The Government has introduced the Wage Credit Scheme to help businesses which may face rising wage costs in a tight labour market. This will allow businesses to free up resources to make investments in productivity and to share the savings with their employees.
The Government will co-fund 40% of wage increases given to Singaporean employees earning a gross monthly wage of up to $4,000 during the three-year period (2013-2015).
You may wish to refer to the WCS Slides with voiceover for more information.
Illustration of WCS benefits
- If an employer increases the gross monthly wage of his employee by $200 in 2013 as shown in the illustration, the Government will co-fund 40% of the $200 wage increase (ie $80) which will be paid in 2014, and in the subsequent two years if the increase is sustained.
- If the gross monthly wage is further increased by $300 in 2014 and another $100 in 2015, the Government will co-fund 40% of the further wage increases, i.e. total wage increase of $500 and $600 in 2014 and 2015 respectively, over 2012.
- At the end of three years, the employer would have paid a total of $15,600 more in wages to the employee and the Government would have co-funded $6,240.
Gross monthly wage is the total wages paid by the employer to the employee in the calendar year, divided by the number of months in which CPF contributions were made. Total wages paid to an employee is derived from the CPF contributions that the employer makes for the employee per month based on the allowance and payments for which contributions to CPF is required. Total wages include basic salary and additional wages such as overtime pay and bonuses, and exclude employer's CPF contributions.
Please see four Worked Scenarios (330 KB) on the computation of WCS.
Only employers are eligible for the co-funding.
Below are the criteria for them to qualify for co-funding in calendar year 2013.
|Employees must be
- A Singapore Citizen;
- Earning a gross monthly wage less than $4,000;
- Employed for at least three months in 2012;
- On employer's payroll for at least 3 months in 2013 (i.e. employer must have paid employee CPF contributions for at least three months in 2013).
- Employers need not submit any application to IRAS.
- All employers, with the exception of entities on the exclusion list (which includes all Government agencies), will automatically qualify if they pay qualifying wage increases to their Singaporean employees.
- The Government reserves the right to disqualify any employer from receiving the Wage Credit.
|Qualifying wage increases
- Wage increases up to a gross monthly wage level of $4,000 will be co-funded. Wage increases that are sustained in subsequent years will continue to be co-funded until 2015.
- The increase in gross monthly wage must be at least $50 to qualify for co-funding.
- Once an employee's gross monthly wage exceeds $4,000, the portion of the wage increase that brings the gross monthly wage above $4,000 will not be eligible for co-funding.
Payment of WCS payout
Eligible employers will automatically receive a payout on a yearly basis. No application is required. There will be three payouts in total, at the end of March 2014, 2015 and 2016.
The first payout at end March 2014 is for wage increases given in 2013 over 2012. Employers must pay their employees' CPF contributions for their wages earned in 2012 and 2013 by 14 Jan 2014 in order to be considered.
The second payout will be in March 2015 and the final payout will be in March 2016.
The payouts are taxable in the Year of Assessment when the payouts are received.
The payout amounts may be used to offset any outstanding tax arrears.
Compute your Wage Credit using the WCS calculator* . New!
*The WCS calculator works best with Microsoft Office Excel 2007 or later version.
Compute your Wage Credit using the WCS calculator (Excel 97-2003)*. New!
*The WCS calculator works best with Microsoft Office Excel 97 - 2003 version.
From the last week of March 2014, employers may check their eligibility for the first Wage Credit and to request for the payout breakdown by employees.
Frequently Asked Questions (FAQs)
For more details, please refer to the FAQs on WCS.
Employers can sign up for seminars to find out more about the WCS. Worked examples and how to use the WCS calculator will be covered.
You may also contact us for further assistance or clarification on the WCS.
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