11 February 2015
The Inland Revenue Authority of Singapore (IRAS) has updated its website content on the tax treatment of medical expenses.
Tax deduction for medical expenses is capped at 1% of total employee remuneration accrued for the year. However, the cap on medical expenses is at 2% of total employee remuneration accrued for the year if the company has implemented any of the following portable medical benefits options:
- Portable Medical Benefits Scheme (PMBS)
- Transferable Medical Insurance Scheme (TMIS)
- Provided employees with inpatient medical insurance benefits in the form of portable medical shield plans (but the additional deduction will exclude premiums for riders that cover deductibles and co-payments); or
- Made ad-hoc contributions to employees’ Medisave accounts (subject to a cap of $1,500 per employee per year) during the relevant basis period.
In the update, IRAS has clarified that to arrive at the “total employee remuneration” for the purpose of computing the medical expense capping, companies do not need to reduce the remuneration amount by payouts it receives from the government such as Wage Credit, Jobs Credit, Special Employment Credit (SEC), absentee payroll and government-paid child care/ maternity/ paternity leave.
The update was made on 16 January 2015.
For further details, please refer to the IRAS website.