Four things to note when reporting employees' income to IRAS

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Employers on the Auto-Inclusion Scheme (AIS), it's never too early to prepare for Tax Season 2025 by ensuring that your employees' income information is in order. As employees’ tax bills will be based on the income information provided by employers, it is crucial that employers ensure that complete and accurate information is submitted to IRAS.

Working out the taxable and non-taxable portions of remuneration can be tricky. To take the guesswork out of income submission, we’ve put together an essential guide for employers.

1. All gains and profits are taxable, including benefits

All gains and profits derived by an employee due to his employment are taxable. An area often overlooked is benefits received – whether in cash or in kind. When submitting employee’s income information, do declare both cash benefits and benefits-in-kind unless specially exempted under the Income Tax Act or covered by an existing administrative concession.

The $200 mark is a general guideline to determine if benefits such as gifts and awards are taxable. If such benefits exceed $200, the full value will be taxable and should be included in income submission to IRAS. For example, if your company gave a baby hamper with a retail value of $250 to an employee, the retail value of the hamper should be reported as taxable income as it is more than $200.

2. Benefits to promote creativity and skills upgrading are not taxable

To nudge employers to support knowledge-building, these benefits (both in-kind and cash) do not need to be reported for income submission if they are available to all staff:

• Subsidies for course fees
• Training for staff development
• Scholarship awards
• Examination fees
• Staff suggestion awards

   

3. Don’t miss out income/benefits outside the payroll system

Employees may receive benefits which are not tracked within the companies’ payroll system. If your company has paid for employees’ car benefits (company car, season parking charges) or their children’s school fees which may be paid directly by the company to the educational institutes, do declare these in the income submission of your employees to IRAS. Expatriate employees may receive benefits such as shares or overseas pension contributions from their overseas company. These benefits should be declared as they were derived while the expatriate employees were working in Singapore.

Another common mistake is missing out reporting premiums incurred on employees’ personal insurance policies because they were direct payments to the insurer.

4. Employee stock option is part of remuneration

Gains and profits arising from Employee Share Options (ESOP) plans and other forms of Employee Share Ownership (ESOW) plans are subject to tax if the plans are granted to an employee in respect of their employment in Singapore. An employer may under-report by failing to declare free shares granted to employees or did not follow the “deemed exercise” rule for foreign employees who ceased employment in Singapore. 

"Deemed exercise" rule refers to the taxability of shares with selling restriction when the foreign employee is no longer employed in Singapore, making the tax payable at that time.