believes that many wages Especially those who have worked for a long time must be familiar with “A prudent fund” already, which is considered a form of long-term savings for full-time employees working with the company.planning for retirementone way
But this is a savings that investors in thrift funds will receive. There will be tax issues involved which will need to be dealt with appropriately. Regarding the new employees who have just started working And the company has provident fund benefits for employees who are interested in investing. it should be thoroughly understood before making an investment decision. As can be described as follows:
- Get to know “Providing a Fund”
A prudent fund It is a fund jointly established by employers and employees voluntarily by both parties and deposited with securities companies licensed to operate a prudent fund management business. This is run by a fund manager that has been approved by the SEC to save money for employees.
There are 4 elements to the provident fund, namely 1) savings, 2) accrued benefits, 3) contributions, and 4) employee benefits. which is a reserve fund for retirement, retirement, disability, or as security for the family in the event of an employee’s death
How to invest in prudential funds will include
– Employee contributions It is part of the money the employee pays into the provident fund. which will be deducted from wages at the rate specified in each employer’s fund regulations at a rate of not less than 2% but not more than 15% of wages
And the law also allows employees to accumulate funds at a rate higher than the employer’s contribution depending on the conditions set out in each company’s fund regulations.
– Contributions from employers This is the money the employer deposits into the provident fund every time wages are paid. at the rate set out in each employer’s fund regulations at a rate of not less than 2% but not more than 15% of wages
- Taxes relating to a provident fund
For full-time employees who invest in prudent funds with the company It is considered a long-term saving. and also receive contributions from employers and profits from the operations of the fund which will also be fully exempt from tax In addition, those who pay accumulated money into the provident fund can also use that money as value .tax deductionas actually paid can be sub-described as follows:
1. Use the accumulated money for a tax deduction.
Savings that employee investors put into the fund Can be used for tax deduction as actually paid Up to 15% of income and when combined with a type of retirement savings, such as a retirement fund or mutual funds for savings or pension insurance premiums should not exceed 500,000 baht
Especially when sending the accumulated money to the fund, how much? The more tax savings are made. because there is less net income to calculate tax but permanent employees who are not members of the fund will not be able to save tax on this money
2. Profit on the fund’s investment is exempt from income tax
The total return on the provident fund’s investment, such as bond interest. profits from stock investment are exempt from tax This is in line with the policy to promote long-term savings for retirement. And this tax benefit also covers the case that the provident fund deposits money or invests in debt instruments. which will not be taxed at 15% of the interest
3. Tax benefits when taking money out of the fund
When an employee who invests in a provident fund receives money from the above four parts of the provident fund, namely contributions, contribution benefits, and contribution benefits. This part of the earnings is considered to be wage income on which the payee must pay tax.
but the government has giventax benefitsto members who receive a refund from the fund in accordance with the conditions set out in 3 cases:
3.1 In the event of leaving work on retirement In a case where the fund’s investor retires at no less than 55 years of age and has been a member of the fund for no less than 5 consecutive years or can be called “retire” according to the tax conditions Members will be exempt from tax from all 4 parts of the fund when taking money out of the fund. Because the government wants to encourage long-term savings for retirement.
But if a member stops at the age of 55, but has been a member of the Fund for less than 5 consecutive years, 3 parts must be used: 1) the benefit of the savings, 2) the contributions, and 3) the benefit of the contributions. to include the annual income tax calculation
But if there is no need to rush to use this money and want to maintain tax benefits then keep the money in the original fund waiting to be transferred to the new employer’s provident fund Or he can transfer money to a mutual fund that accepts money from the provident fund. It is also known as RMF for PVD to invest until the end of 5 consecutive years and then wait to withdraw money from the fund. is also exempt from all income tax.
3.2 In the event of leaving work before retirement If the employee who invests in the fund retires under the age of 55, even after being a member of the fund for 5 years, it is considered that the 4 parts of the income tax exemption are not be satisfied.
If members want to receive tax benefits you may have to consider options such as transferring money to RMF for PVD or keeping money in the same fund until the age of 55 and being a member of the fund for 5 years when withdrawing money out of the fund to qualify for tax exemption
or if members want to take money from the fund Along with resigning from work without waiting for 55 years, but being a member of the Fund for 5 years, according to the conditions, 3 parts of money must be used, namely 1 ) the benefits of the savings, 2) the contributions, and 3) the benefits of the contributions. to be included in the calculation for the annual personal income tax
In this regard, fund members who take money out of the fund are entitled to pay income tax which the employer pays once due to retirement If a member has worked for more than 5 years, he can “tax filing“There are two approaches:
Option 1 Take the 3 parts of the money as mentioned above. Total annual personal income tax calculation
Option 2 Take the 3 parts of the money as mentioned above. Tax calculations separate from other income. The Revenue Department requires that 3 parts of the money be deducted from expenses in the amount of 7,000 baht multiplied by the number of years of service. After deducting the remaining amount, deduct another 50% of the remaining money. and then used to calculate the tax according to the general income tax rate
3.3 In the case of leaving the fund without retiring from work If the employee of the investor resigns from being a member of the fund without resigning from the job Members will receive tax benefits for the accumulated money only. without having to bring the accumulated money to be included in the tax calculation Because this is the income that members have already filed an annual personal income tax return. and exempt from tax equal to the total accumulated amount directed to the fund. But members must bring the other 3 parts of the capital to be included in the calculation for the annual personal income tax.
Therefore, an employer who wants to save money for retirement If there is an opportunity to work with a company that provides a prudent fund as a benefit This is another long-term saving option that should not be ignored. And it can also be used as a deductible when calculating personal income tax.
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Source : Inflow Accounting
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