QUESTIONS ANSWERS ON VOLUNTARY MEDISAVE CONTRIBUTIONS BY COMPANIES TO SELF-EMPLOYED PERSONS General What conditions must be fulfilled for the voluntary Medisave contributions made by Companies to Self-Employed Persons (SEPs) to enjoy tax benefits? To qualify for tax benefits, the voluntary Medisave contribution must meet the following conditions: (a) it is made to the Medisave Account of a SEP (Please refer to question 2 for definition); (b) it is made in cash by a Company; and (c) the Company and the SEP have entered into a qualifying contract which is in force on the date that contribution is made (Please refer to question 3). How do you define a Self-Employed Person (SEP)? A SEP is defined as any Singapore citizen or Singapore Permanent Resident who derives income from Singapore or from outside Singapore through any trade, business, profession or vocation excluding employment under a contract of service. In other words, if you are earning income by buying and selling goods, providing professional or personal services, you are a SEP. Examples of SEPs include sole-proprietors, partners of partnership businesses, taxi drivers, and insurance agents. What is a qualifying contract between the Company and the Self-Employed Person (SEP)? It is a contract between the Company and the SEP that provides for: the rental or loan of an asset1 by the Company to the SEP, for the SEP to carry on his trade, profession, business or vocation; or the provision of services by the SEP to the Company, where the SEP and Company are in the same trade, profession, business or vocation. Includes intangible assets e.g. intellectual property but does not include money.
QUESTIONS ANSWERS ON VOLUNTARY MEDISAVE CONTRIBUTIONS BY COMPANIES TO SELF-EMPLOYED PERSONS General What conditions must be fulfilled for the voluntary Medisave contributions made by Companies to Self-Employed Persons (SEPs) to enjoy tax benefits? To qualify for tax benefits, the voluntary Medisave contribution must meet the following conditions: (a) it is made to the Medisave Account of a SEP (Please refer to question 2 for definition); (b) it is made in cash by a Company; and (c) the Company and the SEP have entered into a qualifying contract which is in force on the date that contribution is made (Please refer to question 3). How do you define a Self-Employed Person (SEP)? A SEP is defined as any Singapore citizen or Singapore Permanent Resident who derives income from Singapore or from outside Singapore through any trade, business, profession or vocation excluding employment under a contract of service. In other words, if you are earning income by buying and selling goods, providing professional or personal services, you are a SEP. Examples of SEPs include sole-proprietors, partners of partnership businesses, taxi drivers, and insurance agents. What is a qualifying contract between the Company and the Self-Employed Person (SEP)? It is a contract between the Company and the SEP that provides for: the rental or loan of an asset1 by the Company to the SEP, for the SEP to carry on his trade, profession, business or vocation; or the provision of services by the SEP to the Company, where the SEP and Company are in the same trade, profession, business or vocation. Includes intangible assets e.g. intellectual property but does not include money.
Revised%20FAQs%20on%20VC-MA.docx