Benefits-in-Kind (BIK) guide for employers in Singapore
Welcome to our comprehensive guide on benefits-in-kind for employers in Singapore. In this guide, we'll unravel the intricacies of benefits-in-kind, exploring common examples, tax implications, administrative concessions, and the importance of proper declaration. Discover the benefits of providing BIK to your employees and learn how Payboy HR Software can streamline IR8A and Appendix 8A submissions for BIK. Let's dive in and ensure your organisation navigates BIK regulations with ease and compliance!
What are Benefits-in-Kind (BIK)?
Benefits-in-Kind (BIK) encompass non-monetary benefits provided by employers to employees in addition to their regular wages or salary. These benefits are designed to enhance the overall compensation package and may include perks, amenities, or services that contribute to the well-being and satisfaction of employees.
What are some common examples of Benefits-in-Kind?
Common examples of benefits-in-kind include a diverse array of offerings designed to meet the varying needs and preferences of employees. Company cars or vehicles provided for business and personal use represent a significant BIK, especially for roles that require frequent travel. Similarly, accommodation provided by an employer, either as part of a relocation package or as on-site housing, is another prevalent example. Other common BIKs include health insurance coverage, which may encompass medical, dental, and vision benefits, along with wellness programmes. Additionally, employers often offer childcare vouchers or subsidies to assist employees with the cost of childcare services. Recreational facilities and subsidised or complimentary meals provided during work hours also feature prominently among BIK offerings.
Are Benefits-in-Kind taxable?
Benefits-in-kind are generally subject to taxation and are considered part of an employee's overall income. As such, these non-monetary benefits must be declared by both employers and employees for tax purposes. However, specific exemptions and concessions may apply to certain types of BIK based on regulatory guidelines and administrative concessions granted by tax authorities. It's essential for employers to accurately assess the tax implications of BIK and comply with reporting requirements to ensure legal compliance and avoid penalties.
Read on as we share some of the BIK that are granted administrative concessions or exempted from income tax.
What are some Benefits-in-Kind Granted Administrative Concession or Exempt from Income Tax?
Benefits that foster goodwill or promote camaraderie among staff:
Sponsored group outings in Singapore
Family Day events
Corporate Dinner & Dance (including door gifts and lucky draw prizes)
Provision of social or recreational facilities (free or subsidised)
Corporate gifts like mugs and T-shirts
Free or subsidised food and drinks
Free transport between pick-up points and the place of work
Corporate passes to places of interests in Singapore
Benefits relating to employee's health (free or subsidised)
Medical bills of employees on outpatient treatment, hospitalisation and dental
Medical bills for employee's spouse and children
Insurance premiums of group medical insurance
Benefits given to promote creativity and innovation, including staff suggestion and Work Improvement Teams (WITS) award
Benefits given to encourage upgrading of skills and knowledge building
Subsidies for course fees
Training fees for staff development
Scholarships awards
Examination fees
Awards not exceeding $200 in value
Retirement award (non-cash)
Long service award (non-cash)
Service Excellence Award (cash/ non-cash)
Zero or low Medical Certificate Award (cash/ non-cash)
Award for passing the examination (cash/ non-cash)
Gifts (cash/ non-cash) not exceeding $200 in value for special occasions like birthdays, weddings, births of child and festive seasons
Bereavement gifts
Childcare subsidy provided by employers to employees who send their children to licenced childcare centres
Death gratuities/Disability payments/Workmen compensation
Ad-hoc overtime meal allowance and reimbursement
Interest benefits arising from interest-free or subsidised interest loans provided by employers to employees
Reimbursement on car park charges for work purposes
Reimbursement on ERP Charges incurred for work purposes
Reimbursement on mileage for business usage
Private benefit, including reimbursement of car parking charges and petrol, derived by drivers of commercial vehicles (e.g. motorcycles, vans, trucks, minibus, and lorries) when drivers drive home after work and from home to the designated workplace
Staff discount on goods or services not exceeding $500 (excluding interest free or subsidised loans and discounted stock options or awards)
Do I have to declare if I provide Benefits-in-Kind to my employees?
Yes, employers are required to declare benefits-in-kind provided to employees as part of their overall income. This information must be accurately reported in the IR8A and Appendix 8A during the annual tax reporting process.
The IR8A form provides details of employment income, including salary, bonuses, and the value of benefits-in-kind, while the Appendix 8A form specifically captures information related to benefits-in-kind. Appendix 8A must be completed for employees who were provided with benefits-in-kind.
As an employer, you can submit your employees’ income information to IRAS electronically via the Auto Inclusion Scheme (AIS), by 1 March each year. The AIS is required for companies with 5 or more employees. Alternatively, for companies with fewer than 5 employees, manual submission of forms is required, with the same deadline.
What information regarding benefits-in-kind do I need to fill up in Appendix 8A?
To complete Appendix 8A, employers need to provide detailed information regarding benefits-in-kind (BIK) provided to employees. This includes specifying the type of benefit provided, along with the corresponding cash value or benefit amount, such as:
Accommodation and related benefits provided by employer
Residence rented by the employer
Place of residence
Utilities
Housekeeping cost
Cost of home leave passages and incidental benefits provided to employee and their family
Interest payments or loans provided by employer
Insurance premiums paid by the employer
Educational expenses, including tutor provided
Car benefits
Non-monetary awards/benefits
It's essential to ensure that all information provided in Appendix 8A is accurate and up-to-date to comply with tax reporting requirements. Please see the attached image for the most recent IRAS Appendix 8A.
What happens if I fail to submit IR8A and Appendix 8A for Benefits-in-Kind?
Employers are required by law (S68(2) of the Income Tax Act) to prepare Form IR8A and Appendix 8A, Appendix 8B or Form IR8S (where applicable) for employees who are employed in Singapore by 1 Mar each year. Submission to IRAS is not required for hardcopy forms.
Non-compliance can result in fines up to S$5,000 or other penalties, emphasising the significance of timely and precise tax document submission.
Tip: As a business owner or HR professional in Singapore, it's important to make sure you stay informed about Singapore’s employment regulations and avoid HR non-compliance pitfalls. Learn more about 6 penalties for HR non-compliance to avoid in Singapore.
What are the benefits of providing Benefits-in-Kind to employees?
Offering comprehensive benefits demonstrates an employer's commitment to supporting the holistic needs of their workforce, ultimately contributing to the overall success and competitiveness of the organisation. Here are the reasons it brings several advantages for both employers and employees alike:
Enhanced compensation package: BIK contributes to a more comprehensive compensation package for employees, beyond basic salary or wages.
Employee satisfaction: Additional perks and amenities improve employee satisfaction, morale, and well-being, leading to a happier workforce.
Talent attraction and retention: Offering BIK helps attract and retain top talent, showcasing the employer as an attractive workplace.
Improved productivity: BIK promotes employee loyalty and engagement, resulting in higher levels of productivity and performance.
Positive work environment: Comprehensive benefits foster a positive work environment, contributing to a supportive and inclusive workplace culture.
Commitment to employee needs: Providing BIK demonstrates the employer's commitment to supporting the holistic needs of their workforce.
Competitive advantage: A robust BIK package enhances the organisation's competitiveness in the job market, positioning it as an employer of choice.
Tip: Consider exploring different bonus structures alongside BIK offerings to further incentivise and reward employee performance. Learn more about the bonus guide for employers in Singapore!
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