You can open a Supplementary Retirement Scheme (SRS) account with authorised local banks to enjoy tax benefits. Singapore citizens, permanent residents and foreigners are eligible for the SRS scheme.
- Both you and your employer can contribute to your SRS account.
- Contributions to SRS are eligible for tax relief if you are assessed as a tax resident.
- You can invest the funds in your SRS account.
- Investment gains are tax-free before withdrawal.
- Only 50% of the withdrawals from SRS are taxable at retirement.
Step 1: Check your eligibility
Both you and your employer are allowed to make SRS contributions in the current year if:
- You earn any form of income, e.g. employment income (including directors’ fees), trade income and rental income in Singapore;
- You are at least 18 years of age;
- You are not an undischarged bankrupt; and
- You do not suffer from a mental disorder that makes you incapable of managing yourself or your affairs.
Your employer’s contribution to your SRS account is part of your remuneration and taxable as income.
Step 2: Open an SRS account
You can open an SRS account at participating branches of these banks:
You can have only one SRS account at a time. It is an offence to open SRS accounts with more than one bank.
However, you may transfer your SRS account between different banks.
Step 3: Deposit funds into your SRS account
You and your employer may contribute any amount to your SRS account, up to the maximum SRS contribution.
The following table shows the yearly maximum SRS contribution allowed:
||Citizen/ Permanent resident
|SRS contribution rate
|Maximum SRS contribution
(SRS contribution rate × Absolute income base*)
|(15% × $85,000)
|(35% × $85,000)
|* The absolute income base, based on 17 months of your CPF monthly salary ceiling, is revised regularly. Please check the MOF website for the latest figure.
To make a contribution to your SRS account:
- Drop a cheque into a deposit box located at any branch of partipating banks; or
- Go to a customer counter at any bank branch for cash payment.
To enjoy tax benefits for this year’s income, you must make your SRS contribution by 31 December. If you are paying by cheque, your cheque deposit must be cleared by 31 December.
If you are a foreigner
You need to complete the declaration form for SRS for your bank to calculate your maximum SRS contribution. Should you become a Singapore citizen or permanent resident within the year of contribution, you should ask your bank to recalculate your maximum contribution.
Penalties may be imposed if you make a false declaration and contribute in excess. For example, if you declare that you are a foreigner even though you were already a permanent resident at the time of contribution, it is considered an offence.
Step 4: Claim your tax relief
You are entitled to an SRS tax relief in the Year of Assessment following the year of your contribution, if you are a “tax resident” for that Year of Assessment. For example, if you are considered a tax resident for the Year of Assessment 2012 (YA2012), your relief is based on the actual SRS contribution made by you and your employer in 2011.
You are considered a tax resident for a particular Year of Assessment (YA) if you are:
- a Singapore citizen; or
- a Singapore Permanent Resident (SPR) and have established your permanent home in Singapore; or
- a foreigner who has stayed in Singapore for 183 days or more in the year preceding the Year of Assessment; or
- a foreigner who is not a director of a company and has worked in Singapore for 183 days or more in the year preceding the Year of Assessment.
How to claim
Your claim is automatically calculated based on information from your bank. You do not need to file a claim for SRS tax relief in your annual tax returns.
|Less: personal tax reliefs
|Employee CPF contribution*
|Total tax relief
| * Assumes that taxpayer is below the age of 50
** Based on YA2012 tax rates
If you are a permanent resident or foreigner
If you are seeking tax clearance and wish to claim relief on your contributions made in the year of cessation/departure, you must obtain an SRS statement of contributions/withdrawals from your bank.
Step 5: Invest your SRS savings
Your SRS savings account can be invested in financial products, such as life insurance, annuities and investment funds, including those offered by financial institutions other than your bank. Your bank will be able to provide information on the SRS products they offer.
The SRS scheme does not guarantee a specific rate of return on your investments. Your actual returns will depend solely on the investment choices you make.
Direct property investments are not allowed.
For life insurance products, these conditions apply:
- Only single premium products are allowed (including recurrent single premium products, encompassing both annuity and non-annuity plans);
- Life cover (including total and permanent disability benefits) will be capped at three times the single premium;
- Plans can allow for a contribution continuation feature/benefit upon disability;
- Other types of life insurance e.g. critical illness, health and long-term care are excluded; and
- Trust nomination is not allowed for life insurance products purchased using SRS funds.
Any balance in the SRS accounts that is not invested earns interest at the market rate. You may wish to approach participating banks for more information.
Step 6: Withdraw from your SRS account
To withdraw funds from your SRS account, contact your bank. You can withdraw from your SRS account at any time, but only in cash.
You need not declare the withdrawal to the Inland Revenue Authority of Singapore (IRAS). The bank will inform IRAS on your behalf.
Typically, withdrawals from SRS fall under three scenarios: retirement, death and early withdrawal.
Withdrawal on retirement
You can withdraw your SRS monies over 10 years. 50% of the amount withdrawn will be taxed. Spreading out your withdrawals will generally result in greater tax savings.
To be penalty-free, the withdrawal has to be made after the statutory retirement age at the time of your first SRS contribution. For example, the statutory retirement age is currently 62 years. Hence you can withdraw the SRS monies any time after you turn 62 and no penalty will be imposed.
If there is any balance in the SRS account at the end of the 10th year, and you choose not to withdraw the amount, it will be deemed to be fully withdrawn. 50% of the amount will be taxed.
For investments in life annuities, so long as you continue to receive your annuity payout from the insurance companies in perpetuity, 50% of the amount will be subject to tax.
Withdrawal on death
Under the law, where an SRS member dies, the sum in their SRS account is automatically considered withdrawn.
Your legal personal representative (LPR) should inform your bank and withdraw your SRS monies.
Early withdrawals are subject to a 5% penalty, except in these situations:
- Death of SRS account holder
- Loss of physical or mental ability that permanently prevents you from working (to complete and submit this application form)
- Lump-sum withdrawals by foreigners (but not permanent residents) who have maintained the SRS account for at least 10 years from the date of first contribution and have been a non-Singaporean for a continuous period of 10 years before the date of withdrawal.
For more information on the scheme, please refer to the IRAS website.