easy CPF contribution question

[ropak]

I just received an offer from a company in Singapore, and it says,
"You will receive S$xxx,000 per annum, (which includes Employee CPF contribution but excludes Employer CPF contribution, if applicable) to be paid monthly."

I am not familiar with this phrasing....if my salay is inclusive of my CPF contribution, does that mean the taxes are already accounted for and this is my take home pay, or does it mean this is my salary and I still need to deduct 15-20% for my taxes?

Thanks!

[kaseyma]

No.
The Central Provident Fund (CPF) is like a 401k.
There's the part you pay out of your slary (your contribution) and the part your employer pays directly (employer's contribution).
Unfortunately, your CPF contribution is not recognized by the IRS as such.

Yes, you still need to pay Singapore taxes.
You are responsible for paying your taxes - they are not normally withheld by your employer.

Assuming you are a US citizen, you will also be liable for US taxes, though you may be eligible for the overseas earned income exclusion once you have established overseas residency.

Use the Search function above to see the various threads that have already covered all this.

[Jeppo]

CPF is also only for SPRs and Citizens, so if you're neither than there will be no cpf payments, note the "if applicable".

[Turtle]

CPF is like a government pension scheme. The way it works is that every month, your employer is responsible for paying a certain amount into your CPF, based on your earnings for that month. Your employer is allowed, if they choose, to deduct part of this payment from your monthly salary.

"Employer CPF" refers to the part that the employer cannot deduct from you, therefore it is not deducted from your salary.

"Employee CPF" refers to the part that the employer can (and in this case will) deduct from your salary.

As others have said, it's only applicable to Singapore Citizens and Permanent Residents. You can choose to contribute voluntarily (but cannot force your employer to do so) even if you're not one of the above, but there's no reason you'd want to, to be honest. It's basically lending money to the government at an interest rate that nobody in their right mind would agree to if they had a choice in the matter.

Income Tax is a totally different matter - it is totally the employee's responsibility to file their own taxes. Your employer will provide you with what's known as an "IR8A" form which states the amount of salary, benefits etc that you have received, so you can file your taxes based on that. But there is no withholding of employee's income tax in Singapore.

[Strong Eagle]

CPF is like a government pension scheme. The way it works is that every month, your employer is responsible for paying a certain amount into your CPF, based on your earnings for that month. Your employer is allowed, if they choose, to deduct part of this payment from your monthly salary.

"Employer CPF" refers to the part that the employer cannot deduct from you, therefore it is not deducted from your salary.

"Employee CPF" refers to the part that the employer can (and in this case will) deduct from your salary.

As others have said, it's only applicable to Singapore Citizens and Permanent Residents. You can choose to contribute voluntarily (but cannot force your employer to do so) even if you're not one of the above, but there's no reason you'd want to, to be honest. It's basically lending money to the government at an interest rate that nobody in their right mind would agree to if they had a choice in the matter.

Income Tax is a totally different matter - it is totally the employee's responsibility to file their own taxes. Your employer will provide you with what's known as an "IR8A" form which states the amount of salary, benefits etc that you have received, so you can file your taxes based on that. But there is no withholding of employee's income tax in Singapore.

There are a couple of clarifications required and an error needs to be corrected in the above statement.

First, the error. EP's can no longer voluntarily contribute to CPF. Therefore, as noted only citizens and PR's can/must contribute.

Clarification: Yes, there are employer and employee CPF amounts that are collected and the amount collected is dependent upon total salary and age. Note that for regular salary, the montly maximum is capped at $4,500 and a percentage rate (for age 50 and below) of 14.5% for the employer and 20% for the employee, or $652.50 for the employer and $900 for the employee.

IF the employer chooses to pay the employee CPF, then it is considered an in kind benefit on your income tax form IR8A and will be considered taxable income. So for example, if your monthly salary was $6,000 and your employer paid the employee portion of the CPF, your IR8A would reflect $900 * 12 = $10,800 in kind benefits, subject to income tax. Very few employers pick up employee CPF for the average employee. It's like an automatic 20 percent salary increase.