Medical Expenses

Watch our e-Learning video to learn about the tax deductibility of medical expenses.

Medical expenses incurred for employees are tax-deductible as long as they are capped at 1% of the total employee remuneration accrued for the year. View Example 1 (PDF,56KB) for an illustration of how the medical expense capping is applied.

The cap increases to 2% if the company implements any of the following:

  • Portable Medical Benefits Scheme (PMBS)
  • Transferable Medical Insurance Scheme (TMIS)
  • Provision of inpatient medical insurance benefits in the form of portable medical shield plans (additional deduction excludes premiums for riders that cover deductibles and co-payments1)

Learn about the portable medical benefits and qualifying conditions at the Ministry of Manpower's website.

If your company makes ad-hoc contributions to its employees' MediSave accounts (subject to a cap of $2,7302 per employee per year), it will also enjoy the additional tax deduction beyond the 1% limit on the amount of ad-hoc MediSave contributions made, up to the higher medical expenses tax deduction limit of 2%. This is even if the company does not adopt any of the portable medical benefits arrangements. View Example 2 (PDF, 56KB) for an illustration of the tax deduction allowable in such a scenario.

Medical expenses include:

  • Maternity health care
  • Natal care
  • Preventive and therapeutic treatment expenses
  • Provision of a medical clinic by the employer
  • Cash allowance in lieu of medical expenses
  • Dental expenses
  • Premium incurred on medical and dental insurance3
  • Contributions made by a company to the employees' CPF MediSave accounts, subject to a maximum deduction of $2,7302 for that year for each employee (does not include employees who are holding a professional visit pass, an employment pass or a work permit)

1 If the medical expenses (including rider premiums) do not exceed 1% of the total remuneration of the employees for the relevant basis period, the full amount of medical expenses is deductible.

If the medical expenses (including rider premiums) exceed 1% of the total remuneration of the employees for the relevant basis period, any excess amount which does not relate to rider premiums is deductible up to another 1% of the total remuneration of the employees for the relevant basis period.

2 With effect from 1 Jan 2018, the cap has been raised from $1,500 to $2,730 per employee per year. This is to encourage companies to make more contributions to their employees’ MediSave accounts for their medical needs.

3 Learn about the tax treatment of premium paid for Group Medical Insurance

What Constitutes Employee Remuneration for the Purpose of Computing the Medical Expense Capping

Total employee remuneration includes:

  • Employees' salaries, allowances and bonuses
  • Directors’ executive remuneration
  • CPF contributions

It excludes:

  • Directors' fees
  • Medical expenses
  • Cash allowances in lieu of medical benefits
  • Benefits-in-kind (e.g. accommodation, home leave passage, employee stock options provided by the employer, actual income tax borne by the employer)
  • Skills development levy (SDL)
  • Foreign worker levy (FWL)
  • Retrenchment payments made for the compensation of loss of employment

To arrive at the 'total employee remuneration' for the purpose of computing the medical expense capping, your company does not need to reduce the remuneration amount by the amount of payouts it receives from the government (such as Wage Credit, Jobs Support, Special Employment Credit, absentee payroll and government-paid child care/ maternity/ paternity leave).


A company incurred $100,000 in employees' salaries, allowances, bonuses and CPF contributions and received $5,000 from the government for government-paid maternity leave for its affected employees.

Assuming the company implemented portable medical benefits, the medical expenses cap should be computed as follows:

2% x $100,0004= $2,000

4 The full $100,000 should be used in computing the cap and not $95,000 (i.e. $100,000 - $5,000).

Tax Treatment of Medical Expenses for Companies Entitled to Concessionary Taxation

Medical expenses in excess of the maximum allowable amount (i.e. 1% or 2% of total employee remuneration) are treated as income and taxed at the prevailing Corporate Income Tax rate when the company derives trade income that is exempt from tax or subject to tax at a concessionary rate (e.g. pioneer companies, companies awarded certain incentives).

Motor Vehicle Expenses

Watch our e-Learning video to learn about the tax deductibility of motor vehicle expenses.

Motor vehicle expenses incurred on goods and commercial vehicles such as vans, lorries and buses are tax-deductible. Some examples of motor vehicle expenses are repairs, maintenance, parking fees and petrol costs.

No deduction is allowed on motor vehicle expenses incurred on private cars (e.g. S-plated cars) and business cars (e.g. Q-plated and RU-plated cars registered on or after 1 Apr 1998). This applies for directly incurred expenses or expenses paid in the form of reimbursement, even if the cars are used for business purposes.

Private cars (e.g. S-plated cars) and business cars (e.g. Q-plated and RU-plated cars registered on or after 1 Apr 1998) Reimbursement of employees' S-plated car expenses Transport allowance to staff Foreign registered cars used exclusively outside Singapore (e.g. rental car in Malaysia) Q-plated and RU-plated business cars registered before 1 Apr 1998
Non-deductible Non-deductible Deductible (Do note that the transport allowance is taxable as part of the employment income of employees) Deductible, if the cars are used for business purposes Deductible subject to the following cap:
$35,000 / cost of vehicle x motor vehicle expenses relating to that vehicle

Difference Between Expenses Incurred on Transportation Services and Private Hire Car Expenses

Expenses incurred on transportation services are payments for services to commute from 1 place to another without the passenger having any control or possession of the motor car.

Payments for transportation services for business purposes qualify for tax deduction. In contrast, expenses incurred on hiring a private car and the operation or maintenance of a hired private car are not tax-deductible, unless the company is carrying on the business of hiring out cars or providing driving instruction.

Registration Costs for Patents, Trademarks, Designs & Plant Varieties

Tax deduction can be claimed on qualifying costs incurred in registering patents, trademarks, designs and plant varieties (collectively referred to as 'qualifying intellectual property rights' or 'IP') up to the Year of Assessment (YA) 2025 under Section 14A of the Income Tax Act.

Your company does not need to file any supporting documents with its Corporate Income Tax Return to claim tax deduction. However, supporting documents must be kept and submitted upon IRAS’ request.

Qualifying IP Registration Costs

The tax deduction applies to costs incurred by a company in registering IP for its trade or business if both the legal and economic ownership of the IP belong to the company.

Economic ownership means that the economic benefits from the exploitation of the intellectual property are accrued to the business entity.

Registration Costs

The registration costs that qualify for tax deduction are official fees and professional fees.

Official fees refer to payments made to the Registry of Patents, Registry of Trade Marks, Registry of Designs or the Registry of Plant Varieties in Singapore or an equivalent registry outside Singapore for the:

  • Filing of an application for a patent, for registration of a trademark or design or for the grant of protection of a plant variety
  • Search and examination report on the application for a patent
  • Examination report on the application for grant of protection of a plant variety
  • Grant of a patent

Professional fees refer to fees incurred in relation to the registration of a patent, trademark, design and/or plant variety, including fees payable to a person acting as an agent for:

  • Applying for any patent, for the registration of a trademark or design or for the grant of protection of a plant variety in Singapore or elsewhere
  • Preparing specifications or other documents for the Patents Act (Cap. 221), the Trade Marks Act (Cap. 332), the Registered Design Act (Cap. 266), the Plant Varieties Protection Act (Cap. 232A) or the intellectual property law of any other country/ territory in respect of patents, trademarks, designs or plant varieties
  • Giving advice on the validity or infringement of any patent, registered trademark, registered design or grant of protection of a plant variety

Allowable Costs

Costs for prior art searches and translation costs where overseas intellectual property offices require documentation or specifications to be submitted in their native languages are also tax-deductible.

Qualifying Period

Registration of Qualifying Period
Patents Registration costs incurred from 1 Jun 2003 to the last day of the basis period for YA 2025
Trademarks, Designs and Plant Varieties Registration costs incurred during the basis periods from YAs 2011 to 2025

Enhanced Deduction for Qualifying IP Registration Costs

To encourage businesses to register and protect their IPs, the tax deduction for qualifying IP registration costs has been enhanced from 100% to 200% for the first $100,000 of qualifying IP registration costs incurred for each YA from YAs 2019 to 20251.

For qualifying IP registration costs incurred in excess of $100,000 for each YA from YAs 2019 to 2025, your company can claim 100% tax deduction.

1 From YAs 2011 to 2018, expenditure incurred on the registration of IP qualifies for benefits under the Productivity and Innovation Credit (PIC) scheme.

Disposal of Patents, Trademarks, Designs and Plant Varieties

Where tax deduction has been claimed for costs incurred in registering qualifying IP rights, it may be subject to claw-back adjustments if your company sells, transfers or assigns all or any part of these IP rights:

  1. Base deduction

The proceeds received for selling, transferring or assigning the rights are deemed as income and taxed in the year of disposal. The amount taxed is capped at the 100% base deduction previously allowed.

  1. Enhanced deduction

If your company was previously granted PIC benefits or the 100% enhanced deduction in YAs 2019 to 2025 on qualifying registration costs, these benefits are subject to claw-back if the rights are disposed within 1 year from the date of filing of the application.

  • For claw-back of PIC benefits (cash payout/ enhanced deduction/ PIC Bonus) granted in YAs 2011 to 2018, refer to  Annex C of the e-Tax Guide (PDF, 831KB).
  • For claw-back of the 100% enhanced deduction granted in YAs 2019 to 2025, an amount equal to the deduction previously granted is deemed as income of the company for the YA relating to the basis period in which the sale, transfer or assignment occurs.

Reinstatement Costs

Generally, reinstatement costs (i.e. expenses incurred to reinstate premises to its original condition before vacating it at the end of the tenancy agreement) are not tax-deductible as they are considered capital expenditure disallowed under Section 15(1)(c) of the Income Tax Act. This is because such expenditure is usually incurred in respect of business premises vacated and no longer used for acquiring income. 

However, tax deduction can be claimed for reinstatement costs when:

  • Costs claimed do not relate to any provisions made under the Financial Reporting Standard (FRS) 161 (i.e. the expense has been incurred); 
  • Costs claimed are contractually provided for in the tenancy agreement. These are considered as part of the costs of renting the property for use in the business in the first place; and
  • The premises are not vacated due to any cessation of business.

1 Under paragraph 16 of FRS 16, the cost of an item of property, plant and equipment includes the initial estimate of the costs of dismantling and removing the item and restoring the site on which the item is located, the obligation for which an entity incurs either when the item is acquired or as a consequence of having used the item during a particular period for purposes other than to produce inventories during that period.

Renovation & Refurbishment Works Expenditure (Section 14Q)

Watch our e-Learning video to learn about the tax deductibility of expenses incurred on renovation and refurbishment (R&R) works.

Tax deduction can be claimed for qualifying R&R costs incurred under Section 14Q of the Income Tax Act. Such expenditure does not qualify for capital allowances as it is not incurred for the provision of ‘plant or machinery’.

Section 14Q deduction is given to a business that is carrying on a trade, business or profession. Investment holding companies do not qualify for Section 14Q deduction as they do not carry on a trade or business for tax purposes.

Your company does not need to file any supporting documents with its Corporate Income Tax Return to claim tax deduction. However, supporting documents must be kept and submitted upon IRAS’ request.

Qualifying Expenditure

The following items qualify for Section 14Q deduction, provided that they do not affect the structure of the business premises:

  • General electrical installation and wiring to supply electricity
  • General lighting
  • Hot/ cold water system (pipes, water tanks, etc.)
  • Gas system
  • Kitchen fittings (sinks, pipes, etc.)
  • Sanitary fittings (toilet bowls, urinals, plumbing, toilet cubicles, vanity tops, wash basins, etc.)
  • Doors, gates and roller shutters (manual or automated)
  • Fixed partitions (glass or otherwise)
  • Wall coverings (such as paint, wallpaper, etc.)
  • Floorings (marble, tiles, laminated wood, parquet, etc.)
  • False ceilings and cornices
  • Ornamental features or decorations that are not fine art (mirrors, drawings, pictures, decorative columns, etc.)
  • Canopies or awnings (retractable or non-retractable)
  • Windows (including the grilles, etc.)
  • Fitting rooms in retail outlets
  • Hacking work on premises
  • Water meter installed to enable renovation works
  • Hoarding works
  • Insurance for renovation works qualifying for Section 14Q deduction

Deductions are not allowed on expenditure relating to:

  • Designer fees or professional fees
  • Antiques
  • Fine art including painting, drawing, print, calligraphy, mosaic, sculpture, pottery or art installation
  • Works carried out to a place of residence provided to or to be provided to employees

Renovation costs that affect the structure of the business premises and do not qualify for S14Q deduction may qualify for Land Intensification Allowance, if approved by the Singapore Economic Development Board (EDB) or Building and Construction Authority (BCA).

Expenditure Cap and Claim Period

R&R costs that qualify for tax deduction as a business expense are capped at $300,000 for every relevant 3-year period, starting from the year in which the R&R costs are incurred.

The Section 14Q deduction must be claimed by the company over 3 consecutive Years of Assessment (YAs) starting from the year in which the R&R expenditure is incurred (i.e. 1/3 of the R&R expenditure is to be claimed in each of the 3 YAs).

Any R&R costs that are not claimed in the YA relating to the basis period in which they are incurred do not qualify for tax deduction in subsequent YAs.

The Section 14Q deduction is given only if your business continues to carry on the trade, business or profession for which the R&R costs are incurred. If the trade, business or profession ceases permanently in any of the basis periods of the 3 YAs, the Section 14Q deduction also ceases with effect from that YA. The balance of the Section 14Q deduction yet to be claimed is not allowed as a tax deduction in the subsequent YAs.


YA 2018 YA 2019 YA 2020 YA 2021 YA 2022
Total Qualifying R&R Expenditure Incurred $150,000 $30,000 $300,000 - -
Qualifying R&R Expenditure $150,000 $30,000 $120,000* - -
Deduction Allowed $50,000 ($150,000/ 3 years) $60,000 ($50,000 + $10,000 [$30,000/ 3 years]) $100,000 ($50,000 + $10,000 + $40,000 [120,000/ 3 years]) $0 $0

* In YA 2020, the qualifying R&R expenditure allowed is capped at $120,000 ($300,000 - $150,000 - $30,000).

The company permanently ceases business in the basis period of YA 2021. As such, the balance of Section 14Q expenditure yet to be claimed of $90,000 ($10,000 arising from YA 2019 qualifying expenditure and $80,000 arising from YA 2020 qualifying expenditure) is not allowed as a tax deduction in YAs 2021 and 2022.

Relocation of Business Premises

If your company incurred qualifying R&R costs, claimed Section 14Q deduction (1/3 of R&R costs) in Year 1 and relocated its business to a new premise in Year 2, your company can continue to claim tax deduction for the balance of the R&R costs (2/3 of R&R costs incurred in Year 1) in Years 2 and 3 if it continues to carry on the trade or business for which the R&R costs were incurred in Year 1.

Option for Accelerated R&R Deduction for YAs 2021 and 2022

For qualifying R&R expenditure incurred during the basis period for YAs 2021 and 2022, your company has the option to claim the deduction in 1 year instead of over 3 years, as announced in Budget 2020 and 2021. All other conditions remain the same.

Unutilised Section 14Q Deduction

Any unutilised amount of Section 14Q deduction forms part of the company's adjusted trade loss and can be:

  • Transferred under the Group Relief system, subject to qualifying conditions;
  • Carried back to the immediate preceding YA to be set-off against the assessable income under the Loss Carry-Back Relief, subject to the shareholding test; or
  • Carried forward to be set-off against the company's assessable income for future YAs, subject to the shareholding test.

Learn more about the deductibility of expenses incurred on R&R works done to business premises (PDF, 320KB) and  common mistakes on claims for Section 14Q deduction (PDF, 374KB).

Rental of Business Premises

Generally, your company can claim tax deduction on rental expenses incurred on premises occupied for business purposes. If only a part of the premises is used for business purposes, the corresponding proportion of the rental expense can be claimed as a tax deduction.

For income tax purposes, your company should claim tax deduction on the rental expense based on the contractual rental payments incurred (i.e. actual rental expenses incurred) rather than its accounting treatment.

For example, where your company is given a rent-free period by its landlord under an operating lease, it is required for accounting purposes to recognise the benefit of the rent-free period over the lease term (i.e. as a reduction of periodic rental expenses over the lease term). For income tax purposes, your company should claim tax deductions based on contractual rental payments, regardless of how such expenses are recognised in its accounts.


Company A entered into a lease agreement to rent an office space for 2 years with a monthly rental of $5,000 for 2019 and 2020. The landlord offered Company A a 2-month rent-free period for the first year, with monthly rent payable only from the third month onwards. The total rental expense incurred is $50,000 for the Year of Assessment (YA) 2020 and $60,000 for YA 2021.

For accounting purposes, Company A is required to recognise the benefit of the 2-month rent-free period over 2019 and 2020. However, for income tax purposes, Company A should claim a tax deduction on the actual rental expense incurred of $50,000 for YA 2020 and $60,000 for YA 2021 respectively.

Retrenchment Payments and Outplacement Support Costs

Contractual Retrenchment Payments

Contractual retrenchment payments refer to those provided for in employment contracts or collective agreements with trade unions.

Such contractual retrenchment payments are tax-deductible, regardless of whether there is a complete cessation of business. This is because they are incurred as part of the pre-existing obligations of the employer to the staff.

Ex-Gratia Retrenchment Payments

Ex-gratia retrenchment payments refer to payments other than contractual retrenchment payments.

Such ex-gratia payments are tax-deductible where there is a continuation of the existing business. This is because the payments are incurred for the continuing income producing activities of the business.

However, ex-gratia retrenchment payments are not tax-deductible where the business completely ceases. This is because such forms of non-contractual retrenchment payments are made gratuitously at the discretion of businesses, and invariably involve some element of goodwill. Hence, they are not considered ‘wholly and exclusively incurred’ in the production of income where the fact is that the income producing activities of the business will cease.

Outplacement Support Costs

Outplacement support expenses are incurred when employers provide outplacement support to affected employees (e.g. they may appoint corporate outplacement agents to provide counselling and moral support to affected employees and to assist them in their search for jobs).

Generally, such expenses are tax-deductible where there is a continuation of the existing business as they are incurred by the employer for the welfare of the employees as part of their continuing income producing activities and are considered ‘wholly and exclusively incurred’ in the production of income.

However, the expenses are not tax-deductible if there is complete cessation of business.