Advice needed on CPF ERS Scheme for my parents.

The_Davis

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Yes, I believe CPF should be taxed.

Forced savings or not, we make a profit from CPF, therefore we should be taxed.

Of course, people should also be allowed and encouraged to spread their withdrawal over a longer period to enjoy tax-free income. :)

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are you out of your mind?
 

crimsontactics

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are you out of your mind?
Nope.

Average Sinkies won't pay any tax since their annual CPF payout under FRS will be under 20k.

Only richer Sinkies like my parents who opt for ERS have to pay a little tax.

No issue at all.

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JuniorLion

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Yes, I believe CPF should be taxed.

Forced savings or not, we make a profit from CPF, therefore we should be taxed.

Of course, people should also be allowed and encouraged to spread their withdrawal over a longer period to enjoy tax-free income. :)

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Capital gains from property should be taxed too, in your opinion?
 

henrylbh

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Capital gains from property should be taxed too, in your opinion?

Can also be done. Tax on CPF payouts, on capital gain etc. All up to what the government to decide what is 'right thing to do' What I think - reinstate estate duties and all proceeds from sales of properties should be returned to CPF (in proportion to cash used)
 

henrylbh

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Can be done. Like the presidential election - "But I did it, because I strongly believe, and still do, that this is the right thing to do"
 

BBCWatcher

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I agree with Henry: it can be done, and in a way that’d be quite difficult to avoid. “Some people will try to avoid (and evade) taxes” is not a great argument against levying taxes, by the way.

We clearly live in a world of growing wealth inequality where the tax burden urgently needs to shift away from labor and consumption, which tend to be regressive taxes, and more toward passive income, wealth, and externalities (such as carbon emission taxes). In fairness, that’s been happening to some tepid extent lately, with hikes in real estate transfer taxes (stamp duties) and the top marginal income tax rate, although the proposed GST hike would be a step backwards. Singapore has also started to take its first, tentative steps toward pricing greenhouse gas emissions, although it’s much too little and needs to be more (pun intended) energetic. It’s particularly true given the reality that Singapore’s national geographic existence is seriously threatened over decades and century timescales. Our children and grandchildren cannot all live atop Bukit Timah.
 

crimsontactics

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Capital gains from property should be taxed too, in your opinion?
Yes, I believe realised capital gain should be included into that year's income.

But people should be allowed to deduct their past realised investment loss and other costs against it. :)

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crimsontactics

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Can also be done. Tax on CPF payouts, on capital gain etc. All up to what the government to decide what is 'right thing to do' What I think - reinstate estate duties and all proceeds from sales of properties should be returned to CPF (in proportion to cash used)
I also support estate duties.

Anyone taking inheritance will add their value into that year's assessable income. :)

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ELKYme

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Good Sunday BBC & Henry,

Hope you can provide confirmation on 2 questions I have:

1) After RA is created, in order to top-up the RA, the order of transfer from my other CPF accounts would be SA-RA and only after SA is exhausted than OA-RA?
There’s no option to choose from OA-RA leaving RA untouched?

2) Is it confirmed that I can continue to contribute into RA till the prevailing ERS from the age 56-65? (Thought that the ERS amount would be capped on the year I’m 55)
 

crimsontactics

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Good Sunday BBC & Henry,

Hope you can provide confirmation on 2 questions I have:

1) After RA is created, in order to top-up the RA, the order of transfer from my other CPF accounts would be SA-RA and only after SA is exhausted than OA-RA?
There’s no option to choose from OA-RA leaving RA untouched?

2) Is it confirmed that I can continue to contribute into RA till the prevailing ERS from the age 56-65? (Thought that the ERS amount would be capped on the year I’m 55)
Yes to both question. :)

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ELKYme

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Another Q guys, NOOB here :s22:

If I choose the cash to top-up option into RA, is this top-up considered a special RA top-up transaction separate from each FY’s maximum contribution ceiling? ($37,740 this year)

SA earns 4%, and OA earns 2.5%. Using CPF funds to top up a RA draws first from SA then from OA. That’s an expensive source of funds, because you’d lose a lot of interest on what are “on demand” funds for those age 55+.

So it’s better to use cash for your RA top up, if you can afford it, which is probably not enjoying such terrific interest rates, especially not that 4% rate.
 

crimsontactics

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Another Q guys, NOOB here :s22:

If I choose the cash to top-up option into RA, is this top-up considered a special RA top-up transaction separate from each FY’s maximum contribution ceiling? ($37,740 this year)
To the best of my knowledge, no.
The annual limit concerns more on OA/SA/MA while RA limit is determined by that year's ERS.

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JuniorLion

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1) After RA is created, in order to top-up the RA, the order of transfer from my other CPF accounts would be SA-RA and only after SA is exhausted than OA-RA?
There’s no option to choose from OA-RA leaving RA untouched?


I assume your last sentence means "There's no option to choose from OA-RA leaving SA untouched?

The answer is "SA Shielding Trick". Search the forums for this keyword and you'll find your answer.
 

ELKYme

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Thanks Junior.
Yes, BBC has enlightened me on how to go about doing the SA shielding (deeply appreciated) which I’ll be doing right before I turn 55. However, that would be the only time that I intend to do it.
After that, will likely use cash to bump up my RA from FRS to ERS. Doing shielding again at 57/58 to fully utilise whatever SA accumulated during those few years may not be worthwhile as I’d still need to leave 40K in SA which will be transferred to RA together with the SA funds.

I assume your last sentence means "There's no option to choose from OA-RA leaving SA untouched?

The answer is "SA Shielding Trick". Search the forums for this keyword and you'll find your answer.
 

BBCWatcher

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If I choose the cash to top-up option into RA, is this top-up considered a special RA top-up transaction separate from each FY’s maximum contribution ceiling? ($37,740 this year)
The CPF Annual Limit does NOT apply to Special Account top-ups (below age 55) or to Retirement Account top-ups (age 55+). It’s possible to top up a newborn CPF member’s Special Account all the way to the Full Retirement Sum in one go.

Yes, BBC has enlightened me on how to go about doing the SA shielding (deeply appreciated) which I’ll be doing right before I turn 55. However, that would be the only time that I intend to do it.
If your Retirement Account is filled up to the Full Retirement Sum when it’s formed on your 55th birthday, and if you still have Ordinary Account funds left over, you can then transfer those OA funds into your RA while the SA “shield” is still raised. For this reason, and before your 55th birthday (but near it), you may wish to consider repaying some/all of the OA that you used for housing.
 
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