How The Relief Works
When you top up a CPF account with cash, the amount is deducted from your income before tax is worked out, up to a cap. You can claim up to $8,000 a year for top-ups to your own Special or Retirement Account and MediSave Account combined, and up to another $8,000 for top-ups to loved ones.
What that is worth depends on your tax rate. Singapore's rates rise in steps, so the relief saves tax at your highest rates first. Someone whose top slice of income is taxed at 11.5% saves $920 on an $8,000 top-up. Someone taxed at 2% saves $160.
The saving comes once, in the tax bill for the year after the top-up. In exchange, the money is locked in: retirement top-ups are paid out as monthly income from 65, and MediSave top-ups can be used only for approved healthcare costs. Weigh the tax saved against how soon you might need the cash.