Running payroll for a Singapore company looks deceptively simple from the outside — calculate gross pay, deduct CPF, file annual income forms, done. In practice it is one of the more error-prone areas of corporate compliance, and the rules shift almost every year. The 2026 calendar year brings yet another adjustment to the Ordinary Wage ceiling, another step-up in senior-worker rates, and an unmissable Auto-Inclusion Scheme deadline of 1 March that catches out hundreds of employers a year.
This guide pulls everything an employer needs to know in one place: 2026 CPF rates, OW and AW ceilings, statutory contributions beyond CPF, payroll-related tax filings to IRAS, recordkeeping rules and the most common penalties we see imposed. It is written for HR managers, finance leads and founders running their first Singapore company — anyone who needs to get payroll right the first time. For a wider compliance picture, our Singapore company compliance checklist sets out the full ACRA/IRAS/CPF/MOM landscape.
The Three Statutory Contributions Every Employer Must Pay
Three contributions sit on top of (or alongside) the gross salary you pay each Singapore Citizen or Singapore Permanent Resident employee:
- CPF — Central Provident Fund contributions, governed by the Central Provident Fund Act 1953.
- SDL — Skills Development Levy, payable on all employees (including foreign work pass holders) up to a wage cap.
- Ethnic / community funds — CDAC, MBMF, ECF or SINDA, depending on the employee’s race/community, paid alongside CPF.
For foreign work pass holders (Employment Pass, S Pass, Work Permit), there is no CPF, but the employer remains liable for SDL. Higher levels of monthly Foreign Worker Levy (FWL) also apply to S Pass and Work Permit holders.
2026 CPF Contribution Rates and Ceilings
From 1 January 2026, the CPF Ordinary Wage ceiling rose to S$8,000 per month, completing the multi-year step-up first announced in Budget 2023. The Additional Wage ceiling continues to be calculated as S$102,000 minus total OW subject to CPF for the year, and the CPF Annual Limit remains at S$37,740 per employee.
The headline contribution rates for 2026 are:
| Employee Age | Employer (%) | Employee (%) | Total (%) |
|---|---|---|---|
| 55 and below | 17 | 20 | 37 |
| Above 55 to 60 | 16.5 | 17 | 33.5 |
| Above 60 to 65 | 12.5 | 11.5 | 24 |
| Above 65 to 70 | 9 | 7.5 | 16.5 |
| Above 70 | 7.5 | 5 | 12.5 |
From 1 January 2026 the employer’s share of the senior worker rate (above 55 to 65) rose by 0.5 percentage points compared with 2025. Where the employee has already reached the Full Retirement Sum, the additional contributions are credited to the Ordinary Account; otherwise they go to the Retirement Account up to the FRS.
Authoritative source: the CPF Board’s employer portal publishes the full contribution rate tables and updates them in step with statutory changes.
Ordinary Wages vs Additional Wages
The OW/AW distinction trips up many first-time employers and is the single most common cause of CPF underpayment.
Ordinary Wages (OW)
Wages paid wholly or exclusively in respect of the employee’s work in a given month, payable before the due date for CPF contributions for that month. Examples: monthly basic salary, fixed monthly allowances (transport, meal, shift), overtime for the month. CPF is computed on OW capped at S$8,000 per month from 2026.
Additional Wages (AW)
Wages that are not granted wholly or exclusively for that month, or that are paid at intervals of more than a month. Examples: annual bonus, leave pay, AWS, performance bonus, commissions paid quarterly. CPF on AW is capped at the AW ceiling (S$102,000 minus total OW subject to CPF for that year).
If you misclassify a quarterly commission as OW, you will under-contribute on the AW side and over-contribute on the OW side. Both are correctable, but the rectification process — including refund of CPF applications — is more painful than getting it right at source.
SDL and Community Fund Contributions
SDL is payable by employers on the gross monthly remuneration of all employees (Singapore Citizens, PRs and foreigners) at 0.25% of the first S$4,500 of monthly wages, subject to a minimum of S$2 per employee per month. SDL is collected by the CPF Board on behalf of the SkillsFuture Singapore Agency.
Ethnic / community funds (CDAC, ECF, MBMF, SINDA) are deducted from the employee’s wages and remitted with CPF. Contribution amounts are tiered by the employee’s monthly wage band; current tables are published on the CPF Board’s website.
Filing and Payment Deadlines
Two recurring deadlines dominate the payroll calendar:
Monthly: CPF (and SDL/community funds) by 14th
CPF contributions, SDL and community fund deductions for a given month must be paid by the 14th of the following month. If the 14th falls on a weekend or public holiday, the deadline rolls forward to the next working day. Late payment attracts interest at 1.5% per month (annualised 18%) and, in serious or repeated cases, prosecution.
Annual: IR8A by 1 March
Every employer must report each employee’s employment income for the preceding calendar year via Form IR8A (and Appendices 8A/8B where relevant) by 1 March each year. Employers who hired 5 or more employees in 2025 are mandatorily on the Auto-Inclusion Scheme (AIS) for YA2026 and must submit electronically through myTax Portal.
Employers under AIS do not issue paper IR8A forms to employees because the data flows directly into the employees’ tax returns. Employers below the 5-employee threshold may still join AIS voluntarily; otherwise they must hand a physical or digital IR8A to each employee by 1 March.
Ad hoc: IR21 (tax clearance)
If a non-Singapore-Citizen employee ceases employment, leaves Singapore for more than three months, or is posted overseas, the employer must file Form IR21 at least one month before the cessation date or departure, whichever is earlier. The employer must also withhold all monies due to the employee until IRAS issues a tax clearance directive. Skipping IR21 is one of the most expensive payroll mistakes — IRAS can hold the employer personally liable for the unpaid tax.
The full IR8A/Appendix 8A explanatory notes are published on the IRAS website each Year of Assessment, and the Ministry of Manpower (MOM) publishes guidance on related employment-law obligations such as itemised payslips and the Key Employment Terms.
Payslip and Recordkeeping Rules
Under the Employment Act, every employer must issue an itemised payslip to each employee covered by the Act, either with payment of salary or within three working days. Acceptable formats include soft copy, hard copy or handwritten. The payslip must include items such as employer and employee particulars, basic salary, fixed allowances, deductions (with reasons), overtime hours and pay, net pay, and the start/end of the salary period.
Employment records — payslips, IR8A submissions, leave records, employment contracts — must be kept for at least two years for current employees and one year after the cessation of employment for ex-employees. CPF records (electronic confirmation of contributions, OW/AW computations) should be kept for at least five years.
Payroll for Foreign Work Pass Holders
Foreign employees on Employment Pass, S Pass, Work Permit and most other passes are not subject to CPF. The employer’s obligations are different but no less critical:
- SDL: Payable on all foreign employees regardless of pass type.
- Foreign Worker Levy (FWL): Payable monthly on each S Pass and Work Permit holder. Tier and quota rules apply by sector.
- Medical insurance: Mandatory inpatient and day-surgery cover (currently a minimum annual coverage of S$60,000) for S Pass and Work Permit holders.
- IR21 tax clearance: Required when the employee leaves the company or Singapore.
If your COMPASS-rated EP application is still in the works, our COMPASS points calculator guide walks through how to score the foundational and bonus criteria before you commit to a candidate.
Common Payroll Errors — and How to Avoid Them
- Miscalculating CPF on AW. Year-end bonuses paid in December that exceed the AW ceiling are the most common source of underpayment. Run a year-to-date AW reconciliation in November so you know what room is left.
- Forgetting SDL on foreign employees. SDL is an employer-only contribution on all employees, not just locals.
- Late CPF payment on the 14th. The 14th-of-the-month deadline is hard. Set bank approvals well in advance — payments made on the deadline day after banking cut-off are treated as late.
- Missing IR21 before a foreign employee leaves. Always run the leaver checklist: IR21, withhold final monies, cancel the work pass within 7 days of the last working day on the MOM portal.
- Not joining AIS once you cross 5 employees. AIS becomes compulsory the year after you cross the threshold. Late AIS registration triggers IRAS reminders and, for repeat non-compliance, fines under the Income Tax Act 1947.
For a wider view of how late filing and late payment penalties stack up across ACRA, IRAS and CPF, see our guide on Singapore compliance penalties.
Outsource or In-House?
Most companies under 50 headcount outsource payroll because the marginal cost of a payroll bureau is low and the consequences of getting it wrong are high. The right answer depends on three factors: the complexity of your wage structure (commissions, share schemes, expat allowances), whether you have an existing finance team with capacity, and how often your headcount changes month-to-month.
Whichever route you choose, make sure someone owns three things every month: (1) running the payroll register, (2) submitting CPF/SDL by the 14th, and (3) reconciling year-to-date OW and AW so the December bonus run does not surprise you.
Conclusion
Payroll in Singapore is highly rule-bound but not opaque. The CPF Board, IRAS and MOM publish clear guidance, and the penalty regime is real but proportionate when employers self-correct. Once you have a clean monthly process, an annual IR8A run, and a leaver checklist that triggers IR21, the system runs quietly in the background.
If you would like a second pair of eyes on your payroll setup — or you would prefer to hand the whole thing to a bureau and stop thinking about CPF deadlines — the team at Raffles Corporate Services runs payroll for clients across professional services, fintech, F&B and manufacturing sectors and is happy to walk through your specific situation.
— The Editorial Team, Raffles Corporate Services