A Wage Credit Scheme (WCS) was introduced as part of Singapore’s Budget 2013. Under the WCS, the government will co-find 40% of the wage increases given to Singaporean employeey earning a gross monthly income of up t $4,000.
WCS – How it works
The co-funding of wage increases is calculated based on the increase in gross monthly income, and includes other payments such as annual bonuses, overtime allowances, commissions etc (all wage items that attract a CPF contribution). Co-payment will be paid only for Singaporeans whose gross monthly income is less than $4,000.
In the above example, Employee A is a Singaporean and has been working with the Company more than 12 months. In 2012, his monthly salary was $2,100. In 2013, his employer gives him a salary increment of $200. Together with bonuses and overtime, Employee A earns a total of $33,300 in 2013, compared to $30,400 in 2012. His monthly gross salary in 2013 is $2,775 (less than $4,000). Thus, the employer will recieve WCS of $1,160 for Employee A in 2013.
In 2014, Employee A is given a salary increment of another $200. Together with bonuses and overtime, Employee A earns a total of $38,000 in 2014, compared to $30,400 in 2012. His monthly gross salary in 2014 is $3,166.67 (less than $4,000). Thus, the employer will recieve WCS of $3,040 for Employee A in 2014.
In 2015, Employee A is promoted and given a salary increment of $1,000. Together with bonuses, Employee A earns a total of $51,500 in 2015, compared to $30,400 in 2012. His monthly gross salary in 2015 is $4,291.67 (more than $4,000). Thus, the employer will recive WCS of only $7,040 for Employee A in 2015 [($4,000 – $2,533.33)*12*40%].
Who is Eligible
All employers are eligible, and will automitacally be covered under WCS except government-related entities, and entities not registered in Singapore.
Employees must be:
- Singapore Citizen;
- Earns a gross monthly wage less than $4,000;
- Was employed for at least three months in 2012;
- Is 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);
WCS will run from 2013 to 2015.
There is no requirement for any additional submissions. Eligible employers will receive a payout automatically annually. The first payout will be in the second quarter of 2014, and the last payout will be in 2016.
The Wage Credit co-funds businesses giving wage increases to their employees and is taxable.
Information is correct at time of publication.
- Download and read the frequently asked questions.
- More examples of WCS calculations (from IRAS).
- Visit the Inland Revenue Authority of Singapore’s website for more information.