Are CPF contributions payable on bursary and scholarship awards?
CPF contributions are not payable on bursary and scholarship awards given to your employee if they are genuine pre-estimates or reimbursements of expenses incurred for official purpose, e.g. you send your employee for further studies as part of his training. The cash award may include reimbursement of course fee, book fee, overseas living expenses, air tickets etc.
If you are using genuine pre-estimates, you must be able to show that the amount given to your employee is reasonable, e.g. there is a sound methodology to derive the quantum such as basing on recent cost or past receipts for similar expenses. Do note that any overseas living allowance should be reasonable based on the country of study, and cannot be simply based on your employee’s last drawn salary to qualify as a genuine pre-estimate. If you are giving reimbursements, the amount must not exceed the expenditure incurred.
If the cash payments are not genuine pre-estimates or reimbursements for official purpose(s), CPF contributions are payable.