Are The CPF Rule Changes Good Or Not?
5 changes to CPF rules
#1 Retirement Sum Scheme automatic transfers
#2 Flexibility in deciding when to transfer funds
#3 Simplifying tax relief rules (From 1Jan2022 ONLY!)
Currently, there is a $7,000 tax relief cap for the Retirement Sum Topping-Up scheme (RSTU). You can get it if you are giving to your own SA or to your loved one's SA.
(Love ones = spouse/sibling/parent/grandparents/parents in law based on current RSTU definition for tax relief)
Do note also for tax relief Iva RSTU to spouse and sibling, there is a less than $4,000/year income criteria.
From 1st of Jan 2022, the amount this amount is at $8,000 but the LIMIT WILL BE SHARED with giving your own to medisave via Voluntary contribution (VC-MA)
How does this go?
Right now when you give to your loved one's medisave, they get the tax relief NOT you.
From 1st of Jan 2022, you will be the one who gets the tax relief when giving.
Therefore the total that can be achieved for tax relief is $8,000 for giving to yourself and $8,000 for giving to loved ones. Total $16,000.
This is generally good news for you because medisave amounts are used up for insurance premiums unlike CPFSA which is hardly touched. If you have more than FRS in CPFSA, you'd know that RSTU wouldn't be available for you to tap for contribution to get tax relief.
#4 Quicker disbursement of CPF money when a member dies
There is no change to the nominees' rights to make claims at any time.
Hence, please NOMINATE your CPF to save your claimants the trouble.
Although the duration that CPF money is retained after death will be shortened to six months, nominating it will expedite to within 15 working days from notification of the member's demise.
In addition, with nomination, CPF will contact nominees for you.
Nominating CPF can now be done even online. To find out more, click the article link.
#5 Government to recover grants if eligibility NOT met
Not much is mentioned beyond "Government can recover grants in cases where the grants were automatically issued to eligible members, but the members later chose not to continue meeting the eligibility conditions."
My guess is grants to needy family such as via HOPE scheme and may not concern most citizens.
My thoughts
The new tax rules do indeed give slightly more for contribution to get tax savings.
Elderly parents are likely to have medical needs and are retired which makes tax relief given to them redundant. For this change on the giving to loved ones medisave, I believe many people can tap on it for tax relief.
Voluntary contribution VC still stands at up to $37,740 and self employed members can tap on the full amount. For employed members, the limit of $20,400 still stands and it is the max contribution from mandatory contribution.
If you are looking to save taxes, check out this video on HOW I'M AIMING FOR $80,000 TAX RELIEF!
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