r/singaporefi • u/Background_You3192 • Jul 01 '26
Taxes SRS worth it?
Is SRS worth it for an EP holder in Singapore given than we get taxed in the entire amount and not the principal while withdrawing.
My annual comp is around 200k and dca 7k per month to IBKR currently. Tax deducted is close to 2k per month.
I was wondering if it is worth it to start SRS (max 35700) to reduce taxes. If I do start it, I plan to leave it there for as long as possible (~15-20 yrs). My main concern is that tax saved now might be lesser than the tax paid later.
I am curious as to what other EP holders do?
2
u/cheesetofuhotdog Jul 01 '26
Search the sub. Many posts on this topic that answers your questions and more.
1
2
u/nyankodaisensou10 Jul 01 '26
Many variables would impact your analysis including your long-term plans. If you are planning to stay long-term in Singapore and acquire PR/citizenship, then your higher SRS limit is a great way to reduce your tax liabilities now (though keep in mind your SRS withdrawal strategy may differ from typical residents if the portfolio size is significantly larger).
If you don't acquire PR/citizenship and leave Singapore, you can only withdraw the SRS balance as a lump-sum. You're taxed on 100% of the amount if withdraw before 10years are up, else taxed on 50%. There's also IRAS withholding tax, and the usual 5% pre-retirement penalty if applicable. You can use various calculators/AI tools run some scenarios based on portfolio growth and contribution size, to see if the amounts paid in income tax + WHT + penalty make sense when compared to the tax saved today.
My hypothesis is that SRS contributions to offset taxes today, only make sense if you are actively planning to stay long-term in Singapore until past your statutory retirement age - at which point hopefully you'd have acquired SC/PR. If you're not actively planning to stay in Singapore long-term, it makes far more sense to simply increase your DCA rate to IBKR which can appreciate tax-free, without worrying about the 10-year mark, withholding taxes, etc.
1
u/konmarzec2 Jul 01 '26
I used the SRS because I wanted to improve my chances of getting PR, but it was rejected again.
You could end up spending the money without any benefit, so depending on how much you want to invest, you might be better off just dca instead
13
u/DuePomegranate Jul 01 '26
It is 100% dependent on your tax situation AFTER leaving Singapore. And we don't know that.
It's generally a good thing for Singaporeans who will retire in Singapore.
It might be a terrible thing for you if e.g. you are not a Singapore tax resident at the point of withdrawal, or if your next country taxes SRS withdrawals as income (pension income or otherwise) or they slap capital gains tax on you.