To find out the beneficiary, check the policy document or check with the insurance provider.
Employer Not Under Legal Obligation to Payout to Employee
Employer has taken up a group term life insurance policy for the employees who are not the named beneficiary.
The premiums are not taxable if the employer (policyholder) has a choice or the discretion to decide whether he wants to disburse the insurance payout from the group insurance policy to the employee or his next-of-kin.
Employer Under Legal Obligation to Payout to Employee
The employees will be subject to tax on the share of benefits of premium paid if the employer is under legal obligation to disburse the payout to the employee in the event of claim.
Documents such as the employment contract, HR policy, staff handbook, collective agreement etc could contain the details of the contractual obligation by the employer.
Administrative Concession Effective YA 2013
Effective YA 2013, for group insurance policy where the employees are entitled to the payout contractually, employer can take up an administrative concession where the employees will not be taxed on the premiums , provided the employer does not claim a tax deduction for the said group insurance premiums in the corporate/business tax filing for the relevant year.
No upfront approval for this administrative concession is required. Once the employer avails himself of the administrative concession, he should apply the treatment consistently for all employees covered by the group insurance policy (i.e. employer cannot choose to report the staff benefit on the share of premiums paid for only some employees covered by the group insurance policy and claim a partial deduction of premium paid in their corporate/business tax filing).
Preparation of IR8A
When an employer does not take up the administrative concession and the beneficiary is the employee or the employer is under contractual arrangement to give the insurance payout to the employee or his next-of-kin, the employee will be taxed on the amount of premium attributable to him.
When preparing IR8A, attribution can be done using average premium per staff or any other appropriate method which is reasonable and consistent across years.
Employer paid total Group Term Life Insurance premium of $108,000 for 2012. As at 31 Dec 2012, the company has 300 employees. The employer may report an insurance premium of $360 ($108,000/300) in each employee's Form IR8A.
Employer purchased Group Term Life Insurance coverage of $50,000 for each employee. The premium is $2 per employee per $1,000 sum assured per annum. For 2012, the annual insurance premium per employee paid by the employer is $100 ($50,000/$1,000 x $2).
In case of staff turnover, premium attributable to an employee can be prorated based on his length of service in the calendar year or any other appropriate method which is reasonable.
Employer took up a Group Personal Accident Insurance for his 80 employees on 1 Jan 2013 by paying a total insurance premium of $8,000 for policy year 1 Jan 2013 to 31 Dec 2013.
Employee A resigned on 31 Mar 2013 and employee B resigned on 31 Aug 2013. When preparing the Form IR8A for year ended 31 Dec 2013, the employer may report an insurance premium of $25 ($8,000/80 x 3/12) and $67 ($8,000/80 x 8/12) in the Form IR8A of A and B respectively.
Employer has already submitted the employees' income information to IRAS for YA 2013. The share of group insurance premiums paid for the respective employees were included in their Forms IR8A.
The employer may amend the IR8A Forms to exclude the insurance premium if the employer decides not to claim a tax deduction for the group insurance premiums in the corporate/business tax filing.
For details, please refer to Guidelines on making amendments to submitted information for Form IR8A and after filing tax clearance for Form IR 21.