CPF Contribution in Singapore
Central Provident Fund or CPF Contribution is a contribution to Singapore retirement fund set up by the government for Singaporean and Singapore Permanent Resident. It is a mandatory contribution by both employer and employee for Singaporean and Singapore Permanent Resident when they are remunerated.
Do you need our support service for Central Provident Fund (CPF) Contribution? Though you may be a new start-up business with one-man operation and may not need much accounting support, the CPF Contribution for yourself or your part-time or short-term employees is still required. If you are not sure how to proceed with the CPF Contribution, we are here to help.
Apply for CPF Submission Number (CSN)
You have to open an account and apply for the CSN before your business can contribute CPF for you and your employees. The CSN application must be completed and submitted online with your SingPass. In the near future, CorpPass will be used instead (i.e. CorpPass will replace SingPass for business transaction in the future). After the online registration of CSN, you should receive a letter from CPF Board notifying you of the application status.
Though the payment of CPF Contribution can be made by Nets or Cheque, the most convenient mode is still the GIRO. You should download and complete the GIRO formso that the CPF Contribution can be deducted automatically from your business bank account without the hassle of issuing cheques or entering the PIN to authorize a deduction via Nets or internet banking.
How much to Contribute to CPF?
The CPF Contribution rate for most of us is 17% and 20% for employer and employee respectively in Year 2016. You would not wish to under contribute the CPF amount for your employees because this will attract interest and/or penalty from CPF Board. You also would not wish to over contribute the CPF amount for your employee because the excess contribution means you pay more than necessary as an employer and the excess CPF Contribution becomes taxable income to the employee. So how do you ensure that your CPF Contribution amount is correct? You may wish to use the CPF calculator provided by CPF Board. If there are additional wages (i.e. non-monthly payment like bonus) and CPF capping issue, you may wish to perform your own calculation to confirm the amount provided by the CPF calculator. You may refer to this CPF capping illustration to assist you in the calculation.
How about the Skills Development Levy (SDL) and Donations?
The Skills Development Levy (SDL) is automatically calculated by the CPF website when you select the right option. SDL is used to fund workforce upgrading and training programs when employers send their employees to attend training under the National Continuing Education.
Donations to CDAC, SINDA, ECF and MBMF have to be calculated by you (i.e. the CPF website does not automatically calculate). For your convenience, please click for CDAC rates, SINDA rates, MBMF rates and ECF rates to check the appropriate rates to contribute.
By default, employees have to make the donation if they did not opt out from it. The donation is borne by the employees (i.e. deducted from employee’s salary) while SDL is borne by the employer (i.e. not deducted from the employee’s salary but an additional amount which the employer has to pay). If employees wish to opt out of the donation, they need to download the relevant form from the respective organization (i.e. CDAC, SINDA, etc) and submit it.
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