IRAS has revised its guidance on employee fringe benefits, adding a new section that clarifies the GST treatment of common benefits provided by employers.
The Inland Revenue Authority of Singapore (IRAS) has updated its guidance on Employee fringe benefits, providing additional clarification on the Goods and Services Tax (GST) treatment of benefits that employers provide to their employees.
The revised guide explains that when an employer provides fringe benefits, it is regarded as making a supply and may be required to account for output GST on the value of those benefits. A new section has been added to address common employee benefits and clarify when output tax applies in different circumstances.
IRAS defines employee fringe benefits as goods or services provided free of charge or at a reduced cost as part of an employee’s remuneration package. Examples include company cars for private use, free meals, accommodation and the personal use of business mobile phones.
Accommodation provided to employees
Under the updated guidance, employers are not required to account for output GST when providing non-residential accommodation, such as hotels, chalets and boarding houses, for employees.
The same GST treatment also applies to furnished residential accommodation provided to employees, including workers’ dormitories and serviced apartments.
Mobile phones given as employee gifts
The revised guide provides specific guidance on the GST treatment of mobile phones supplied to employees.
Where a mobile phone is purchased with the intention of being given as a gift and the employer has claimed input tax, output tax must be accounted for if the purchase price exceeds SGD 200. For GST purposes, employers may use the purchase price paid to the supplier as the open market value.
If a phone was initially acquired for business use but is subsequently given to an employee as a gift, output tax must also be accounted for where input tax has been claimed and the purchase price exceeds SGD 200. In these cases, the open market value must be determined based on the price of identical or similar goods at the time the phone is transferred.
Mobile phones retained as business assets
No output tax is required where a mobile phone remains a business asset and is provided to an employee solely for temporary business use.
This treatment applies where the phone is used exclusively for business purposes and the employer has apportioned the input tax claimed on the purchase, claiming only the portion attributable to business use.
Purpose of the update
According to IRAS, the new section is intended to help employers determine when GST applies to commonly provided employee fringe benefits and how those benefits should be valued when output GST is required.
