CENTRAL PROVIDENT FUND TAX BENEFITS (Extension to self-employed)

Mr Noris Ong Chin Guan asked the Minister for Manpower, in view of the Government's encouragement to Singaporeans to adopt a more risk-taking entrepreneurial spirit, whether his Ministry intends to extend the Central Provident Fund tax benefits for the self-employed to take into account a "notional employer's contribution" so as to bring them in line with the CPF contribution level of employees and thereby overcome the less attractive features of the proposed Supplementary Retirement Scheme.

The Minister of State for Manpower (Encik Othman bin Haron Eusofe) (for the Minister for Manpower): Sir, currently tax exemption is granted for compulsory CPF contributions. Hence, all employees enjoy tax exemption on both employers' and employees' compulsory CPF contributions. For self-employed persons, CPF contributions are not compulsory with the exception of Medisave contributions. However, to encourage self-employed persons to contribute to CPF voluntarily for their retirement needs, we also allow self-employed persons tax exemption for their CPF contributions up to 20% of their net trade income (subject to a maximum of $14,400). The Ministry of Finance is reviewing this limit. The Supplementary Retirement Scheme (SRS), a voluntary retirement scheme to be launched next year, will provide an alternative avenue for individuals to save for retirement. Both employees and self-employed persons participating in the SRS will enjoy similar tax benefits.