Cash investing: how it is taxed
Singapore does not tax gains from the sale of assets that are capital in nature, whether they are foreign-sourced or Singapore-sourced.[1] Since 1 January 2004, foreign-sourced income received in Singapore by resident individuals is exempt from tax, except when it is received through a Singapore partnership.[2] Dividends paid by a fund based abroad are foreign-sourced income.
Tax can still be taken abroad before the dividend reaches you. An ETF domiciled in the US and held by a Singapore investor is subject to a 30% US withholding tax on dividends.[6] Where an ETF is domiciled affects how much is deducted.[6]
SRS: tax relief now, tax later
SRS is a voluntary scheme that complements CPF. Every dollar you contribute reduces your taxable income, up to the SRS cap and within the overall personal income tax relief cap of $80,000 a year.[3] SRS money can be invested in shares, unit trusts, bonds, fixed deposits and ETFs, and returns are not taxed before withdrawal.[3]
| SRS rule (page updated 15 April 2026) | |
|---|---|
| Yearly cap, Singapore Citizens and Permanent Residents | $15,300 |
| Yearly cap, foreigners | $35,700 |
| Withdrawal before the statutory retirement age | Fully taxable, plus a 5% penalty |
| Withdrawal at or after that age | Only 50% is taxable |
| Spreading withdrawals | Over up to 10 years |
The caps have been unchanged since 1 January 2016. The retirement age that counts is the statutory one in force when you made your first contribution.[3]
Example: $15,300 a year is $1,275 a month. If you later withdraw $40,000 in one year after the retirement age, only $20,000 of it counts as taxable income.
CPFIS: investing your CPF savings
CPFIS lets you invest part of your Ordinary Account (OA) and Special Account (SA). You must first set aside $20,000 in the OA and $40,000 in the SA; only savings above those amounts can be invested.[4] Unit trusts can be bought from both accounts. Shares can be bought from the OA only, up to 35% of investible savings, and gold up to 10%.[4]
Money left in CPF earns interest without risk. From 1 October to 31 December 2026 the OA pays 2.5% a year and the Special, MediSave and Retirement Accounts pay 4% a year.[5] The Government also pays extra interest on the first $60,000 of combined balances, of which at most $20,000 can come from the OA.[5] An investment made through CPFIS has to beat these rates after costs to be worthwhile. Compare costs in fund fees.
What it means for an index saver
- Cash is flexible. No tax on capital gains, no limit and no lock-in.
- SRS trades access for tax relief. You save tax today and pay tax on half of what you take out later. Early withdrawals cost 5% plus full tax.
- CPFIS competes with a guaranteed rate. The first $20,000 in the OA and $40,000 in the SA stay put either way.
- Fund domicile matters. Tax withheld abroad on dividends lowers the return in every pot.
Common questions
Do I pay tax when I sell an index fund in Singapore?
Singapore does not tax gains from the sale of assets that are capital in nature. Foreign-sourced income, such as dividends from a fund based abroad, is exempt for resident individuals when received in Singapore, unless it is received through a Singapore partnership.
Can I take money out of SRS early?
Yes, but a withdrawal before the statutory retirement age is fully taxable and carries a 5% penalty. At or after that age only 50% of the amount withdrawn is taxable, and you can spread withdrawals over 10 years.
Sources & further reading
We cite independent authorities so you can verify everything yourself. Last reviewed 3 Oct 2026.
- IRAS — e-Tax Guide: Tax Treatment of Gains or Losses from the Sale of Foreign Assets (Third Edition)
- IRAS — e-Tax Guide: Tax Exemption for Foreign-Sourced Income (Fifth Edition)
- Ministry of Finance — Supplementary Retirement Scheme
- CPF Board — CPF Investment Scheme options
- CPF Board — Earning attractive interest
- MoneySense — How do I choose between ETFs that track the same index?