Self-Employed PR - Medisave Top Up?

[IronMac]

Hi all,

Just got this CPF notice asking for a huge (3 times my income tax bill!) top up to my Medisave account. My wife (SG citizen) says to throw a few hundred in and wait for the next notice. Says that I will never use it because I am insured up the wazoo.

A PR friend of mine says to just pay it but he uses his Medisave acct for family.

What says this forum? Thanks.

P.S. I'm very tempted by the 4% interest but if I never get it out...

[sundaymorningstaple]

http://www.acra.gov.sg/NR/rdonlyres/F6E ... ah_CPF.pdf

What happens if SEP fails to Contribute?
ïÂ

[IronMac]

Sigh...

Thanks for the presentation, SMS. Can I use this for anything? The dental is out of the question. Maybe I should ask my insurance agent about the Medisave-approved private integrated plans?

[taxico]

also if you own local businesses, annual renewals will be... difficult.

[ecureilx]

A PR friend of mine says to just pay it but he uses his Medisave acct for family. ..

A PR friend was diligently topping up the CPF Medisave, 4,000 $ each year, though he wasn't in Singapore for the past 2 years .. REP was rejectd .. just saying ..

[sundaymorningstaple]

Just think, when he takes it all out, he'll also get the 4% interest that is being paid on that as well. He's got some coverage for medical and a nice interest rate on a no risk investment.

[katbh]

Do you need to pay medisave if you are self employed? If so, do you wait until you are asked, or are you supposed to do it automatically. I thought you waited until you got a notice. Correct?

[ecureilx]

Do you need to pay medisave if you are self employed? If so, do you wait until you are asked, or are you supposed to do it automatically. I thought you waited until you got a notice. Correct?

with a bit of pun thrown in .. if you are a SC, you can wait for the notice

If you are a PR, not waiting and paying up is prudent

[sundaymorningstaple]

^^^^This!

[katbh]

But if you take your income as 'directors fees' you are not liable to pay medisave. Or have I been advised incorrectly?

[sundaymorningstaple]

You do not have directors in a sole proprietorship. Therefore if you have a business (not a company) you are liable for medisave. If you are a director in a company, the company pays taxes and you will pay taxes on Director's fees and CPF on salaries (which included Medisave in the CPF contributions).

[katbh]

AHHHH but, depends on what definition of 'Self Employed' you use or is intended. You are considered self employed if you are a director of your own company. You are also considered self employed if you have a SP/business.
From my reading, drawing ONLY Directors Fees (no other salary) is the only way you can get around medisave.

[sundaymorningstaple]

If you are a director of your own company you are not self employed. Once a business is turned into a company, then it has a life of it's own. It has to file it own tax return, etc. Just because you are the only director, doesn't make you self employed, it makes you a director of an independent company no longer tax wise directly to you. Of course, as a director of a company you can still beheld legally liable for any illegal wrongdoings of the company, but of course I don't have to tell you that as you are a lot more versed in the legal aspects that way than I could ever hope to be.

But, from a tax point of view, the above stands, at least here in Singapore so I've been informed when I still had my company operational here in Singapore before I gave up my license.

[sundaymorningstaple]

I believe another way is with a company and taking all your pay via dividends. The company will pay all the taxes but you won't have to pay medisave either. Of course if you use either of the dividend OR Director's Fees as a method of tax avoidance, if you are a Foreigner, you could find yourself out of a pass come renewal time. Most can be found back in their country of origin. :-/

My philosophy? It's their ballpark, their balls, their mitts and their rules. If we don't like their game, we can go elsewhere. The taxes here are lower than everywhere else, save HK.

[katbh]

yes...but you tell a bank that! I have been director of companies for over 30 years and I am still considered self employed! Amazing how banks think that someone who has 'worked for themselves' in their own companies for 30 years is more a a risk than an employee earning the same money and liable to be sacked at anytime!

And as far as the Singapore Govt is concerned being a director of your own company makes you 'self employed' when you are seeking an employment pass or applying for PR.

So while a company is a separate legal entity, the people who run it are considered self employed by that 'separate legal entity'. It does not make legal sense but since when did G'ment policy make legal sense...