As I have attained full retirement sum of $198,800 for 2023 in my CPF Special Account, I could not make voluntary top-up under Retirement Scheme Top-Up to qualify for tax relief.
A maximum tax relief of $8,000 applies when we top up our own CPF SA or RA, and an additional tax relief of $8,000 if we top up loved ones' CPF SA or RA. The combined $16k tax relief on COF cash top-ups is shared with any contribution to MA of our own or loved ones.
I have already top up my mum CPF RA with $8k and my own Supplementary Retirement Scheme account by $15,300 early this year to qualify for tax relief.
The other options for tax savings would be to enroll in courses, make donations to qualified charity organisations or to make top up to Medisave account.
After spotting that my CPF Medisave account (MA) is no longer at the Basic Healthcare Sum (BHS) of $68,500 for 2023 after deductions of Medishield Life premiums were made days ago, I sensed this opportunity for a Medisave top-up to qualify for some tax relief.
Effectively, I would be making cash top-up of $693.64 which are the total premium costs, back to my CPF Medisave account from my pocket.
However, fret not, I am not taking my own cash to pay for insurance premiums which could be offset by CPF Medisave.
Thank you Aims Apac Reit for the sponsorship!
There it goes. Using Paynow for instant top-up and reflection in the CPF transaction.
Restoring my MA back to BHS, earning potentially 4.08% for 2024 in Medisave worth $28 and saving at least 9% of income taxes worth around $62.
Thanks for reading. Stay focused and remain steadfast as always!
With love & peace,
Qiongster
I dont think the effective interest rate is 4.08% or the so call 4%. CPF interest calculation is unlike other FIs. The interest rate calculated for that next month is based on the Lowest Balance in the preceding month (compared to average daily balance in FIs).
ReplyDeleteAlso, the interest earned in any of the months for that year is paid out only in Jan of the next year.
Thanks for highlighting the rules. If we do maintain the balance in our MA and SA (which cannot be spent), earning an effective interest rate of at least 4% or 4.08% for first 3 months of 2024 is not difficult. For OA, we may use it for investments or housing, hence not easy to maintain its balances throughout the year.
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