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Wage Credit Scheme

 

  •     About the Wage Credit Scheme (WCS)      
  •     Qualifying Conditions             
  •     Illustration of Wage Credit Computation        
       -    WCS Calculators      
     
  •     Disbursement of Wage Credit Scheme Payout
     
          When and how will payouts be made?
     
       -    Request for Wage Credit breakdown by employees
     
       -    Appeal for Wage Credit recomputation or adjustment
     
          Quick Guide on Second Wage Credit Scheme Payout 2015         
  •     Abuse of the Wage Credit Scheme        
  •     FAQs        
  •     Contact Us            

     

     

    About the Wage Credit Scheme 

    The Government has introduced the Wage Credit Scheme to help businesses which may face rising wage costs in a tight labour market. Wage Credit Scheme payouts will allow businesses to free up resources to make investments in productivity and to   share the productivity gains with their employees.

    Over the period 2013 to 2015, the Government will co-fund 40% of wage increases given to Singaporean employees earning a gross monthly wage of $4,000 and below.   

     

    Qualifying Conditions  

    Only employers are eligible for the co-funding. Employers need not submit any application to IRAS. The Government reserves the right to disqualify any employer from receiving Wage Credit. The qualifying conditions are listed in the table below.

      Qualifying year 

      
    •  Qualifying year refers to the year for which Wage Credit is computed, based on the wage increases given in that year. There are 3 qualifying years, i.e. 2013, 2014 and 2015. 
     

      Qualifying employers 

      
    • All employers, with the exception of entities on the employer exclusion list , will automatically qualify if they pay qualifying wage increases to their Singaporean employees who meet the following criteria (i.e. qualifying employees):   
      •  A Singapore Citizen; 
      •  Earning a gross monthly wage less than $4,000 and with a minimum gross monthly wage increase of $50 in the qualifying year; 
      •  Received CPF contributions from a single employer, for at least three calendar months in the preceding year;  
      •  On employer's payroll for at least three calendar months in the qualifying year (i.e. employer must have paid employee CPF contributions for at least three calendar months in qualifying year) 
      •  Must not be a business owner of the same entity (i.e. sole proprietor of the sole proprietorship, or a partner of the partnership, or both a shareholder and director of a company) 

     

     Additional Eligibility Conditions 

    •  An employer is not eligible for a payout under any of the circumstances below: 
      •  The employer is an entity that has no substantial trade or business; 
      •  The employer had given, in IRAS' opinion, false or misleading information to IRAS in order to obtain a payout or a higher amount of payout; 
      •  The employer (either singly or with another person) had used, in IRAS' opinion, one or more artificial, contrived or fraudulent steps in order to obtain a payout or a higher amount of payout; 
      •  The employer was convicted in the qualifying or preceding year for making CPF contributions to Singaporeans who were not actively employed by the firm 

      

    •  An employer is not eligible for a payout for a wage increase for a particular employee who: 
      •  Did not carry out any substantive work for the employer; 
      •  Effectively controls the employer (i.e. controls decision making power and management of the business or company) 

      

    • If the total wages paid by an employer for a period is not commensurate with the volume or nature of activity carried out by the employer in that period, then the employer is only eligible for an amount of payout that, in IRAS' opinion, corresponds to the increase in the total wages paid for that period that commensurate with such volume or nature of activity. 

      

    • If the total wages paid by an employer to a particular employee for a period is not commensurate with the volume or nature of work carried out by the employee in that period for the employer, then the employer is only eligible, in respect of that employee, for an amount of payout that, in IRAS' opinion, corresponds to the increase in the total wages paid to that employee for that period that is commensurate with such volume or nature of work. 

     

    • If an employer fails to give to IRAS, by the time specified by the IRAS, any information requested by IRAS for the purpose of determining the employer's eligibility for a payout or the amount of payout the employer is eligible for, with respect to one or more employees, then the employer will not be given the payout for these employees. 

     

      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.      
    •  Wage increases or sustained wage increases 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.   
     

     

    The Government takes a serious view of any attempt to abuse the WCS. The additional eligibility conditions make clear that IRAS will not make a payout or part of a payout under the WCS if IRAS assesses that the employer has displayed one or more of the stated categories of behaviour, as doing so is not in line with the aim of the WCS to allow businesses to free up resources to make investments in productivity and share the productivity gains with their employees. The decision made by IRAS on the amount to be paid to the employer will be final. These conditions strengthen our efforts to minimise any potential abuse of the WCS.     

    Wage Credit Scheme payouts are taxable in the Year of Assessment relating to the year IRAS disburses the payouts to you. Payouts may be used to offset any outstanding tax arrears.   

    Individuals (including sole-proprietors) and partnerships are not required to declare the Wage Credit Scheme payout received in their income tax returns (Form B/B1 or Form P) as this will be automatically included by IRAS in their tax assessment for the relevant YA.   

    Companies are however, still required to declare the Wage Credit Scheme payout received in their income tax return (Form C/Form C-S) for the relevant YA.  

       Back to Top  

    Illustration of Wage Credit Computation 

    The formula used to compute Wage Credit on each qualifying employee in the qualifying year is: 

    Wage Credit for each employee = 40% x Qualifying wage increase x No. of months of CPF contribution made by the qualifying employer      

    Illustration:     

      Computation - Worked Illustration 

    • 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 (i.e. $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.   

    Wage Credit for 2013 = 40% x $200 x 12 months = $960  
    Wage Credit for 2014 = 40% x ($200 + $300) x 12 months = $2,400   
    Wage Credit for 2015 = 40% x ($200 + $300 + $100) x 12 months = $2,880

    Total Wage Credit = $960 + $2,400 + $2,880 = $6,240   

    See more Worked Illustrations on how Wage Credit is computed and Examples of How to Qualify for Wage Credit on Sustained Wage Increases.

    Gross monthly wage is 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 CPF contributions are required. Total wages include basic salary and additional wages such as overtime pay and bonuses, and exclude employer’s CPF contributions.   

      WCS gross monthly wage 

     

    Compute your Wage Credit using the WCS Calculator:   

      

    To learn more about how the Wage Credit Scheme works, you can attend IRAS' Corporate Tax seminars conducted twice monthly from Jul to Nov. 

     

    Disbursement of Wage Credit Scheme Payout      

    When and how will payouts be made?     

    • Employers do not need to apply for Wage Credit. They will receive their yearly payout automatically via direct credit to their GIRO bank account for income tax/GST, or by cheque. The three yearly payouts will be made by the end of March 2014, 2015  and 2016. 
    • The second payout, to be disbursed by the end of March 2015, is for wage increases given in 2014 over 2013. Employers must pay their employees' CPF contributions for wages earned in 2013 and 2014 by 14 Jan 2015 in order to be considered.   
    • From the last week of March 2015 till 31 October 2015, employers can also check their eligibility for the second payout online.   

         

    Request for Wage Credit breakdown by employee   

    • Employers will receive a total amount of Wage Credit without the breakdown by employee. From the last week of March 2014, 2015 and 2016, employers may submit an online request for a breakdown of their total Wage Credit by employee.
    • In any given year of payout (2014, 2015 and 2016), employers have until 31 October to submit the breakdown requests pertaining to that year only.
    • Should the request for Wage Credit breakdown pertain to new hires, consent would have to be obtained from the new hires as their Wage Credit amounts might indirectly disclose their wages from their previous employment. Consent has to be obtained even if the new hire has ceased employment.  
    • Processing fees are applicable if the employer has more than 100 qualifying employees.  

         

    Appeal for Wage Credit recomputation or adjustment   

    • In any given year of payout (2014, 2015 and 2016), employers have until 30 June of the same year to submit appeals. Only appeals on Wage Credit for that particular qualifying year, and not previous years, will be considered.    
    • Each appeal will be considered on a case-by-case basis. Employers must substantiate their claim with supporting documents.

      

    Some examples of successful appeals are:   

    • Appeal for amalgamation of CPF records of ceased UEN(s) with new UEN (e.g. due to the merger of 2 companies, conversion of business entity, or change in UEN)   
    • Appeal for Wage Credit adjustment for overseas Singaporean employees for whom CPF contributions were not made but whose salaries were nonetheless paid

      

    The following appeals will not be considered:   

    • Appeal to transfer bonuses etc paid out in any year to the preceding or subsequent year (E.g bonuses paid in Feb 2015 to be included in the gross monthly wages for 2014)
    • Appeal for voluntary CPF contributions to be considered for Wage Credit

     

    Quick Guide on Second Wage Credit Scheme Payout 2015
     
     
     
     
    Find out more about what employers need to know for the disbursement of the second payout at the end of March 2015.

     
     Back to Top    

    Abuse of the Wage Credit Scheme   

    The Government takes a serious view of any attempt to abuse the WCS, and will take firm action against those involved in such cases. Click here to find out more about how the Government prevents abuse of  the scheme, and how to report any suspected abuse or fraud to IRAS

      

    FAQs 

    Before you ask us a question, check this handy list of FAQs to get answers to your questions quickly.

    You can also refer to the WCS Slides  with voiceover for more information. 

     

    Contact Us 

    You may also contact us for further assistance or clarification on the Wage Credit Scheme.

    • Email us:  wcs@iras.gov.sg   
     
    • Call us: 1800-3524727 (8 am to 5 pm from Mon to Fri)
        
    • SMS us: 9107 6902 with message "WCS <followed by your name>" (Example "WCS John Tan"). Our officer will contact you by the next working day. 

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

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    Last Updated on 23 January 2015


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