GST: Fringe Benefits (PDF, 449KB)
Employee fringe benefits are goods or services you provide to employees at no cost or at a reduced cost as part of their overall remuneration package. Common examples include company cars for private use, free meals, accommodation, or personal use of business mobile phones.
When you provide fringe benefits, you are making a supply to your employee. You may need to account for output GST on the value of these benefits.
On this page:
Provision of services to employees
In general, the provision of services to employees is not subject to GST.
For example, you need not account for output tax when you allow your employees to use the office telephone to make personal calls.
When you must account for output tax on goods provided as fringe benefits
You must account for output tax on goods provided to employees as fringe benefits if both the following conditions are satisfied:
- The goods are provided to your employee, or the goods are used for non-business purposes by the employee; and
- Input tax was allowed on the purchase or import of the goods. This includes imported goods where GST was suspended (e.g. imported under the Major Exporter Scheme).
Exceptions for goods provided free of charge
You do not need to account for output tax on goods provided free of charge if:
- The goods relate to food or beverages catered for employees;
- The cost of the gift is not more than S$200 (amount exclusive of GST); or
- No input tax was allowed on the purchase or import of the goods.
How to account for output tax on goods provided as fringe benefits
| Scenario | How to calculate GST | Example |
|---|---|---|
| Goods provided free of charge | 9% on the open market value* of the goods | A new laptop purchased at $1,000 awarded to top performing employee. Output tax to be accounted: $1,000 × 9% = $90 Reporting in GST return: Box 1: Total value of standard-rated supplies [$1,000] Box 6: Output tax due [$90]
|
| Goods sold at discounted price | 9% on the subsidised price or discounted price | Company laptop worth $1,000 sold to employee for $400. Output tax to be accounted: $400 × 9% = $36 Reporting in GST return: Box 1: Total value of standard-rated supplies [$400] Box 6: Output tax due [$36] |
*To determine the open market value of the goods, you should differentiate between goods intended as gifts and those not originally purchased as gifts. For more information, please refer to the page on Gifts and samples.
Apart from goods provided free of charge or sold at a discount to employees, you must also account for output tax when you let your employees temporarily use your business goods for free, except where any of the following applies:
- It relates to the provision of accommodation in a hotel, inn, boarding house or similar establishment;
- No input tax was allowed on the purchase or import of the goods; or
- The employee’s use of the business goods has a close nexus to your business activities. For more information on close nexus, please refer to paragraph 6 of the e-Tax Guide, GST: Fringe Benefits (PDF, 485KB).
Example: Business goods used by employee
You purchased a motorcycle to be used for your company’s deliveries and claimed the input tax incurred on the purchase. Your employees are allowed to use the motorcycle for free on weekends to run their personal errands. You need to account for output tax on the portion of the use that is for personal purposes.
Common fringe benefits
To help you determine whether output tax is required to be accounted for on fringe benefits provided to your employees, the tables below list common fringe benefits and their GST treatment. For more details, please refer to the e-Tax Guide, GST: Fringe Benefits (PDF, 485KB).
Meals and gifts
| Transaction | Account for output tax? |
|---|---|
|
Food or beverage provided for employees at:
|
No. |
|
Food or beverage provided to employee’s spouse / child / relative at company functions
|
No as input tax is blocked under Reg 26 |
|
Gift of goods for:
|
No, unless:
For more information, refer to Gifts and samples. |
| Gift voucher | No, as no GST is chargeable when a voucher is provided free of charge. |
Clothing, accessories and personal grooming benefits
| Transaction | Account for output tax? |
|---|---|
Clothing and accessories provided to employees (e.g. shoes, belts, bags and eyewear) | No, unless:
1 Exceptions are: a) Uniforms and protective clothing required to be worn for work purposes b) You are in the business of selling the products worn by your employees; or c) Your business requires staff to look attractive or project a uniform image when serving customers. For more information, refer to paragraphs 7.13 to 7.19 of the e-Tax Guide, GST: Fringe Benefits (PDF, 485KB). |
Grooming-related products and services provided to employees |