Types of Clearance Directives
You will receive either a:
- Directive to Pay Tax which informs you of the amount of monies to be remitted to IRAS; or
- Notification to Release Monies which informs you to release the employee's withheld monies to him.
Directive to Pay Tax
You are required to pay within 10 days from the date of the Directive. A penalty will be imposed on late payments.
The amount payable as stated in the Directive is not confined to the tax due in respect of the employment period reported in the Form IR21. It may include your employee's tax balance for prior years.
Notification to Release Monies
You should release the withheld monies to your employee as stated in the Notification to Release Monies.
However, if you have filed an Amended/Additional Form IR21, you should not release the withheld monies to the employee until you receive another Clearance Directive in respect of the Amended/Additional Form IR21.
I filed both Original and Amended/Additional Form IR21 for my employee. Thereafter, I received a Directive To Pay Tax for the Original Form IR21. Should I pay first or wait for the second directive?
You should make payment as per the first Directive to avoid penalty for late payment.
My employee has decided to withdraw his resignation after I have filed the Form IR21. What should I do?
You can provide IRAS with the following information via email:
- Your employee's Tax Reference Number;
- The reason for withdrawing the Form IR21; and
- Confirmation that there is no break in the employee's employment with you from the "Date of Cessation/Overseas Posting" reported in the Form IR21.
Do not file an Amended Form IR21.
The amount payable as stated in the Directive to Pay Tax is higher than the amount of monies I have withheld from my employee. What should I do?
Scenario 1: You failed to withhold monies with no valid reason
You are required to withhold all monies due to your employee from the date you are aware of the employee's impending cessation of employment or departure from Singapore.
If you failed to withhold monies from your employee and did not provide any valid reasons in the Form IR21, you may be held liable for the amount of tax which should have been withheld.
For example, your employee gave one month's notice of his intention to cease employment on 15 Jan 2021. The amount of monies due to him was $600, which comprised his salary for Jan 2021 ($450) and Feb 2021 ($150). The full amount should be withheld for the purpose of tax clearance.
However, you decided to pay him $450 and withheld only $150. Assuming that your employee's tax liability is $500, you would then be liable for the amount payable of $500 as stated in the Directive, since you should have withheld $600, which would have been sufficient.
Scenario 2: You have reasons for not being able to withhold all monies due to your employee
Please provide IRAS with the following information via email:
- Tax Reference Number of the employee;
- Date of resignation/termination notice;
- Amount of last salary paid, applicable period and date of payment; and
- Reasons for not withholding all monies for the purpose of tax clearance.
We will notify you of the review outcome. However, notwithstanding any objection, you are required to pay the amount of tax stated in the Directive within 10 days from the date of the Directive.