Accounting Services| 3 mins read | Last updated on 30 June 2019
As an employer, we are required to make CPF contributions for employees who are Singapore citizens or Singapore permanent residents (SPRs) at the monthly rates stated in the CPF Act.
The Common Mistakes by Employers that We Should Avoid.
- Non-payment of CPF contributions for employees under probation, part–time/temporary, contract/casual, daily-rated.
(Fact: Employers should ensure that CPF contributions are paid on wages received by employees on the types of employments as stated above, as long as they earn more than $50 in a month.)
- Non-payment of CPF contributions for full time employees who have requested not to have CPF contributions so that they can have higher take-home pay.
(Case Study: An employee had an agreement (in writing or verbal) with his employer not to have CPF contributions so that he can have a higher take-home pay. After his service was terminated, he complained to the Board that his employer had underpaid his CPF contributions. This agreement is not valid and the employer is responsible to pay both the employer’s and employee’s share of CPF contributions. The employer also has to make good the underpayments and the late payment interest incurred.)
- If the Employee’s total wages for the calendar month is less than $50, nil CPF Contribution by both Employer and Employee.
- If the Employee’s total wages for the calendar month is less than $500, nil CPF Contribution by the Employee.
- If the Employee above age of 55, the rate is lower than the standard rate. (20% / 17%) (Employee / Employer)
- Self-employed person (Sole-Proprietor / Partner) is subject to Compulsory Medisave Contributions, when his/her net trade income is more than $6,000.
Penalties for not paying CPF
If we don’t comply with the CPF Act, we may be liable to:
- Late payment interest charged at 18% per annum (1.5% per month), starting from the first day of the following month after the contributions are due. The minimum interest payable is $5 per month.
- A fine of up to $5,000 and no less than $1,000 per offence and/or up to 6 months jail.
- A fine of up to $10,000 and no less than $2,000 per offence and/or 12 months jail for repeat offenders.
- Fine of up to $10,000, imprisonment of up to 7 years or both if you deduct your employee’s share of CPF contributions but fail to pay the contributions to CPF Board.