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Income Tax Planning: SRS vs CPF Cash Top-ups

Panerex77

By Panerex77,
in Investment & Financial Matters

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Wind30

Wind30

Turbocharged
1 hour ago, Ct3833 said:

5% penalty plus income tax equivalent to the amount you draw out from your SRS account. 

I can literally withdraw it anytime if I lose my job?

If you think about it, the first 40k is around 1% tax rate, even with the 5% penalty it is lower than what i pay to the government in income tax. 

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Ct3833

Ct3833

Supersonic
3 hours ago, Wind30 said:

I can literally withdraw it anytime if I lose my job?

If you think about it, the first 40k is around 1% tax rate, even with the 5% penalty it is lower than what i pay to the government in income tax. 

basing on what is stated in the SRS publication, you are correct. Dont forget the amount will subject to tax as well. Assuming a person get retrenched in July, he has 7 months of salary being taxable, if he withdraw SRS in the same year, the amount withdrawn from SRS will be added into his 7 months income  for tax assessment. So if one will to withdraw his SRS immediately  upon retrenchment , there will be income tax implication. 

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Lala81

Lala81

Hypersonic

I'm not sure if premature withdrawal, how does it work.

If u withdraw after 62/65 (depends on when did u 1st put $ into SRS), u have 10 years to withdraw the entire amount. So the tax u will incur then will also need to be accordingly planned. 

 

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Ct3833

Ct3833

Supersonic
(edited)
6 minutes ago, Lala81 said:

I'm not sure if premature withdrawal, how does it work.

If u withdraw after 62/65 (depends on when did u 1st put $ into SRS), u have 10 years to withdraw the entire amount. So the tax u will incur then will also need to be accordingly planned. 

 

Only 50% of SRS withdrawals is taxable, assuming one withdraws $40k in a year, his taxable amount is $20k, if a person has no other income, then his tax assessment is only that 20k, which is 0% income tax based on current tax rate.

Edited by Ct3833
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Dp26

Dp26

5th Gear

If someone has more than 400k in SRS, then the planning will have to be more detailed if not might have to pay a little bit of tax.... 

Or buy an approved annuity 

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Didu

Didu

Turbocharged

I just topped up into my wife's CPF's SA. Let's see if it's tax relief shows up in my next income tax statement.

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Wind30

Wind30

Turbocharged

Just opened my SRS account. Going to put some money in it.... The stupid thing is I need to figure what to do with the 15k sitting inside it.

Is there like a low maintenance thing to buy that I don't have to keep track of it? 

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Throttle2

Throttle2

Supersonic
1 minute ago, Wind30 said:

Just opened my SRS account. Going to put some money in it.... The stupid thing is I need to figure what to do with the 15k sitting inside it.

Is there like a low maintenance thing to buy that I don't have to keep track of it? 

Why you bother with SRS?  Small money dont waste your time and effort

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inlinesix

inlinesix

Hypersonic
4 minutes ago, Wind30 said:

Just opened my SRS account. Going to put some money in it.... The stupid thing is I need to figure what to do with the 15k sitting inside it.

Is there like a low maintenance thing to buy that I don't have to keep track of it? 

Bank stock

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Throttle2

Throttle2

Supersonic

This cpf income tax saving thing is just a gimmick to me.

The savings are insignificant and comes with all sorts of terms and conditions .....so troublesome....headache

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Wind30

Wind30

Turbocharged
(edited)
11 minutes ago, Throttle2 said:

Why you bother with SRS?  Small money dont waste your time and effort

small money to you lah...

Did I get my calculations wrong? I assume $15k is totally exempt from tax. If your tax bracket rate is around/near 20% which most people should be (over $160k is already 18%), the savings is $3k?

that is quite a lot what... 

Especially you can withdraw anytime with just 5% penalty.... once you retire.

Edited by Wind30
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Throttle2

Throttle2

Supersonic
2 minutes ago, Wind30 said:

small money to you lah...

Did I get my calculations wrong? I assume $15k is totally exempt from tax. If your tax bracket rate is around/near 20% which most people should be (over $160k is already 18%), the savings is $3k?

that is quite a lot what... 

The restrictions and conditions that come with it just isnt to my liking.  Headache lah. I try not to fret the small things.

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Ct3833

Ct3833

Supersonic
(edited)

It is Nov now, next month will be the last month to deposit  money into your SRS. do i tearly before you miss the dateline. 

Edited by Ct3833
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RadX

RadX

Moderator
16 minutes ago, Ct3833 said:

It is Nov now, next month will be the last month to deposit  money into your SRS. do i tearly before you miss the dateline. 

Waiting for offers ahhaha

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Dp26

Dp26

5th Gear
15 hours ago, awhtc said:

I figured out that for someone with significant passive income, IRAS will come back to reclaim quite a lot of income tax when you start withdrawing SRS.

That is if your passive income is taxable, ie rental 

 

if your passive income is like bond coupons, dividends then as of current structure it’s not taxable. 

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