The Central Provident Fund (CPF) is a compulsory savings scheme implemented by the Singapore Government and is split into three different accounts – Ordinary Account (OA), Special Account (SA) and Medisave Account. This post will illustrate the required steps to top up your Medisave account.
Benefits of topping up Medisave Account:
- A tax reduction in the form of reduction in your assessable income. For instance, if you top up S$2,000 into your Medisave account, you will receive S$2,000 reduction in your assessable income (if your compulsory CPF contribution did not exceed the CPF contribution limit – more about this in Step 5). This is useful if you are aiming to drop to a lower tax bracket.
- Relatively high interest rate – 4% per annum
- Contributions to Medisave can still be utilized for medical treatments
Please note that Medisave contributions will build up your Medisave balance until the Basic Healthcare Sum (BHS) is reached. Any amount above the BHS will be automatically transferred to your other CPF accounts.
Step 1: Proceed To CPF Website & Login
Click on this link – https://www.cpf.gov.sg/members to proceed to the CPF website. Login with your Singpass.
Step 2: Select “My Request” on the sidebar
Upon a successful login, you should see “My CPF Homepage”, which will display your current CPF balance and latest contribution from your employer. Select “My Requests” as indicated by the red arrow below.
Step 3: Select “internet banking using e-cashier”
Expand the section on “Building Up My/My Recipient’s CPF Savings”. Click on “internet banking using e-cashier” under Contribute to my Medisave Account (see red circle below).
Step 4: Select “Contribute to my Medisave”
Select “Contribute to my Medisave (Tax deductible)”, as shown in the picture below.
Step 5: Input the amount that you wish to contribute to your Medisave Account
You can contribute any amount to your Medisave account up to the allowable Medisave contribution limit, which is the Basic Healthcare Sum (BHS).
- There is a limit on the amount of tax relief that you can get per year for voluntary Medisave contributions (Please refer to this post from IRAS). It depends on the amount of compulsory CPF contribution (which you and your employer have contributed due to your employment) and the annual CPF contribution cap ($37,740 as of 2016). For example, consider the following assumptions:
- Your Medisave account has not hit the Basic Healthcare Sum (BHS); and
- Your compulsory CPF contribution (yours and your employer) for the year amounts to $30,000.
In this case, you can contribute $7,740 to your Medisave account to maximize your tax relief. The $7,740 is the difference between the annual CPF contribution cap ($37,740 as of 2016) and your compulsory CPF contribution ($30,000 in this example).
- The tax relief that you get from topping up your Medisave account is DIFFERENT from the tax relief that you get for topping up your special account or retirement account (which is capped at $7,000).
You can check the allowable contribution limit by clicking on the “Check Allowable Contribution”. You should be directed to the following page:
Step 6: Confirm your payment request and make payment
Once you are satisfied with the amount, you can proceed to submit your payment request and the site will redirect you to a payment gateway (e-nets).
With e-nets, you can debit from your bank accounts with the major banks locally. Once you have chosen your preferred bank, you will be redirected to the bank’s website to login and make payment. Once the payment has been made, your contribution will be processed by CPF in a few days’ time.