Singapore GST – Input Tax Claim on Fringe Benefits Explained


A GST-registered business can claim input tax on fringe benefits provided to its employees only if they are supplied to the business and incurred for business purposes.


  • The goods/ services must be contractually supplied to the GST-registered business.
  • If they are contracted supplied in the employee’s names (e.g. mobile phone plans), as an administrative concession, the GST-registered business can claim the input tax if the employee is reimbursed and they are recognized as a business expense in the employer’s account.


In the e-Tax Guide issued on 6 Jan 2017, IRAS  introduced in paragraph 7 a “close nexus test” comprising six indicators to help businesses determine if a fringe benefit is given for the purpose of business.

Accommodation and related household expenses

  • IRAS generally does not regard them as having a close nexus to business operations.  Some exceptions are where they are necessary to ensure minimal disruptions to business operations (for example the provision of accommodation for an airline’s flight crew layovers) or are required for corporate activities (such as hotel accommodation during a company retreat).

Transportation and related expenses

  • IRAS generally does not not regard them as having a close nexus to business operations unless under the following circumstances:
    • Transportation for corporate activities
    • Transport of employees where limited public transport is available
    • Transport expenses incurred when employees work beyond their official working hours
    • Travel between home and airport for overseas business trip
    • Travel between home and external venues for work-related purposes (for example, client’s office)

Provision of Meals to Employees

  • IRAS generally does not consider expenses incurred for an employee’s meals to have a close nexus to business operations, unless the food and beverages were provided during business meetings, at the staff canteen at company functions and events or when employees work beyond their official working hours.

Clothing, accessories and personal grooming expenses 

  • Clothing, accessories and personal grooming expenses are typically considered incurred for an employee’s personal consumption, except for uniforms, protective clothing, and products sold by the business and worn by employees at work or work-related events to promote the corporate identity.

Medical expenses, health and wellness programs

  • These programs are generally deemed to be primarily incurred for the employee’s personal benefit unless they are necessary under regulatory requirements. Exceptions to the rule may include health and wellness programs organized as part of the corporate activities.

Professional membership fees, education and training expenses

  • They are typically considered having a close nexus to business operations as long as they are relevant to the employee’s job or career progression in the business.


A person is required to account for output tax on goods if such goods are given free to employees. The exceptions are free food and accommodation, gifts that cost less than or equal to $200 and gifts that cost more than $200 but for which no input tax was claimed previously.

Accounting for output tax is also required on deemed supply of services, where he allows his business goods to be used temporarily for free by his employees, except where no input tax has been allowed on the purchase of the goods or when there is a close nexus to his business activities.

If the person provides free services to his employees, he will not be required to account for output tax.

If you have any questions regarding the above, please contact

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