SRS member may withdraw their SRS savings anytime, albeit early withdrawals are fully subject to tax and attract a 5% penalty. An SRS member may make his first penalty-free withdrawals from the SRS account over 10 years from the date of his statutory retirement age that was prevailing at the time of his first SRS contribution. If an SRS member (i) passes away before completing his SRS withdrawals or (ii) made a full withdrawal on the grounds of terminal illness, he would not be able to enjoy the full benefit from spreading out his SRS withdrawals over a 10-year period. Hence, a tax exemption of up to $400,000 would be granted for SRS funds withdrawn in full on the grounds of terminal illness or deemed withdrawn upon an SRS member’s demise.

Withdrawals from SRS accounts are subject to tax in the Year of Assessment following the year of withdrawal.

For example, if you withdraw $6,000 from your SRS account in 2009, either 50% or 100% of the withdrawal amount, depending on the type of withdrawal (see below), will be regarded as part of your income in 2009 and subject to tax for Year of Assessment 2010.

50% of the sum withdrawn will taxed for the following types of withdrawal:

a. withdrawal on or after the statutory retirement age prevailing at the time of your first contribution (prescribed retirement age);

b. withdrawal on medical grounds;

c. withdrawal on death, and;

d. withdrawal by a foreigner who has maintained his SRS account for at least 10 years from the date of his first contribution.

100% of the sum withdrawn will be deemed as your income and taxed in all other situations.

If you are a non-Singaporean who no longer works and lives in Singapore, you will be taxed as a non-resident when you withdraw the fund from your SRS account.

From YA 2016, up to $400,000 of an amount of a deemed withdrawal upon the death of an SRS member or a full withdrawal made by an SRS member on the grounds of terminal illness, would be exempt from tax. 50% of any remaining amount of such a deemed withdrawal or full withdrawal would then be subject to tax.

The SRS operator will withhold/collect an amount of tax at the prevailing non-resident tax rate for all SRS withdrawals by foreigners and Singapore Permanent Residents (SPRs). This withholding tax is in addition to the 5% premature withdrawal penalty, if applicable.

A concessionary withholding tax rate of 15% will apply to an SRS withdrawal in the form of cash/ investment if the following conditions are met:

(i) Cumulative amount withdrawn (in the form of cash/ investment) by the SPR/ foreigner SRS account holder in the calendar year in which the withdrawal is made, does not exceed $200,000; and

(ii) The SPR/ foreigner SRS member does not have any other income besides the SRS withdrawal(s) during the calendar year in which the withdrawal(s) is/are made.

To enjoy this concession, the SRS account holder must submit to his SRS operator, a declaration that he fulfills the two conditions above.

i) Withholding tax on withdrawals in cash

For example, if a SPR/foreigner withdraws the full amount of $200,000 in his SRS account by the age of 62 (the statutory retirement age) in cash at year 2016 (i.e. YA 2017), the tax withheld on the withdrawal will be computed as follows [1]:

ii) Tax imposed on withdrawal of SRS investments

Withdrawals of SRS investments are taxed at the applicable tax rate2 on 50% of the value of the investment to be withdrawn from his SRS account3. The SRS member may withdraw cash from his SRS account to settle this amount. Cash withdrawn from his SRS account is subject to a withholding tax.

Hence, the SRS member would have to withdraw a higher amount of cash to take into account the amount of tax that is payable by him to his SRS operator.

To illustrate this, if an SRS member aged 62 (i.e. he has reached the statutory retirement age), transfers his shares valued at $200,000 from his SRS account to his personal Central Depository (CDP) account, the amount of tax to be collected on the withdrawal is computed as follows:

If he wishes to pay the tax of $22,000 using cash withdrawn from his SRS account, he will need to withdraw $24,720 in order to receive a net cash withdrawal of more than $22,000. This is because the second cash withdrawal is also subjected to withholding tax.

The SRS members application to withdraw the investment from his SRS account can only be approved by the SRS operator, after such tax has been collected by the SRS operator from the SRS member.

Calculating the final tax payable

The final tax payable is determined by the actual tax rate applicable for the SRS withdrawal:

The tax withheld or tax collected on the withdrawal is a tax credit which the taxpayer can use to offset his actual tax liability. Any unused tax credit will be refunded to the taxpayer.

To illustrate this, suppose that in the example in part (i), the actual tax rate applicable for the SRS withdrawal is finally determined to be 15%. If the SRS member has no other tax liability, the amount to be refunded will be computed as follows:

[1] In the case of a full withdrawal from tfhe SRS account of an SRS member who is not a citizen, on the grounds that he is suffering from a terminal illness or disease, the amount on which tax is withheld or collected by the SRS operator is reduced by the specified amount of withdrawal that is exempt from tax, from 1 July 2016.

[2] The applicable tax rate is the applicable withholding tax rate had the SRS withdrawal been in the form of cash instead of in the form of investment.

[3] In the case of a full withdrawal from the SRS account of an SRS member who is not a citizen, on the grounds that he is suffering from a terminal illness or disease, the amount on which tax is withheld or collected by the SRS operator is reduced by the specified amount of withdrawal that is exempt from tax, from 1 July 2016.

From year of assessment 2016, a specified amount of SRS funds (i) deemed withdrawn upon death, or (ii) withdrawn in full on the grounds of terminal illness, would be exempt from tax, to ensure that SRS members are not unduly disadvantaged due to death or terminal illness.

Currently, an SRS member can withdraw up to $40,000 per year [1] from his SRS account tax-free on or after reaching the prescribed retirement age [2], assuming that he has no other taxable income. Over the maximum withdrawal period of 10 years, he can withdraw up to $400,000 tax-free.

However, if an SRS member passes away before completing his SRS withdrawals or made a full withdrawal on the grounds of terminal illness, he would not be able to enjoy the full benefit from spreading out his SRS withdrawals over a ten-year period.

Hence, a tax exemption of up to $400,000 would be granted for SRS funds deemed withdrawn upon an SRS members demise or a withdrawn in full on the grounds of terminal illness.

[1] While 50% of the withdrawal of $40,000 (i.e. $20,000) is subject to tax, the tax rate on the first $20,000 of chargeable income is 0% from YA 2003.

[2] The prescribed retirement age is the statutory retirement age prevailing at the time of your first SRS contribution.

The full amount of SRS withdrawals that is made before the prescribed retirement age subject to tax. A 5% penalty will also apply on the withdrawal. The current prescribed retirement age is 63 effective from 1 Jul 2022.

We refer to the 4 scenarios provided:

1. I withdraw a part of my SRS before 10years and before my retirement age?

2. I withdraw the full amount of my SRS before 10years and before my retirement age ?

3. I am not living anymore in Singapore and I withdraw the full amount of my SRS before 10years and before my retirement age ?

4. I am not living anymore in Singapore and I withdraw the full amount of my SRS after 10years and before my retirement age ?

As you are age 30 and you make withdrawals before the prescribed retirement age, 100% of the withdrawal is subject to tax and 5% penalty will be imposed.

For more information, please refer to IRAS’s website below:

https://www.iras.gov.sg/taxes/individual-income-tax/basics-of-individual-income-tax/special-tax-schemes/tax-on-srs-withdrawals

Yes. Your withdrawal will be subject to withholding tax. However, if you have already paid tax on the deemed withdrawal in the prior year and there is no further tax outstanding, IRAS will refund the amount of tax withheld.

[1] For an SRS member who withdraws his SRS savings: (i) at or after the statutory retirement age that was prevailing when he made his first SRS contribution or (ii) on medical grounds, the 10-year withdrawal period will start from the date of his first such withdrawal.