How does a CPF cash top-up to the Special Account provide tax relief?

Making a voluntary cash top-up to your CPF Special Account (SA) or Retirement Account (RA, if you are 55 and above) is one of the most effective ways to reduce your income tax in Singapore. This falls under the Retirement Sum Topping-Up (RSTU) scheme.

Tax relief amounts:

• Up to S$8,000 tax relief for cash top-ups to your own SA or RA.
• Up to S$8,000 additional tax relief for cash top-ups to your family members' SA or RA (spouse, parents, parents-in-law, grandparents, grandparents-in-law, siblings, or children).
• This means a maximum of S$16,000 in tax relief per year from CPF top-ups alone.

How it saves tax (example):

If your chargeable income is S$100,000 and you make a S$8,000 top-up to your own SA, your chargeable income drops to S$92,000. At the 11.5% marginal rate, this saves you S$920 in income tax, while your S$8,000 earns 4% per annum interest (guaranteed) in your SA.

Important conditions:

• Top-ups must be in cash (not CPF-to-CPF transfers) to qualify for tax relief.
• The recipient's SA or RA must not have reached the current Full Retirement Sum (FRS) of S$205,800 (for members turning 55 in 2024).
• Top-ups are irreversible. The money cannot be withdrawn until retirement age.

How to top up: Log in to the CPF website and use the Retirement Sum Topping-Up Scheme e-service, or transfer via PayNow (CPF account number).