MR Wee,a singaporean who has been working in New York for the past 10 years, will be seconded to work in singapore for a three-year period commencing 1 january 2009.he has heard  that the employer"s CPF contributions are not taxable and the contributions are fully deductible. furthermore,he intends to structure his compensation package such that his employer and himself would contribute CPF based on his annual salary of $120000 and bonus of $54000.

based on the statutory employee"s and employee"s CPF contribution rates at 1 january 2009 of 20% and 14.5%respectively ,the statutory and proposed CPF contributions are as follows:                                                     

 

                                                        employee"s        employer"s  

statutory CPF contributions on:                     $                         $ 

annual salary(4500x12x20%)                        10800

                  (4500x12x14.5)                                                   7830

bonus(max)[76500-（4500x12)]x20              4500

                 [76500-（4500x12)]x14.5                                     3263

total                                                            15300                11093

 

proposed full CPF contributions on:

annual salary                                                24000                17400

bonus                                                          10800                7830

total                                                             34800               25230

you are required to write a brief report to Mr Wee on the deductibility of the employee"CPF contributions, the taxability of the employee" CPF contributions and the tax consequences of his proposed CPF arrangement.