A Useful Guide on SRS Contributions And It’s Tax Reliefs
Interested in getting more tax reliefs, obtaining tax-free investment returns and preparing for retirement all at the same time? The Supplementary Retirement Scheme (SRS) is a governmental grant that is the perfect candidate.
What is SRS?
The Supplementary Retirement Scheme (SRS) is a voluntary scheme set by the Singapore government to prepare residents for their retirement purposes. This is on top of their Central Provident Fund (CPF) savings. Contrary to CPF, SRS is optional and are for individuals who want to reap the benefits of contributing to their SRS account.
Contributions to SRS are eligible for tax relief and can allow contributors to pay lesser income tax. The investment returns in SRS are also tax-free and only 50% of the withdrawal are taxable during retirement. Here’s more information on tax for SRS withdrawals.
Note: SRS contributions are eligible for tax relief for the following year. So, if you happen to be contributing to your SRS account by December 31st, 2024, you may expect your tax relief in the year of assessment 2024 (which is usually filed by you in 2025)
Keep in mind, you won’t be able to contribute your entire income to SRS and get away with the tax-free scenario because you are only eligible to stash away $15,300 into your SRS account every year.
How to get started with SRS
You first need an SRS account. To open one, you need to be either a Singapore citizen, Singapore permanent resident (SPR), or a foreigner who can obtain any form of income and can potentially make SRS contributions in the current year.
You also need to be;
- At least 18 years old
- Free from any mental disorder
- Not an undischarged bankrupt
- Stable to manage yourself and your whereabouts
You can choose to open your SRS account with any of the operators below:
- DBS Group Holdings Ltd
- Overseas-Chinese Banking Corporation (OCBC) Ltd
- United Overseas Bank (UOB) Ltd
Note: You can only have 1 SRS account. It is an offense to open SRS accounts with more than 1 operator.
You will also need to produce the following documents:
- Completed Declaration Form for SRS (For Foreigners)
- Identity card/Passport
Changing SRS bank operator
You can change the bank operator of your SRS account. Simply fill in the “Transfer of Account Form” from your new bank operator, and they will help you with the transfer thereafter.
SRS contributions and tax reliefs
Contributions made by the end of the year will be eligible for SRS tax relief in the following Year of Assessment. However, it is still advised to check with your respective bank operations on the exact cut-off dates.
You or your employer can contribute (only in cash) to your SRS account anytime, until the maximum SRS contribution for the year. However, your SRS contribution cannot be functional if you start withdrawing from your SRS account;
- Or if you attained your retirement age that prevailed when the first SRS contribution was made.
- On medical grounds
For Singapore citizens and Singapore permanent residents, the maximum SRS contributions per year is S$15,300. For foreigners, it is S$35,700.
Do you qualify for SRS tax relief?
Following the year of contribution, you will be allowed tax relief only if you are a tax resident for that year of assessment. Moreover, a personal income tax relief cap of $80,000 applies to the total amount of the tax relief.
You won’t be allowed SRS tax relief if:
1. Your SRS account is suspended from December 31st of the following year of contribution or;
2. The contribution amount is withdrawn from your SRS account in the same year it is made
If you meet the eligibility criteria for the SRS tax relief, the relief amount is determined by the total SRS contribution made by you and/or your employer (on your behalf) in the previous year.
