According to section 2 of the Central Provident Fund Act (CPF Act), wages means the remuneration in money, including any bonus, due or granted to a person in respect of his employment but does not include such payments as the Minister may, by notification in the Gazette, specify.

All items that fall under the definition of wages will attract CPF contributions. The rates of contribution are set out in the First Schedule of the CPF Act.

Therefore, all items that do NOT fall under the meaning of wages in the CPF Act will not attract CPF contributions.

 

On the CPF Board’s website, they listed some examples of wages. Some examples listed are:

  1. Basic wages
  2. Overtime pay
  3. Bonus
  4. Allowance
  5. Commission
  6. Cash incentive

 

As stated on the CPF Board’s website, CPF contributions are not payable on the following as they do not fall under the meaning of wages in the CPF Act.

a) Reimbursements of medical and dental benefits

b) Reimbursements incurred for official purposes

 

Comparing the two, we can see that there are some material differences when it comes to items listed as wages. They are usually regular payments that contribute to the regular income of the employee. Reimbursements are payments that do not contribute to the regular income of the employee. For example, the company may have a policy where employees can claim up to $100 per year for medical expenses. Therefore, when an employee falls sick and sees a doctor and incurs a bill of say $60 for the visit, he can come back to the company and claim this $60. Such reimbursement will not attract CPF contributions. Another example is if the employee needs to send something to a client and he orders a courier to pick the document up and send it to the client. He pays for this courier first and seeks reimbursement from the company later. Such payments will not attract CPF contributions.

 

If you need assistance with CPF related matters, you may look for the HR and employment support team at Raffles Corporate Services at [email protected].

 

Yours sincerely,

The editorial team at Raffles Corporate Services