CPF Easy Info Thread. :)

[akwl88]

Parent Relief
YA 2010 to YA 2014 From YA 2015
Taxpayer Stays with Dependant
$7,000 per dependant
$9,000 per dependant

 

[akwl88]

The Working Mother's Child Relief (WMCR) is given to:

Reward families with children who are Singapore Citizens
Encourage parents to take up Singapore citizenship for their children
Encourage married women to remain in the workforce after having children
Single or male taxpayers are not eligible for this relief.

 

[oceanicmanta]

To save that $1540 a year, you must be earning around $330k a year.

That's out of reach to the average Sinkie.

Their real savings is actually way way lower due to SG low tax rates.

Thus tax saving is not important at all.

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For me, its weighing the Value of Cash at Hand vs Amount of Tax Relief received. I benefit from getting both tax relief and compound interest.

It's not always Tax Relief is more important than Compound Interest or vice versa. As mentioned, it depends on individual's tax and cash situation.

For someone (mata_hippo) earning high 5 figures a month, that's got to be a consideration.

 

[crimsontactics]

For me, its weighing the Value of Cash at Hand vs Amount of Tax Relief received. I benefit from getting both tax relief and compound interest.

It's not always Tax Relief is more important than Compound Interest or vice versa. As mentioned, it depends on individual's tax and cash situation.

For someone (mata_hippo) earning high 5 figures a month, that's got to be a consideration.

I see.

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[highsulphur]

For me, its weighing the Value of Cash at Hand vs Amount of Tax Relief received. I benefit from getting both tax relief and compound interest.

It's not always Tax Relief is more important than Compound Interest or vice versa. As mentioned, it depends on individual's tax and cash situation.

For someone (mata_hippo) earning high 5 figures a month, that's got to be a consideration.

problem is you have to choose btw tax relief and interest from early compounding.

I chose the latter as I have no idea what my income will be in the future. I was constrained later as I was unable to top up my SA but I guess you can't have it both ways

 

[crimsontactics]

problem is you have to choose btw tax relief and interest from early compounding.

I chose the latter as I have no idea what my income will be in the future. I was constrained later as I was unable to top up my SA but I guess you can't have it both ways

True.

Compound interest is very important!

 

[oceanicmanta]

ok, maybe I m just extremely adverse to paying taxes

 

[highsulphur]

ok, maybe I m just extremely adverse to paying taxes

you are not wrong. I did think of the same as well.

actually for working mums, they should max SA as their tax relief is already gao gao

 

[elnewbie]

For me, I'm in the 20% bracket and $1400 is still a lot of money.

Which banking or insurance product out there will give you 20% cashback in the 1st year?

I think tax relief should be secondary.

Assuming you're paying 22% tax on that 7k, you only save $1540.

The compound interest is more important.

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[elnewbie]

That's what I was alluding to a few days ago. If your tax rate is low, better to do a VC topup since the opportunity cost is low too.

Or for working mums, if they already exceed the max tax relief cap of 80k, then VC is a better option than RSTU.

At SG median wage of $42k per annum.

Assuming you're a male.

Earned Income Relief = $1,000
NSman Relief w no ICT = $1,500
CPF Fund Relief = $8,400

The only taxable wage is $31.1k

Tax saved only $235.

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[crimsontactics]

For me, I'm in the 20% bracket and $1400 is still a lot of money.

Which banking or insurance product out there will give you 20% cashback in the 1st year?

I think you misunderstood what I meant.

Given the choice between investing early (thus not receiving any tax relief) and investing later (receiving tax relief), I will invest earlier because the compound interest is more than what I can save through tax.

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[crimsontactics]

That's what I was alluding to a few days ago. If your tax rate is low, better to do a VC topup since the opportunity cost is low too.

Or for working mums, if they already exceed the max tax relief cap of 80k, then VC is a better option than RSTU.

Actually I disagree.

With VC, some of your money is place into MA.

This is something I don't like as you can't withdraw MA for retirement.

I prefer to focus my attention on RSTU to hit FRS, then use VC on all 3 accounts to increase my SA.

I will let MA increase naturally.

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[bladez87]

The refund does not include interest.

No interest will be paid to any refunded amount..

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You are missing my point.
Is the interest defined as the interest on refunded amount at end of year.
Or is it the interest generated by that amount pumped in inflate the cpf accounts prematurely?

Theoretically by year end my cpf will be 37k higher than last year end. But it will be staggered so approximately 37k/12, with each month organic contributions going in. But because we pump in Jan, my cpf as at jan will be x+37k instead of x+3k where 3k is the organic contribution.

And since cpf interest is calculated based on the lowest amount of each month, it should already contain the +37k inside.

Then at year end, cpf refund me the balance of the 37k that are excess.

Anyone get my point?

 

[bladez87]

For me, its weighing the Value of Cash at Hand vs Amount of Tax Relief received. I benefit from getting both tax relief and compound interest.

It's not always Tax Relief is more important than Compound Interest or vice versa. As mentioned, it depends on individual's tax and cash situation.

For someone (mata_hippo) earning high 5 figures a month, that's got to be a consideration.

I think is high 5k, not high 5 figures like 50000-99999

 

[henrylbh]

You are missing my point.
Is the interest defined as the interest on refunded amount at end of year.
Or is it the interest generated by that amount pumped in inflate the cpf accounts prematurely?

Theoretically by year end my cpf will be 37k higher than last year end. But it will be staggered so approximately 37k/12, with each month organic contributions going in. But because we pump in Jan, my cpf as at jan will be x+37k instead of x+3k where 3k is the organic contribution.

And since cpf interest is calculated based on the lowest amount of each month, it should already contain the +37k inside.

Then at year end, cpf refund me the balance of the 37k that are excess.

Anyone get my point?

My understanding, your 'organic' contributions in excess of annual limit will be refunded quarterly without interest. At end of year, interest will be adjusted according to 'organic' contributions and VC within annual limit.

May be your only gain is the VC in excess of organic contributions within annual limit done in Jan.

 

[mata_hippo]

Haha yes high 5k, not 5 figures (very far away)... sorry wasn't clear...

I think is high 5k, not high 5 figures like 50000-99999

 

[mata_hippo]

I was jus looking at the cpf website and see that vc falls under the employer schemes

Only the rstu falls under the individual scheme.

We can do this vc on our own?

Or am i looking at the wrong stuffs?

Pardon my ignorance, still tryingto gain clarity on wads most optimal for ppl like me...

I do make some small blue chip investments for dividents but still a super beginner on that, if this info helps in the assessment of my status...

 

[elnewbie]

Can be done. The form is VC-1

I was jus looking at the cpf website and see that vc falls under the employer schemes

Only the rstu falls under the individual scheme.

We can do this vc on our own?

Or am i looking at the wrong stuffs?

Pardon my ignorance, still tryingto gain clarity on wads most optimal for ppl like me...

I do make some small blue chip investments for dividents but still a super beginner on that, if this info helps in the assessment of my status...

 

[crimsontactics]

I was jus looking at the cpf website and see that vc falls under the employer schemes

Only the rstu falls under the individual scheme.

We can do this vc on our own?

Or am i looking at the wrong stuffs?

Pardon my ignorance, still tryingto gain clarity on wads most optimal for ppl like me...

I do make some small blue chip investments for dividents but still a super beginner on that, if this info helps in the assessment of my status...

Yes we can do VC on our own.

It's on the same page as RSTU.

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[elnewbie]

Can even do this on AXS.

Yes we can do VC on our own.

It's on the same page as RSTU.

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