From 1 Nov 2012, the many different CPF top-up schemes will be merged to Minimum Sum Topping-up Scheme (MSTS). This will make the calculation on how much can be contributed towards the family members’ Special Account (SA) or Retirement Account (RA) easier.
Under the MSTS, you can use cash or CPF money to top-up the family members’ SA/RA up to the prevailing CPF Minimum Sum, currently at $139,000. The family members include parents, grandparents, spouse, siblings, parents-in-law (from 1 Jan 2013) and grandparents-in-law (from 1 Jan 2013). Each qualifying giver can enjoy tax relief of up to $7,000 for cash top-ups to your own CPF and another $7000 to your family members’ accounts. To qualify for tax relief for cash top-ups for spouse and siblings, they must not have income exceeding $4,000 in the year preceding the year of top-up or they are handicapped.
There is a limit to the top-up that the recipient can receive in his CPF SA/RA. For those who are below 55 years old, it is the difference between the prevailing Minimum Sum and the net balances in his SA account, including the amount withdrawn for investments. For those age 55 and above, the limit is the prevailing Minimum Sum and the net balance in his RA account, excluding the interest earn since age 55, Government grants received and any amount withdrawn.
Employer can also claim tax deduction of up to $7000 by topping the staff’s CPF RA/SA account, while the staff can claim the equivalent amount of tax relief.