For foreigner or PR, before you consider to contribute to SRS, pls note there are withholding tax of 24% when you withdraw from SRS and you will be tax as non resident !!! Can you verify this?
This is partly correct, so let's break it into the two components. Withholding tax of 24% - When money is withdrawn from SRS, the tax originally saved needs to be paid, which could be at a top marginal rate of 24%. This is transferred to IRAS, along with your SRS information, and any excess returned to the account holder. Other tax - If this is withdrawn whilst an Australian tax resident, you could have a tax liability on currency gains and the SRS growth / returns for that period you were an Australian resident also. Non-resident tax - If you're a non-resident when withdrawing SRS, then the actual tax payable on the withdrawal will be 15% or the relevant resident rates, whichever is highest. I hope this helps to clarify.
Great question. The SRS investments must be approved, so this does limit things somewhat, however you can consider platforms such as iFast, which allows you to invest in such Unit Trusts as the Infinity Index Funds, which are feeder funds for the underlying Vanguard ETFs providing this exposure and relatively low cost. Which penalty tax are you referring to here? Withholding tax or the withdrawal tax from SRS?
@@AustralianExpatFinance if such investments are not considered as withdrawal of SRS contributions so we are still entitled to tax benefits. Correct? Thank you!
Thanks for clarifying@@shuochen7284. In this case, the investments would remain within SRS. You would be setting up an SRS investment account to then invest the funds within your account in line with your risk profile based on your goals and objectives. Therefore, the withdrawal penalties wouldn't apply. Given the measly return on cash inside SRS, often investing the funds into a diversified portfolio can be a worthwhile consideration.
Thanks for your question. Yes, based on the current information from MOF you can contribute after a withdrawal BEFORE the statutory retirement age, albeit I would question why given the early withdrawal penalty and tax that would apply.
@@rameshmadineni6684 Of course, you can check out the guide here - www.mof.gov.sg/docs/default-source/mof-for/individuals/SRS/srs_booklet---dec-2016.docx?sfvrsn=2
@@rameshmadineni6684 This is produced by the Ministry of Finance, and wouldn't be updated every year given very little changes. Here is the FAQ answering the same question - ask.gov.sg/mof/questions/clgotv5y7008ci908biuawtr8?from=search If you need anything more recent, I'd suggest reaching out directly to MOF/IRAS and confirming.
Thanks buddy!
Most welcome - thanks for checking out the video.
For foreigner or PR, before you consider to contribute to SRS, pls note there are withholding tax of 24% when you withdraw from SRS and you will be tax as non resident !!! Can you verify this?
This is partly correct, so let's break it into the two components.
Withholding tax of 24% - When money is withdrawn from SRS, the tax originally saved needs to be paid, which could be at a top marginal rate of 24%. This is transferred to IRAS, along with your SRS information, and any excess returned to the account holder.
Other tax - If this is withdrawn whilst an Australian tax resident, you could have a tax liability on currency gains and the SRS growth / returns for that period you were an Australian resident also.
Non-resident tax - If you're a non-resident when withdrawing SRS, then the actual tax payable on the withdrawal will be 15% or the relevant resident rates, whichever is highest.
I hope this helps to clarify.
@@AustralianExpatFinancethanks for yr clarifications
You're most welcome@@verbie65
Could you advise how we can invest SRS contribution into the S&P 500 ETFs like CSPX? How to implement this investment without paying tax penalty?
Great question. The SRS investments must be approved, so this does limit things somewhat, however you can consider platforms such as iFast, which allows you to invest in such Unit Trusts as the Infinity Index Funds, which are feeder funds for the underlying Vanguard ETFs providing this exposure and relatively low cost.
Which penalty tax are you referring to here? Withholding tax or the withdrawal tax from SRS?
@@AustralianExpatFinance if such investments are not considered as withdrawal of SRS contributions so we are still entitled to tax benefits. Correct? Thank you!
Thanks for clarifying@@shuochen7284. In this case, the investments would remain within SRS. You would be setting up an SRS investment account to then invest the funds within your account in line with your risk profile based on your goals and objectives. Therefore, the withdrawal penalties wouldn't apply.
Given the measly return on cash inside SRS, often investing the funds into a diversified portfolio can be a worthwhile consideration.
If I withdraw SRS money before statutory retirement age, after that can I still contribute SRS funds?
Thanks for your question. Yes, based on the current information from MOF you can contribute after a withdrawal BEFORE the statutory retirement age, albeit I would question why given the early withdrawal penalty and tax that would apply.
@@AustralianExpatFinance can you please share the link related to whether I can contribute after penalty withdrawal?
@@rameshmadineni6684 Of course, you can check out the guide here - www.mof.gov.sg/docs/default-source/mof-for/individuals/SRS/srs_booklet---dec-2016.docx?sfvrsn=2
@@AustralianExpatFinance thanks for sharing. But this is very old document (27 Dec 2016). If possible, can you please share latest document?
@@rameshmadineni6684 This is produced by the Ministry of Finance, and wouldn't be updated every year given very little changes. Here is the FAQ answering the same question - ask.gov.sg/mof/questions/clgotv5y7008ci908biuawtr8?from=search
If you need anything more recent, I'd suggest reaching out directly to MOF/IRAS and confirming.