Tax Treatment of Various Payments (Summary Table)

NatureTaxable/ Not taxable


Absentee payroll for attending training courses during or after office hours under Skills Redevelopment Programme (SRP)

Payment from both SRP and employer are taxable


Conditional payments made in advance

Example: retention bonus/ gratuity


See Refund of Conditional Payments Made

3Encashment of unutilised leave


Employer can declare the leave encashment under "d) Others: 1.Allowances: (iii) Others" in the Form IR8A.

See Encashment of unutilised leave


Inflation bonus (cash/ vouchers)



Laundry allowance

Taxable, unless it is made for washing special clothing, e.g. protective clothing


Maternity Leave Benefit



NSman pay


When filling in the Form IR8A, exclude NSman pay made directly to an employee by MINDEF, Singapore Civil Defence or Singapore Police Force as they will send the information to IRAS.

Information submitted includes:

- Physical payment such as Service Pay, Make-Up Pay (MUP), Awards (e.g. IPPT Award), NS Allowance etc

- Equivalent payment such as NS HOME Awards (LifeSG credits utilised), NS Excellence Awards etc

More information can be found on NS Portal.


Skills Development Levy (SDL)

Not taxable

More information on SDL can be found in  CPFB website.


Contributions made by employer to employee's  Supplementary Retirement Scheme (SRS) account



Relocation allowance


For details, see  Relocating to Singapore.


Contributions made by employer to any pension/provident fund outside Singapore


Also see  Concessionary Tax Treatment Up to YA 2024 on Overseas Pension / Provident Fund Contributions

With effect from YA 2025, the concessionary tax treatment will cease. 


Employment Assistance Payment

Not Taxable

Conditional Payments Paid in Advance

Some employers make payment to employees even though the employees are not entitled to it at the date of payment.

These employers are paying the employees in advance. The employee is required to refund the payment if he subsequently fails to fulfill the conditions attached to the payment.

Payments with conditions attached and are commonly made in advance include:

  1. Retention Bonus/Gratuity

    The intention of this payment is to induce an employee to stay on with the company for a specific period or up to a certain date. An employee is entitled to the payment only after he has fulfilled the conditions.

    Some employers pay part of or the full bonus/ gratuity earlier so as to make the scheme more attractive to employees.

  2. Bonuses with Conditions of Stay

While the non-contractual bonus is paid based on the performance of the employee or company, some employers attach conditions like the employee served "x" months from the date of payment, or the employee remains an employment up to a certain date.

Generally when an employer makes a conditional payment in advance, the payment is considered to be income of the employee based on date of payment.

If the conditions are subsequently not met and the employee returns the bonus in full or in part, the amount refunded to the employer is considered as an adjustment of his employment income in the year the refund is made.

Refund of Conditional Payments Made

Generally a payment consists of three components: the cash component, employer's contribution to CPF (if any) and employee's contribution to CPF (if any).

Where the advanced payment and refund happen in different years and the employee refunds only the cash component and not the CPF contributions, the sum refunded will be allowed as a deduction in the year of refund. The excess employer's contribution to CPF is taxable. The excess employee's contribution to CPF will not be granted CPF relief.

The above does not apply in the case where an employee is paying liquidated damages.

Scenario 1: Employer Obtains Refund from CPFB

The advanced payment and refund must be in the same year. The employer obtains refund from employee and CPF contributions from CPFB.

Employer Should:

Prepare Form IR8A as if there is no payment made in advance.

Scenario 2: Employers Does Not Obtain Refund from CPFB

The advanced payment and refund may be (a) in the same year or (b) in different years.

The employer obtains refund from employee but is not able to/does not obtain a refund on the CPF contributions from CPFB. The employee may or may not refund the employer's contribution to employer.

Employer Should:

1. Prepare Form IR8A to include the conditional payment made in advance, but exclude details of the refund.

2. Provide details of the refund using the excel template below. (Explanatory notes and examples are provided under the "Notes" worksheet in the file) Refund of advanced payment template (28KB)

3. Forward the template to IRAS by email when you issue the Form IR8A or transmit employment income electronically to IRAS.

    Email: [email protected]    

4. Inform employee that the sum refunded will be allowed as a deduction in the year of refund.

Encashment of unutilised leave

If an employee is unable to utilise all the leave days prescribed for the year and his employer allows him to convert the unutilised leave into cash (i.e. encashment of unutilised leave), the cash amount is taxable in the year in which he is entitled to the encashment. 

ScenarioTaxing point

1. Employee A has 4 days of leave that are not utilised. His employer converted the leave to cash of $1,200 and paid him the amount on 31 Dec 2022. 

The $1,200 is taxable in YA 2023 since Employee A is entitled to the encashment of leave in the year 2022. 

2. Employee B ceases employment with his employer on 24 Dec 2022. He has 6 days of unutilised leave from the year 2022 that are converted into cash of $3,000 on the last day of his service. The $3,000 is paid to him on 5 Jan 2023. 

The $3,000 is taxable in YA 2023 since Employee B is entitled to the encashment of leave on the last day of his service in 2022. 

If his employer's company policy is to allow employees to encash unutilised leave in the year following the year of cessation, the $3,000 is taxable in YA 2024 as he will only be entitled to the encashment of leave in the year 2023 (i.e. the year following his cessation).


3. Employee C has 5 days of leave from year 2021 that are carried forward to 2022. As he was not able to utilise the 5 days of leave by the end of 2022 due to work commitments, his employer allowed him to convert the unutilised leave in Jan 2023 and paid him an amount of $1,500 in Feb 2023. 

The $1,500 is taxable in YA 2024 since Employer C is entitled to the encashment of leave in year 2023. 


Employment Assistance Payment

(Re-employment of Older Employees)

In accordance with the Retirement and Re-employment Act (RRA), the minimum retirement age is 63 years. Employers must offer re-employment to eligible employees who turn 63, up to the age 68, to continue their employment in the organisation. The re-employment age was raised from 67 to 68 on 1 July 2022 to help older workers who wish to continue working as long as they are willing and able. 

One-Off Employment Assistance Payment (EAP)

Where the employer is not able to find a suitable job for the eligible employee who wishes to work beyond his retirement age, the employer must offer a one-off Employment Assistance Payment (EAP) to the employee.

The RRA provides that employers are not obliged to make the EAP if:

  1. the eligible employees declined the employer's offer of re-employment; or
  2. the employees do not meet the eligibility criteria for re-employment under the new RRA.

As eligible employees will receive EAP only if the employers are unable to find suitable positions for them, the EAP is therefore not subject to tax in the hands of the recipients.

Find out more about Re-Employment of Older Employees on the Ministry of Manpower website.