Relocation allowance and reimbursement
Relocation benefits include:
- Cash allowances given to you for relocating to another country; and
- Reimbursements of your expenses related to the relocation to another country.
Cash allowances for relocation
The full amount of cash allowances given to cover relocation expenses, whether you have incurred the expenses or not, is taxed as employment income.
Claiming relocation expenses as deductions
Relocation expenses are deductible against the cash 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.
Find out more about claiming relocation expenses in your income tax return and keeping proper records.
Types of deductible relocation expenses
These relocation expenses are deductible against the cash allowance for relocation:
- 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; and
- Settling-in expenses (e.g. first purchase of beddings, kitchen appliances, subscription to broadband Internet access and enrolment for immersion programmes for expatriates).
Types of non-deductible relocation expenses
These relocation expenses are not deductible against the cash allowance for relocation:
- Personal expenses such as payment for meals, laundry and transport; and
- 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).
Relocation reimbursements
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.
Reimbursements for personal expenses
Reimbursements of personal expenses that are granted in respect of employment and confer a benefit on you are taxable. They are not relocation reimbursements.
Reimbursements of loss incurred on disposal of personal assets resulting from relocation are taxable because:
- The reimbursements of the loss are made in respect of employment (as a consequence of the employer and employee relationship); and
- 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
Tax treatment of home leave passages from YA 2018
The home leave passages provided to expatriate employees, their spouses and children are taxable in full.
Tax treatment of home leave passages before YA 2018
As a tax concession, only 20% of the cost of the leave passage is taxed. This concession is limited to:
| Person whom home leave passage is provided to | No. of home leave passage per year |
|---|---|
Expatriate employee | One |
Spouse | One |
Unmarried child who is:
| Two for each child |
For subsequent home leave passages, or where passages are provided to other family members, the full cost of the passage is taxable.
Lump sum cash for home leave passages
When the company pays a lump sum cash amount for the home leave passage, the full cash amount (100%) is taxable.
Leave passages on first appointment and termination of employment
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 are not taxable.