COMMISSIONS earned by car salesmen on loans offered with the vehicles are, in some cases, deals that have nothing to do with the motor traders.

Can the industry be expected to monitor, let alone pay Central Provident Fund (CPF) contributions on these undeclared extra wages?

This was among the issues that surfaced after news broke on Wednesday that the CPF Board is investigating several motor traders for failing to pay CPF contributions on commissions their salesmen earn on car loans.

The board deems car loan commissions as additional wages and are therefore liable to CPF contributions even if salesmen's earnings have hit the $4,500-a-month ceiling.

The board has so far written to two major distributors in the first such investigation into the motor trade.

But the move is likely to have implications for other motor companies, as well as companies in industries where sales staff get commissions from third parties.

The CPF probe has put the spotlight on a common trade practice.

Most dealerships sell cars packaged with a loan from a bank or finance house, with the salesmen earning a 1to 3per cent cut of the loan amount.

Some dealerships lump this into the monthly pay cheque; others leave it off the books and allow the salesmen to pocket the money separately.

Motor Traders Association president Michael Wong said if motor companies do not have formal arrangements with banks or finance houses, they do not track commissions the institutions pay car salesmen for swinging a loan their way.

"Anything outside my payroll I'm not aware," he said. "This is an industry of free wheeling and dealing, not just here but everywhere in the world. We leave salesmen room to manoeuvre."

Although the CPF probe was sparked by car salesmen who feel their loan commissions should have CPF contribution, not all salesmen share the sentiment. Some prefer not to contribute to CPF so as to have a fatter take-home pay packet.

Others said it is hard to know how much commission they eventually earn because rising competition has made it necessary for salesmen to offer customers discounts out of their own pocket.

A veteran salesman with a listed group said: "When we come across tough customers, we sometimes throw back all our commissions - just to meet our sales quota."

Several motor companies were in a scramble after news broke of the CPF probe but some, like multi-brand agent Wearnes, are confident they have complied with all CPF regulations and guidelines.

Others were still figuring out what was happening. Mazda Motor managing director Phng Hooi Chay said: "We have to clarify this with our human resource department."

Nissan and Subaru agent Tan Chong International said: "We don't know what the fuss is about."

The fuss, according to a Singapore Manual and Mercantile Workers Union member, is "we are entitled to CPF contributions on commissions".