Scope and three qualifying conditions
Updated 1 November 2024, these five pages require cash contribution by a company into a SEP’s MediSave account, with a qualifying contract in force on the contribution date. A SEP works under a contract for service, including sole proprietors, partners, PHC/taxi drivers, agents, freelancers and online-business owners.
What the qualifying contract must provide
Either the company rents/lends an asset for the SEP’s trade/profession/business/vocation, or the SEP provides services to the company in the SAME trade/profession/business/vocation. Assets include intellectual property but exclude money. These are alternative routes, not any informal commercial relationship.
Contribution amount versus deduction limit
Payments count as SEP payments subject to the prevailing CPF Annual Limit. From 2018, each company’s deductible qualifying voluntary contribution is capped at S$2,730 per SEP per calendar year. Claim in the company return and add back excess in the tax computation. The deduction cap is separate from CPF’s annual contribution acceptance limit.
Company application procedure
Request CPF Board through Write to us: select A Business Partner, My Organisation, subject MediSave and category Other matters. This is the route printed in this version; keep the contract and contribution evidence for tax reporting.
SEP tax treatment and automatic inclusion
Co-contributions triggered by specific prior SEP contributions, such as Drive and Save, are not SEP income. Other qualifying work-related contributions are income exempt up to the stated limit, with excess taxable. The SEP does not manually report these MediSave contributions, even excess: IRAS obtains excess information from CPF for automatic inclusion.
Refund sequence and compulsory contributions
If total exceeds CPF Annual Limit, refund the SEP’s own voluntary contributions first, without interest, up to the SEP-paid amount; no relief for the refunded sums. Remaining excess company contributions are then refunded to the company. Company contributions affect the SEP’s remaining room and offset compulsory MediSave liability. View them in the 15-month contribution history and Yearly Statement using Singpass.
Concurrent employee and SEP
From 2018 tax-exempt voluntary contributions are capped at S$2,730 per contributor per calendar year. The SAME entity contributing both as employer and SEP contracting company counts as ONE contributor, not two; those roles do not double the limit.
Losing citizen or PR status
CPF does not allow contributions once the SEP is neither citizen nor PR, even if due before status changed. Direct cash instead is tested separately: the company can deduct wholly/exclusively income-producing expenditure that is neither capital/private nor section-15 prohibited; the MediSave S$2,730 deduction cap does not apply to cash not paid to the account.
Cash replacement: SEP reporting
A replacement of a prior-contribution-triggered co-contribution remains non-income. Other work-related cash is taxable, without the MediSave exemption, and must be reported as trade income in the YA for the period when due/payable. If closing business or leaving Singapore permanently, send IRAS the information and four-line business statement one month before expected cessation/departure. Do not apply automatic CPF inclusion to direct cash.
Official source
This article independently explains the substantive contents of the official PDF, including the relevant conditions, procedures and annexes. The linked document remains the authoritative source for its original wording, and later changes should be checked separately.
Read the official PDF ↗