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Singapore – Budget 2014 Brings Changes to Central Provident Fund

Singapore – Budget 2014 Brings Changes to Central...

Singapore’s 2014 Budget Statement includes increased Central Provident Fund contributions, higher tax relief for resident taxpayers supporting their parents and other dependents, and the repeal of certain tax provisions.


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Flash Alert 2014-027

Singapore’s recently-presented 2014 Budget Statement includes proposals impacting individuals such as increases in the contributions due to the Central Provident Fund for employers as well as employees, higher tax relief for resident taxpayers supporting their parents and other specified dependents, and the repeal of certain tax provisions.


The tax changes may affect cost projections for future assignees and budgeting for international assignments to Singapore or from Singapore where the assignee will be subject to Singapore taxation.  Furthermore, the resultant tax differential may impact tax equalizations.

The 2014 Budget Statement was presented by Deputy Prime Minister and Minister for Finance, Mr. Tharman Shanmugaratnam, in Parliament on 21 February 2014.1

Increase in Contributions to Central Provident Fund (CPF)

Present Situation:  See the table below.

Proposed Change:  CPF contributions from employers and employees will be increased between 0.5 percent and 2.5 percent depending on the age of the employees as shown in the table below.



Employee Age

Present Position

Proposed Change

Employee Portion (%)

Employer Portion (%)

Total (%)

Employee Portion (%)

Employer Portion (%)

Total (%)

50 and below







Above 50 to 55







Above 55 to 60







Above 60 to 65







Above 65








The rationale for the increase is to help provide for the future health-care and retirement needs of employees. 

Employers will receive a one-year special credit from the government to help partially fund the increase in employer contributions.  These credits are in the form of payments from the government to the employer to defray the cost of the CPF increase.

Effective starting 1 January 2015.  

Higher Relief for Supporting Parents and Handicapped Dependents

If a resident taxpayer supported his or her parents (including grandparents, parents-in-law, or grandparents-in-law) or handicapped dependents during the year, the taxpayer can claim higher reliefs as compared with the present reliefs.  The increase in relief ranges from S$1,000 to S$3,000.

The rationale for increasing the relief is to further encourage and support individuals who care for their parents and handicapped dependents.

Effective for Year of Assessment (“YA”) 2015.

Repeal of Certain Tax Provisions

The following provisions would be repealed to simplify the tax system.

Inter-Spousal Transfers of Qualifying Deductions and Deficits

Present Situation:   A married taxpayer can transfer to the spouse his/her deductions and deficits for unabsorbed trade losses and capital allowances, unutilized donations, and rental deficits for a particular year of assessment.  The unabsorbed trade losses and capital allowances can be also be carried back to reduce the income of the spouse for the immediate preceding year of assessment.      

Proposed Change:  No transfer will be allowed from YA 2016.  As a concession, deductions and deficits incurred before YA 2015 will be allowed for transfers up until YA 2017.  Inland Revenue Authority of Singapore (IRAS) will provide more details by end May 2014.

Relief for Nonresident Individuals

Present Situation: Certain categories of nonresident individuals may claim relief to reduce their tax payable on their aggregate assessable income to an amount equal to what they would been liable for had they been assessed as a tax resident in Singapore.

Proposed Change:  The provision will be repealed from YA 2016.


1  For the budget speech and related documentation, see:


For a complete analysis of the Budget, see “Singapore Budget 2014: Budget 2014 and Your Business,”  a publication of the KPMG International member firm in Singapore. 


For further information or assistance, please contact your local IES professional or one of the following professionals with the KPMG International member firm in Singapore:


BJ Ooi, Partner, Head of IES

Tel. +65 6213 2657


Dennis McEvoy, Partner

Tel. +65 6213 2645

The information contained in this newsletter was submitted by the KPMG International member firm in Singapore. 

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