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Responsibilities as an employer

The Form IR21 must be completed and signed by the company secretary/director, precedent partner, sole-proprietor, manager, honorary secretary/treasurer, representative of the non-resident company or a person authorised by the employer.

A)  How do I complete the Employee’s Employment Records Section of the Form IR21?

Example:
Assume the employee received his last salary $2500 on 12 May 13 for the period from 1 May 13 to 31 May 13. He has not turned up for work since 11 Jun 13. The amount of monies that could have been withheld for tax clearance would be $833 (10/30 x $2,500). Please complete as follows:

  1. Date of cessation: 10 Jun 13
  2. Date resignation tendered: not applicable
  3. Give reasons if < one month’s notice is given to IRAS before employee’s cessation: Employee left without giving notice
  4. Amount of monies withheld pending tax clearance: $833  
  5. Date last salary paid: 12 May 13
  6. Amount of last salary paid: $2,500
  7. Period applicable for last salary paid: 1 May 13 to 31 May 13
  8. Reasons for not withholding monies due from date of notification: not applicable


B)  How do I complete Income Section of the Form IR21?

You should report your employee's income for each calendar year in the Form IR21.

Example:
If the period of employment is from 1 Nov 2012 to 31 May 2013, you should report as follows:

Year 2012 - Income for period 1 Nov 2012 to 31 Dec 2012
Year 2013 - Income for period 1 Jan 2013 to 31 May 2013

You need not complete 2012 income if you are filing the Form IR21 after 30 Apr 2013 and the salary information has been transmitted electronically to IRAS.

Your may refer to the e-filing User Guide or Explanatory Notes to the Form IR21 to help you complete the form.

 

What do I do if there are unexercised stock options?

Under the Deemed Exercise Rule, a foreign employee is deemed to have obtained taxable gains from unexercised / restricted Employee Share Option Plan (ESOP) and unvested / restricted Employee Share Ownership Plans (ESOW) which he has at the time he ceases to work in Singapore with the company which granted him the ESOP or ESOW. This rule applies to ESOP and ESOW granted from 1 Jan 2003.

Employees affected

  • Foreigners (non citizens of Singapore).
  • Singapore Permanent Residents leaving Singapore permanently.
  • Singapore Permanent Residents posted to work overseas.


What types of ESOP and ESOW are affected?

They are:

  • Unexercised ESOP granted while an employee is employed in Singapore.
  • Restricted ESOP granted while employed in Singapore where the moratorium has not been lifted when the employee ceases employment with the company.
  • Shares granted while employed in Singapore under any ESOW with vesting imposed where the beneficial interest from the ownership of the shares has not yet been vested to the employee when he ceases employment with the company.
  • Restricted shares granted while employed in Singapore under any ESOW where the moratorium has not been lifted when the employee ceases employment with the company.


How do I compute taxable gain under ‘Deemed Exercised Rule’?

Taxable gain is A - B

A refers to the open market price of the shares as at:

  • one month before the date the individual ceases employment; or 
  • the date of grant of the ESOP or ESOW
    whichever is the later.

B refers to:

  • the exercise price of the shares under unexercised / restricted ESOP; or
  • the price paid or payable for shares acquired under an ESOW with vesting / moratorium imposed.


What if the actual gain upon subsequent exercise is less than the taxable gain?

The employee can apply for a reassessment of his tax liability. He can submit supporting information to Comptroller of Income Tax within:-

  • 6 years from the year of assessment following the year in which the deemed exercise rule is applied, if the year of assessment is 2007 or earlier. (For example, deemed gains for 2006 is taxable for the Year of Assessment 2007. The application for reassessment must be made by 31 Dec 2013.)
  • 4 years from the year of assessment following the year in which the deemed exercise rule is applied, if the year of assessment is 2008 or later. (For example, deemed gains for 2007 is taxable for the Year of Assessment 2008. The application for reassessment must be made by 31 Dec 2012.)


How do I compute actual gain?

Actual gain is C - B

C refers to:

  • the open market price of the shares on the date of exercise of ESOP / date the moratorium is lifted for restricted ESOP.
  • the open market price of the shares on the date of vesting / the date moratorium is lifted for shares acquired under an ESOW.

B refers to:

  • the exercise price of the shares under unexercised / restricted ESOP; or
  • the price paid or payable for shares acquired under an ESOW with vesting / moratorium imposed.

 

What supporting information is needed?

For ESOP, submit:

  • the date of exercise of ESOP or the date the moratorium is lifted
  • the open market price of the shares on the date of exercise of ESOP or the date the moratorium is lifted
  • the exercise price of the shares.

For ESOW, submit:

  • the date of vesting or the date the moratorium is lifted
  • the open market price of the shares on the date of vesting or the date the moratorium is lifted 
  • the price paid or payable for the shares.


Tracking Option for unexercised / restricted ESOP and unvested / restricted ESOW for employees seeking tax clearance

As an alternative to the Deemed Exercise rule, the Tracking Option allows a company the option to track when the ESOP or ESOW is exercised/vested.  The employer can track and report the gains from ESOP and ESOW based on actual gains realised. The employer would need to meet some conditions and apply to IRAS for the tracking.

See Tax Treatment of Employee Stock Options and other Forms of Employee Share Ownership Plan (Second Edition)    (582KB)

 

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Last Updated on 29 October 2013


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