5 May 2015
On 4 May 2015, the Inland Revenue Authority of Singapore (IRAS) issued an e-Tax Guide, “GST: Fringe Benefits”.
The Guide explains the GST treatment for goods and services provided by a GST-registered person to employees as fringe benefits. Specifically, it highlights the circumstances to claim the GST incurred on fringe benefits and whether GST is to be accounted for when these benefits are given free to employees.
Fringe benefits refer to non-wage benefits provided by employers to their employees. These benefits are given to employees as part of their overall remuneration packages and can take the form of either goods or services.
Generally, the input incurred on fringe benefits is claimable provided that they are not disallowed under regulation 26 and 27 of the GST (General) Regulations.
Under those Regulations, input tax credit for GST incurred on the following are not allowed to be claimed:
- club subscription fee
- medical and accident insurance premium (excluding that where the insurance or the payment of compensation is obligatory under the Work Injury Compensation Act or the insurance is obligatory under any collective agreement within the meaning of the Industrial Relations Act)
- medical expenses (excluding those that are obligatory under the Work Injury Compensation Act or any collective agreement within the meaning of the Industrial Relations Act)
- family benefits
- any transaction involving betting, sweepstakes, lotteries, fruit machines or games of chance
- Q-plate motor car with COE issued on or after 1 April 1998 (including purchase and running expenses like petrol, maintenance, parking fees)
- SZ-plate motor car rented on or after 1 July 1999 (including running expenses), and
- Non-Q-plate motor car (including purchase and running expenses).
In some cases, output tax must be accounted for on the provision of goods to the employee, even if no consideration is charged. Such situations arise when business goods are given free to the employees or the goods are allowed to be temporarily used free of charge for their private purposes. There is no requirement to account for output tax on services provided free to employees.
This e-Tax Guide replaces the IRAS’s e-Tax Guide on “GST: Fringe Benefits (6th Edition)” published on 1 October 2012.
For full details, please refer the e-Tax Guide on the IRAS website.
Source: This article was extracted from the Inland Revenue Authority of Singapore’s (IRAS) website. Visit http://www.iras.gov.sg/ for more information.