.

As I said, I'm basing what I know one first & Second hand experience (myself & persons personally known to me). I am not privvy to the inner workings. The taxation I don't think you want to get into. If you are a PR, just like a citizen, your passport isn't stamped with your date of leaving and date of returning so the 183 day tax situation is a moot point.

sms
SOME PEOPLE TRY TO TURN BACK THEIR ODOMETERS. NOT ME. I WANT PEOPLE TO KNOW WHY I LOOK THIS WAY. I'VE TRAVELED A LONG WAY, AND SOME OF THE ROADS WEREN'T PAVED. ~ Will Rogers

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Post by sundaymorningstaple » Sun, 19 Mar 2006 12:00 pm

Carpe Diem wrote:
sundaymorningstaple wrote:Oh yeah, Wham, as the average westerner (engineer or better) makes between 6 - 9K USD/year. Let's relook at the percentages.

Lets us 7K USD x 1.60 = $11,200. (Employer will not pay CPF contributions so his portion which you end up paying is $585/mo (Total is $1485/mo CPF).
We'll just use 1500/mo CPF contributions for round numbers.
Now, instead of 33% of your income it is now 1500/11,200 = 13.4% of your income. It makes the total withholdings a bit better and has you automatically saving almost 18K/year as a good interest rate.
Can you please elaborate more? I find your calculations not clear.
(thinking about PR too, after 4 years on EP :wink: )
Sorry CD,

This ole farmboy was using ears of corn strewn about the house trying to do the calculations......will try again. :mrgreen: Will modify somewhat.

Data:

1. Basic salary = USD $7000/month
2. Approximate current exchange rate = SG 1.60:US 1.00
3. Bonus = 3 month salary (max allowed for contributions to CPF)

Facts:

1. CPF Contributions are based on a maximum salary cap of 4,500/month

2. Contribution rate third year onwards = 13% Employers & 20% Employees contribution based on salary cap of $4,500/month. (1st year is 5% Employee & 4% Employer; 2nd years is I believe 9% Employee & 7% Employer) This is to allow a new PR to get used to it easier instead of a massive jump in the first year.

Calculations:

Income: US $7,000 x 1.60 + SG 11,200/month.

CPF Contribution (by Employee) = 11,200 (subject to cap) = 4,500 x 20% = 900.00/mo

CPF Contribution (by Employer) = 11,200 (subject to cap) = 4,500 x 13% = 585.00/mo.

CPF Total for the month (both parties) = 1485.00/mo

Senario:

Assume that your employer is already locked into a 401K plan (as in Wham's case - using the same example here) or other pension scheme possibly linked to the home office/country due to being a MNC.

If, due to the above case, you employer doesn't want to contribute to the CPF when you become a PR, they may tell you that you can pay their share out of your salary (accounting headache - but not your problem as long as they go with it).

Conclusions:

Instead of your contribution rate being a maximum of 20% or 33% in this case, it effectively become only $1485/11,200 or 13.25% of your salary (if the employer pays their share then it is effectively only 8%. (4,500 x 20% = 900.00) 900/11,200 = 8%.

The higher your income is the smaller the effective percentage is due to the salary cap for contributions. The cap has been reduced over the past 4 or 5 years from 6,000/mo.

As you also get the salary cap on your bonus separately it is effectively 15 months x 1485 = or a savings of $22,275 per year of which the minimum interest rate is 2.61% up to 4%.

Additionally, the amount of "your" contributions (the 20% amount) is also deductible from you income tax as an "income" deduction (as opposed to a "tax" deduction). It is also Tax Free upon withdrawal whether due to reaching 55 or giving up your PR to return to your country of origin. Depending on your actual income this can be nice as well as there are so few tax deductions here for personal income tax (rates damn low to begin with :wink: )

Now, got to get the broom out and clean up all the corn all over the house a'fore the missus comes home! :mrgreen:
SOME PEOPLE TRY TO TURN BACK THEIR ODOMETERS. NOT ME. I WANT PEOPLE TO KNOW WHY I LOOK THIS WAY. I'VE TRAVELED A LONG WAY, AND SOME OF THE ROADS WEREN'T PAVED. ~ Will Rogers

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Post by Carpe Diem » Sun, 19 Mar 2006 12:19 pm

Thanks a lot for your detailed explanations; I was not aware of the 4,500 cap. That's why i got confused...

Will do my homework then...
:)
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Post by Carpe Diem » Sun, 19 Mar 2006 1:21 pm

Another question, I know I could browse the IRAS website to find out but I am leaving soon to airport... will be back in only 2 weeks.

So here it is: are Area Representative Status and PR status compatible?

Thanks in advance.
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Post by sundaymorningstaple » Sun, 19 Mar 2006 1:51 pm

Carpe Diem wrote:Another question, I know I could browse the IRAS website to find out but I am leaving soon to airport... will be back in only 2 weeks.

So here it is: are Area Representative Status and PR status compatible?

Thanks in advance.
''

CD, off the top of my head I honestly don't know. That said, I'll see what I can find out. Stay tuned.
SOME PEOPLE TRY TO TURN BACK THEIR ODOMETERS. NOT ME. I WANT PEOPLE TO KNOW WHY I LOOK THIS WAY. I'VE TRAVELED A LONG WAY, AND SOME OF THE ROADS WEREN'T PAVED. ~ Will Rogers

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Post by fx8fx » Sun, 19 Mar 2006 3:21 pm

fx8fx wrote:I still doubt there is a cons :

As it's not a PR but a 5 years Resident

You have to meet some criterias to extend the PR at the 5th year end ?
In case you work/live outside Singapore more than 183 days each year, there is no tax contribution to Singapore gov...........
Then whether the PR status could be renewed ?


Am I wrong in this point ?
furthermore, while apply Retry permit , there is another tough requirement as following.
Proof of employment in Singapore, if applicants acquired SPR under the Professionals/Technical Personnel and Skilled Workers Scheme


If you are an employee:
A letter (issued not more than one month ago) from the employer addressed to the Controller of Immigration, stating the date of employment, position held and monthly salary;
A statement from the CPF Board showing the CPF Contribution History for the last 12 months;
Income Tax Notices of Assessment for the last 3 years.


If you are self-employed (e.g. company director, sole proprietor, business partner):
A valid Practising Certificate (this is applicable to applicants whose occupations require the application of such certificates before they can proceed with their respective professional practices in Singapore e.g. doctors, lawyers, etc); or
A valid Vocational Licence; or
A valid Business Registration Certificate (showing the names of all the Directors and partners) from the Instant Information Service, Accounting & Corporate Regulatory Authority (ACRA). You may wish to visit ACRA's website at http://www.acra.gov.sg or call them at 63253731 / 63253732 / 62486028 for further information; and
Income Tax Notice of Assessment for the last 3 years.

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Post by sundaymorningstaple » Sun, 19 Mar 2006 4:26 pm

fx8fx,

I understand were you are coming from. That is why I stated about a year. I also stated that all was my observations. When I renewed my Employment Pass in 2000, I had been unemployed 9 months of 1999 and only returned to work 3 days before the millenium. When I renewed my re-entry permit back then, I had only been working from the end of Dec 99 to May 2000. I still got a letter from my employer, etc, etc. and was given a re-entry permit.
If you are an employee:
A letter (issued not more than one month ago) from the employer addressed to the Controller of Immigration, stating the date of employment, position held and monthly salary;
does not indicate a minimum length of time as to how long you have been working for does it.
A statement from the CPF Board showing the CPF Contribution History for the last 12 months;
again, just wants the cpf contribution to confirm that your employment for the period was not fabricated
Income Tax Notices of Assessment for the last 3 years.
This is the only one that indicates that you were employed for the past couple of years. If it wasn't flexible I would have though they would have wanted all for the past 5 years
I also give them my tax statements for the past 3 years. I'm not saying that you don't need to do these things, I am saying that due to the recessions over the past 8 years since '97 I think SISIR takes a different approach towards things.

I have found that while things that are published on the websites are facts, they are not engraved in stone.

The Government is actually fairly flexible if you approach the situation properly. e.g., if you were working for an MNC here, got your PR, was sent back to your home of origin for a couple of years and then returned to Singapore still with the same employer, then I could easily see them giving you another re-entry permit.

On the other hand, those who get PR for just the ability to not have to leave singapore after 30 days while looking for another job, or those who are trying to collect PR's from various countries - I think the government should zap them. It's the abusers of the system that make it hard for those who honestly want to stay here for the longer haul. But, like all else that I have said, this is also my personal opinion or facts that I have experienced first hand of the 24+ years that I've been here.

sms
SOME PEOPLE TRY TO TURN BACK THEIR ODOMETERS. NOT ME. I WANT PEOPLE TO KNOW WHY I LOOK THIS WAY. I'VE TRAVELED A LONG WAY, AND SOME OF THE ROADS WEREN'T PAVED. ~ Will Rogers

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Post by fx8fx » Sun, 19 Mar 2006 4:35 pm

sundaymorningstaple wrote:If you are under 50 years of age, you need to be gainfully employed in order to renew you re-entry permit. Over 50 do not have to be employed (as I have posted earlier - been there and done that in March this year and also renewed my re-entry permit for "10" years which should see me through to retirement back to the farm).

If you are gainfully employed (in Singapore) for the year prior to renewal you should not have any real problems however I am NOT privvy to the inner working of the point allocation system that they would almost have use to determine this. I would sincerely doubt that it is Income based alon as their is too wide a spread in earning capabilities between former holders of EP's (forerunners of PR's) e.g., Q vrs P1 passes. Also, with 3 recessions in 8 years I would think this could have put too many managers with PR at a risk at renewal time.

As I said, I'm basing what I know one first & Second hand experience (myself & persons personally known to me). I am not privvy to the inner workings. The taxation I don't think you want to get into. If you are a PR, just like a citizen, your passport isn't stamped with your date of leaving and date of returning so the 183 day tax situation is a moot point.

sms
Thanks a lot Sms.

I'm under 50 years of age manager :)
The 183 days would be reported by myself to IRAS for my tax paid at Singapore ,in case I never stay at Singapore in past 5 years. Even I worked for my Singapore company 's overseas branch , my re - entry permit might not be renewed as I dont have tax contribution to them ??:)

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Post by sundaymorningstaple » Sun, 19 Mar 2006 4:40 pm

It's entirely possible unfortunately, but you wouldn't know unless you approached them to find out.

I was told that while they stated there were 5 & 10 years re-entry permits they did not give out 10 year ones. While I was getting mine renewed in March it was the Civil Servant herself who suggested that I get a 10 years one. Often, all one has to to is ask. A lot would depend on the circumstances.

sms
SOME PEOPLE TRY TO TURN BACK THEIR ODOMETERS. NOT ME. I WANT PEOPLE TO KNOW WHY I LOOK THIS WAY. I'VE TRAVELED A LONG WAY, AND SOME OF THE ROADS WEREN'T PAVED. ~ Will Rogers

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Post by fx8fx » Sun, 19 Mar 2006 11:34 pm

in case what ICA care a lot on TAX I paid , does it make sense that I set up a business in Singapore and get some of my income paid to this business ? let's say 100k SGD annually , dose it make sense :) ?

I'm just confused how is the rule for CPF for self-employed or employed by a business/company ?

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Post by sundaymorningstaple » Mon, 20 Mar 2006 9:13 am

fx8fx wrote:in case what ICA care a lot on TAX I paid , does it make sense that I set up a business in Singapore and get some of my income paid to this business ? let's say 100k SGD annually , dose it make sense :) ?

I'm just confused how is the rule for CPF for self-employed or employed by a business/company ?
To put it simply, As a Self employed individual or Sole proprietor as it is called, you do not have to pay into CPF per se, you do have to pay into your medisave account (which is incorporated for employees within the CPF rates) In other words, a much smaller percentage. Only problem is you would have to set up using entrepass which I have no knowledge of or its workings. The expert there is Strong Eagle, who has done so. You may want to PM him or post it openly on the board hoping that he sees it. (don't know if he's out of town at the moment or not - haven't seen any posting in recent days).

Yes it does make sense provided which your employer is okay with you changing your employment to that of a consultant or contractor rather than employee (that's what it would probably take).

sms
SOME PEOPLE TRY TO TURN BACK THEIR ODOMETERS. NOT ME. I WANT PEOPLE TO KNOW WHY I LOOK THIS WAY. I'VE TRAVELED A LONG WAY, AND SOME OF THE ROADS WEREN'T PAVED. ~ Will Rogers

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