Fringe benefits - accounting for output tax
Goods and services given free to all employees are known as fringe benefits.
The employer that is GST-registered is required to account for output tax (as though they have supplied) on the fringe benefits given to employees unless the value of each gift is less than S$200 and it does not form a series of gifts or if it is a free supply of food or accommodation.
A series of gifts refers to a situation where three or more gifts are given to the same person within a period of three months (depending on the company's GST filling frequency to decide the time period). In determining whether a gift constitutes a series of gifts, gifts purchased from non-GST registered persons must also be taken into account.
However, accounting of output tax is not required if GST was not incurred in the purchase of this benefit (e.g. The employer that is GST-registered pays for HDB flat rental (rental of bare residential property is an exempt supply) for its staff, there is no need to account output tax since no input tax was incurred.)
The provision of free services is not subjected to GST. For example, you need not charge output tax when you allow your staff to use the office telephone to make personal calls.
Fringe benefits - claiming input tax
The GST incurred on the expenses when company provides Fringe Benefits is claimable unless:
- The Fringe Benefit is a non-claimable item listed under Regulation 26 and 27 of GST (General) Regulations. For example, where there is a payment of club membership subscription fees paid by the company provided to the staff as a fringe benefit, the input tax incurred for the subscription fees is not claimable. Similarly, when a company decides to buy a motor car for its staff to reward good sales figures attained by the staff, the input tax incurred from the purchase of the motor car is not claimable.
- The Fringe Benefit is not given to all staff. This means that if the Fringe Benefit is only restricted to the Sole Proprietor, Partners or Directors of the company, the GST incurred on expenses are not claimable.
Discounted sale to employees
If goods are sold at a lower price to employees, GST is accountable on the net amount paid after the staff discount.
Find out more on Fringe Benefits (222 KB).
FAQs
- Club subscription fees (including transfer fees) charged by sporting and recreational clubs.
- Medical expenses, medical and accident insurance premiums incurred by your staff. Excluding those covered under the Work Injury Compensation Act or under any collective agreement under the Industrial Relations Act.
- Benefits provided to the family members or relatives of your staff.
- Costs and running expenses of a motor car (except for Q-plated cars with COE issued before 1 April 1998).
- Any transaction involving betting, sweepstakes, lotteries, fruit machines or games of chance.
Yes, you are entitled to claim GST incurred on utilities paid for your employee. As the supply of utilities is a supply of goods, you have to deem a supply and account output tax based on the cost. If you are charging your employee at a discounted price, GST is accountable on the discounted price.
- Traders having prescribed accounting periods of three months, it is their prescribed accounting period;
- Traders with prescribed accounting periods of six months, it is each half of the prescribed accounting period; and
- Traders with prescribed accounting periods of one month, it is each quarter of the calendar year, i.e. January to March, April to June, July to September and October to December.