The GST treatment for the sum of money paid by an employee to you (the employer) for receipt of a gift from a third party depends on who the gift belongs to.

Employees retaining gifts

Your employee may receive a gift from third parties in the course of their work. He may subsequently pay a sum of money to you (the employer) to retain the gift.

Determining if GST is applicable

Illustration of an employee who made payment to an employer for retaining a gift received in the course of work from a third party.

The GST treatment for the sum of money will depend on who the gift belongs to. This is determined by whether the giver intends to give it to the employee or the employer.

IRAS recognises that administratively, employers would find it difficult to determine or prove the giver's intent.

To ease compliance for employers, IRAS has adopted the following treatment for gifts received from third parties.

Employee retains the gift

When the employee retains the gift given by a third party to him in the course of his work, IRAS regards the  gift as belonging to the employee. 

Any payment made by the employee to the employer to retain the gift is deemed as payment for staff conduct and is not subject to GST.

Employee does not retain the gift

When the employee does not retain the gift and surrenders the gift to the employer, the ownership of the gift is transferred to the employer.

The employer has to charge and account for GST on the supply of the gift if he sells it to a third party (including other employees).