Enjoy tax savings and grow your savings when you contribute and invest with SRS

What is Supplementary Retirement Scheme(SRS)?

The Supplementary Retirement Scheme (SRS) is a voluntary scheme to encourage individuals to save for retirement, over and above their CPF savings. Contributions to SRS are eligible for tax relief. Investment returns are tax-free before withdrawal and only 50% of the withdrawals from SRS are taxable at retirement.

Who is eligible to open an SRS account

Singapore Citizens, Singapore Permanent Residents (SPRs) and foreigners who derive any form of income may make SRS contributions in the current year. You must be:

1. At least 18 years of age;

2. Not an undischarged bankrupt;

3. Not having a mental disorder; and

4. Capable of managing yourself and your affairs.

SRS contributions and tax relief

All SRS contributions must be made by 31 Dec of the year or as your SRS operator requires, to be eligible for SRS tax relief in the following Year of Assessment. However, you are advised to check with your SRS bank operator about the cut-off date for SRS contributions.

SRS accounts are managed by 3 bank operators:

• DBS Group Holdings Ltd

• Overseas-Chinese Banking Corporation (OCBC) Ltd

• United Overseas Bank (UOB) Ltd

Making SRS contributions

You and/or your employer (on your behalf) may contribute at any time, and as often as you like, subject to the maximum SRS contribution for the year. Contributions must be made in cash.

However, SRS contributions cannot be made if you start withdrawing from your SRS account:

1. at or after the statutory retirement age that was prevailing when you made your first SRS contribution; or

2. on medical grounds.

SRS tax relief

You will be allowed SRS tax relief in the Year of Assessment following the year of contribution, provided you are a tax resident for that Year of Assessment. However, a personal income tax relief cap of $80,000 applies to the total amount of all tax reliefs claimed (including relief on SRS contributions).

You will not be allowed SRS tax relief if:

1. Your SRS account is suspended as at 31 Dec of the year of contribution; or

2. The amount of such contribution is withdrawn from your SRS account in the same year of contribution.

If you are eligible for the SRS tax relief, the relief amount is the actual amount of SRS contribution made by you and/or your employer (on your behalf) in the preceding year.

You do not need to make a claim in your Income Tax Return as it will be allowed automatically based on the information provided by the SRS operator. The SRS tax relief will be reflected in your Income, Deductions and Reliefs Statement when you e-File.

Here's an illustration of how much you could save in taxes:

Investing your SRS funds

Maximise growth of your SRS by investing it. By doing so, you earn potentially higher interest, as your balance in the SRS account earns only 0.05% interest p.a.. What’s more, you get to accumulate tax-free returns on your investments.

If you want to find out how you can invest and grow your SRS funds, feel free to contact me for a discussion.