At a glance - Tax treatment of accommodation provided and related benefits
New! As announced in the Budget Statement 2013, the government will tax accommodation benefits enjoyed by employees (including director of a company) according to the market value with effect from the Year of Assessment 2015. The change is to simplify tax compliance and make our tax system more equitable. The taxable benefits will be assessed as follows:
| Benefit |
New Taxable Value |
| Place of Residence |
Annual Value (AV) of the premises (less rent paid by the employee), regardless of whether the premises is owned or rented by the employer.
The current method of determining AV will continue to apply, i.e.:
AV will be apportioned if accommodation is not provided for the whole year or accommodation is shared by 2 or more employees; and Changes in AV during the year are taken into account
|
| Hotel accommodation |
The actual costs incurred by the employer for the hotel stay provided.
|
| Furniture & Fittings (F&F) |
A percentage of AV of the premises, regardless of whether the F&F is owned or rented by the employer.
The percentage will be announced at a later date, after consultation with the industry.
|
IRAS will release further details on the changes by October 2013.
Accommodation provided to employee
Q1 What is the taxable value when accommodation is provided to an employee?
The taxable value is:
(1) The lower of:
- 10% of employment income, or
- the annual value of the premises
(2) Less rent paid by employee (if any)
Example
An employee was paid salary of $40,000, bonus of $4,000 and allowance of $5,000 in a calendar year. He was also provided with an unfurnished accommodation with an annual value of $35,000, but has paid a total rent of $1,000 in the year.
The taxable value is computed as follows:
(1) The lower of:
- 10% x ($40,000 + $4,000 + $5,000) = $4,900, or
- Annual value of $35,000
(2) Less rent paid of $1,000
In this case, the taxable benefit is $3,900 (i.e. $4,900 - $1,000).
Q2 Two or more employees shared the accommodation. What is the taxable value?
The taxable value is:
(1) The lower of:
- 10% of employment income, or
- the annual value/ number of employees sharing the premises
(2) Less rent paid by employee (if any)
Example
Assume similar circumstances as in the example under Question 1, except that the premises was jointly shared with another employee.
The taxable value is computed as follows:
(1) The lower of:
- 10% x ($40,000 + $4,000 + $5,000) = $4,900, or
- Annual value of $35,000/ 2 = $17,500
(2) Less rent paid of $1,000
In this case, the taxable benefit is $3,900 (i.e. $4,900 - $1,000).
Q3 What is the taxable value if accommodation is only provided for part of the year?
The taxable value is:
(1) The lower of:
- 10% of employment income x number of days accommodation was provided/ number of days employed in that calendar year, or
- the annual value x number of days accommodation was provided/ 365
(2) Less rent paid by employee (if any)
Example
| Employment period: |
365 days |
| Place of residence provided: |
90 days |
| Annual Value: |
$40,000 |
| Taxable Value of furniture & fittings: |
$78 |
| PUB bills provided: |
$250 |
| Rent paid by employee: |
$2,000 |
| No. of employees sharing the premise: |
1 |
| Employee's remunearion for the whole year: |
$180,000 |
The taxable value is computed as follows:
(1) The lower of:
- 10% x [($180,000 x 90/365) + 78 + $250] + 78 = $4,549, or
- Annual value of $40,000 x 90/365 = $9,863
(2) Less rent paid of $2,000
In this case, the taxable benefit is $2,549 (i.e. $4,549 - $2,000).
Q4 What is the taxable value if no salary is paid to the employee?
If no salary is paid to the employee but the employee is provided with a place of residence, declare the annual value of the place of residence (if it is owned by the employer) or the rent paid by employer (if it is rented).
Q5 Where can I get the annual value?
The annual value is the estimated annual rent that a property can fetch. The annual value of a property can be found on the property tax bill.
If you are not able to get the annual value, you can report the value which is the difference between the gross rent paid by employer and the rental for furniture and fittings.
Service apartment provided to employee
Q What is the taxable value if a service apartment is provided?
The taxable value is:
(1) The lower of:
- 10% of employment income, or
- the annual value of the premises
(2) Less rent paid by employee (if any)
For rental paid for hire of furniture and fittings, utilities and housekeeping services, declare them as benefits-in-kind in Appendix 8A.
If the service apartment is located within the hotel building, hotel accommodation rates are applicable.
Hotel accommodation provided to employee
Q What is the taxable value if a hotel room is provided?
Use the table to work out the taxable value.
| |
A) No. of persons |
B) Rate per person per month ($) |
C) No. of days hotel is provided |
D) Value ($) AXBX12XC/365 |
| Self |
|
250 |
|
|
| Spouse |
|
250 |
|
|
| Child > 20 years old |
|
250 |
|
|
| Children: |
|
|
|
|
|
|
|
25 |
|
|
|
|
|
50 |
|
|
|
|
|
100 |
|
|
Subtotal
|
|
Add: 2% x (basic salary per annum x C/365 days)
|
|
Taxable value (add the figures in column D)
|
|
Accommodation provided to director
Q1 What is the taxable value if accommodation is provided to a director?
The taxable value depends on whether the director's remuneration is less than the annual value of the premises.
| Director's remuneration is less than annual value |
Director's remuneration is equal to or more than the annual value |
| Taxable value = Annual value |
Taxable value =
(1) The lower of:
- 10% of remuneration, or
- the annual value of the premises
(2) Less rent paid by director (if any)
|
Q2 What is the taxable value if the accommodation is provided for less than a year?
The taxable benefit can be apportioned according to the duration for which the accommodation is provided.