Tax Deferred Calculator
In
In this tax deferred scheme, tax benefits are enjoyed immediately through income tax relief upon contribution to the tax deferred account. The annual contribution is up to $12,750 and $29,750 for
Assets in the tax deferred account (TDA) accumulate tax free until a stipulate age known as the penalty free year. As a concession, instead of the full amount, only 50% of the amount withdrawn are taxed. The first penalty free year is the retirement age defined as the statutory retirement age that was prevailing when the first SRS contribution was made. Of course, there is no need to made any withdrawal when you reach the retirement age. Withdrawal can be made after the retirement age. However, once a withdrawal is made, you have 10 years to withdraw the entire amount in the TDA.
As on end of December 2009, there are 53,656 SRS account holders representing $2.05 billion in amount. However, how many tax paying individuals are there in
The statistics is quite alarming because it means 92% of those eligible for open the SRS account are not doing so!
Besides not being aware of the existence of such tax deferred scheme, there are those who are concerned of the potentially large amount of tax they are required to pay if they would to accumulate large amount of balances in their SRS accounts. The fact that both capital and profits are taxed upon withdrawal are usually the objection for opening such a tax deferred account. Due to this reason, professional advisers introduce the concept of Relative Value.
To illustrate how such tax deferred scheme works and the meaning of Relative Value, you can enter your current age, first penalty-free year, assumed pre-tax investments return and as well as your chargeable income. Note that chargeable income is not your gross income. Chargeable income is gross income less all tax relief such as CPF relief, personal relief, Nsman relief, etc. Try the calculator below.
