Income Tax & GST – Chinese New Year Gifts to Employees


First of all, we wish all our readers a happy and prosperous Year of Rooster.

During this festive season, some employers have the practice of gifting red packets to their employees.  It is important for them to be aware of the related Singapore income tax and GST rules:

  • For Singapore income tax purposes, any gifts not exceeding $200 is considered not substantial in value and thus, the gifts to the employees do not constitute a taxable benefit.  However, if the gift exceeds this exemption threshold, the full value of the gifts is a taxable benefit to the employee.
  • For Singapore GST purposes, the Comptroller allows the employers to claim input tax incurred on the gifts for Chinese New Year to their employees (not to the employees’ family members).   On the other hand, the the cost of each gift exceeds $200, the employers will also be required to account for output tax.  Of course, the employers need not account for any output tax if they do not make any input tax claims.

 

 

If you have any questions regarding the above, contact us at support@whm-consulting.com.

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