The Additional Wage (AW) Ceiling sets the maximum amount of AW on which CPF contributions are payable per year. An employee's AW Ceiling is computed on a per employer per year basis. It is a CPF contribution cap on the employee's additional wages, such as bonuses, commissions etc.
The Ceiling applies to all Singapore Citizens and Singapore Permanent Residents (SPR).
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Why do employers need to calculate AW Ceiling?
This is to ensure that:
CPF contributions are paid correctly to employees
Avoid over-payment of CPF contributions
Save the hassle of applying refund of excess contributions and to avoid situations where refunds cannot be made due to insufficient funds in their employees' CPF accounts.
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How to calculate AW Ceiling?
The AW Ceiling is computed using the following formula:
$102,000* - Total Ordinary Wages (OW) subject to CPF for the year
Step 1: At the start of the year, employers should first estimate the AW ceiling by using the current year’s estimated monthly OW.
Step 2: At the end of the year, upon an employee’s resignation or if there are changes in the employee’s salary, employers are to re-calculate the AW ceiling of the year based on the OW paid.
For example, if your employee earns $8,000 a month, and earns an annual bonus of $20,000. Only the first $6,800 of his/her monthly income will be subjected to CPF contributions. As for his/her annual bonus, the Additional Wage Ceiling is $102,000 – $6,800 x 12 = $20,400. This means that your employee's entire annual bonus is also subjected to CPF contributions as it is below the CPF contribution cap.
Do note that Official CPF calculator (CPF website) will give you a different amount because Additional Wage Ceiling Calculator is not real time and it doesn't project the OW ceiling for 12 months. In Talenox, we will calculate additional wage ceiling automatically in payroll.
For a more detailed understanding of different AW ceiling scenarios, head over to CPF website. 😎
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How to export Additional Wage Ceiling report?
Additional Wage Ceiling breakdown for each employee can be extracted into the individual employee Year-to-Date (YTD) Payroll Report.
Individual employee payroll report can be downloaded under Payroll > Payroll Report > Payroll Employee Report:
In the payroll report, select "Awage Ceiling" tab (bottom section). The Additional Wage Ceiling breakdown* will be shown for the entire year (January - December) for the specific employee.
*Kindly note that Additional Wage Ceiling report is only available for our SUITE plan users only.