If an error is made when capturing information on SimplePay, this could result in CPF being calculated incorrectly. If the information is corrected on the system, SimplePay will take the changes into account when calculating CPF for December, the final month in the tax year.
For example:
An employee starts working on 1 January, but they are incorrectly marked as CPF Exempt. The payroll administrator only realises the error on 1 March and therefore CPF was not calculated in January or February. The CPF figure for December will be higher than expected, as the system uses the year-to-date figures to calculate December’s CPF, and therefore it will include an amount for January and February.
In some instances, it might not be possible for SimplePay to automatically correct the CPF calculation error. In this case a CPF adjustment is needed to correct the incorrect CPF figures. To add the adjustment:
- Go to the employee’s profile.
- Click on Add next to Payslip Inputs.
- Select CPF Adjustment under Other.
- Enter the amount of the adjustment for both the employee and employer CPF contributions. Add the amount as a negative figure to reduce the CPF for the year, or as a positive to increase the CPF figures for the year.
- Save.
For example:
A company uses SimplePay to pay both employees and independent contractors. An employee is captured on SimplePay with an appointment date of 1 January. However, they worked as an independent contractor from 1 January – 28 February, and they were then hired as an employee on 1 March. CPF was incorrectly added to their January and February payslips. It will not be possible to change their appointment date, as they have finalised payslips for January and February. An adjustment is therefore required.
Please note: An adjustment is a once-off item. It is therefore not used to change first or second year Permanent Residents to a higher contribution rate. Refer to this article on CPF at higher rates:
Payroll Processing > System Items > CPF at Higher Rates
To read more about CPF, visit the following help page:
Payroll Concepts > Statutory Deductions and Contributions > CPF