Relocation allowance and reimbursement

Relocation benefits include:

• Cash allowances given to you for relocating to another country
• Reimbursements of your expenses related to the relocation to another country

How is relocation allowance taxed?

• The full amount of cash allowances given to cover relocation expenses, whether you have incurred the expenses or not, is taxed as employment income.

Are claims for relocation expenses deductible against the allowance?

• Claims for relocation expenses are deductible against the allowance provided. The excess of the relocation allowance from the relocation expenses is taxable.
• If the relocation expenses claimed exceed the allowance given, the excess will be disregarded and cannot be used to offset against other income.

What relocation expenses are deductible against the relocation allowance?

• Cost of airfare to bring you, your family members and pets to the country
• Freight / storage charges to move personal effects
• Cost of temporary accommodation (i.e. hotel or serviced apartment) incurred before the commencement of employment
• Settling-in expenses (e.g. first purchase of beddings, kitchen appliances, subscription to broadband Internet access and enrolment for immersion programmes for expatriates)

What relocation expenses are non-deductible against the relocation allowance?

• Personal expenses such as payment for meals, laundry and transport
• Recurrent expenses after the initial settling-in period (e.g. ongoing storage costs incurred for storing your personal effects during the period of employment in Singapore).

How is relocation reimbursement taxed?

• Generally relocation reimbursement is not taxable, as you do not derive a personal benefit. The reimbursement is compensatory in nature and for the benefit of the employer.
• However, reimbursement of personal expenses that are granted in respect of employment and confer a benefit on you are taxable

Is reimbursement of loss incurred on disposal of personal assets resulting from relocation taxable?

• Such a reimbursement of loss is taxable because:
  1. The reimbursement of the loss was made in respect of employment (as a consequence of the employer and employee relationship); and
  2. You derive a personal benefit in terms of obtaining an indemnity against personal loss in having sold your personal assets at a lower price.

Home leave passages

Is home leave passage given by the employer taxable?

• As a tax concession, only 20% of the cost of the leave passage is taxed. This concession is limited to:
  
  

  	No. of home leave passages per year
  Expatriate employee	one
  Spouse	one
  Child who is: Unmarried; and Under 16 years old. If over 16, he is schooling; or Physically or mentally disabled	two

  
  
• For subsequent home leave passages, or where passages are provided to other family members, the full cost of the passage is taxable.

If the company pays a lump sum cash amount for the home leave passage to me, is the tax remission or concession still applicable?

• The full cash amount is taxable.

Are leave passages provided to a foreigner and his family on taking up his first appointment in Singapore, and on their return upon termination of employment, taxable?

• Such leave passages are not taxable.