CENTRAL PROVIDENT FUND CONTRIBUTIONS (Liability to Estate duty)

Mr Ng Kah Ting asked the Minister for Finance whether contributions to the Central Provident Fund will be liable to estate duty in the case of a contributor who dies before reaching the age of 55 years and whose CPF contributions alone exceed $100,000; whether it will be fair to impose estate duty in respect of the CPF contributions in such a case; and if he will consider exempting the CPF contributions from estate duty or separating the contributions from the estate of a contributor who has the misfortune to die prematurely.

The Senior Minister of State for Finance (Mr Goh Chok Tong): Mr Speaker, Sir, contributions to the Central Provident Fund of a deceased person are liable to duty under the Estate Duty Act. For purposes of calculating the duty payable, the contributions are aggregated with the deceased's estate. Estate duty is payable on the value of the estate in excess of $100,000 whether or not the estate comprises wholly of CPF contributions.

There is no compelling reason to accord special treatment to CPF contributions from the other assets of a person who dies before the age of 55. Moreover, the provisions of the Estate Duty Act do not discriminate on grounds of age of a deceased person.

Besides, other forms of provisions for old age and dependants, such as insurance policies, family homes and superannuation or retirement benefits also do not enjoy special consideration for estate duty purposes.

Contributions to the Central Provident Fund are exempt from income tax up to a limit of $4,000 a year, which is generous enough. Contributions by employers are tax deductible, and at the same time do not incur income tax for the beneficiaries. It is difficult therefore to justify additional tax concessions for CPF contributions under the Estate Duty Act. That Act does not provide either for special concessions for those who die before their 55th year, and I see no reason to make an exception for CPF contributions.