Some Tax Changes announced in Budget 2008

Some tax changes announced in Budget 2008 that some companies may wish to take advantage of.

1. Supplementary Retirement Scheme

Employers can now contribute to their employees’ SRS accounts, subject to the current contribution limits of $11,475 per year for Singapore Citizens and Permanent Residents, and $26,775 for foreigners for each employee.

Employers will be able to claim full tax deduction for the contributions they make to their employees’ SRS accounts.

SRS members will be taxable on the contributions that their employers make to their SRS accounts. But, they can enjoy a tax relief up to the applicable contribution limit per YA for the SRS contributions which they or their employers make.

2. Encouraging portable medical benefits

With effect from YA2008, employers who provide their employees with inpatient medical insurance benefits in the form of portable medical shield plans can qualify for tax deduction at 2% of the total wage bill for medical expenses they incur for their employees.

Employers can provide such portable medical shield plans, either by paying the insurance premiums on behalf of their employees to the insurance companies directly or by reimbursing the premiums into employees’ Medisave accounts.

To qualify, the employer must provide the portable medical shield plans for at least 20% of existing local employees employed as at the first day of the basis period for the YA, and every local employee who commences his employment during the basis period for that YA.

For more details, pls visit the Ministry of Finance website www.mof.gov.sg.

I'll of course be happy to email to interested parties the related FAQs and Details of these changes, as well as advise and help on these 2 schemes.

Having said that, group medical insurance schemes however generally cost less than portable medical shield schemes, depending on age profiles.

Also, staff with some medical conditions should stay with group medical schemes as these do not underwrite on individual basis for companies with more than 10 staff; whereas, staff of standard health condition should take up portable medical shield plans so that they may have continuous medical coverage without any exclusions, even if their health deteriorates later, and they change employers.