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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-in-kind include a diverse array of offerings designed to meet the varying needs and preferences of employees. Here is the list of BIK granted administrative concessions or exemptions from income tax provided by the Inland Revenue Authority of Singapore (IRAS):

  1. 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
  1. 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
  1. Insurance premiums of group medical insurance
  2. Benefits given to promote creativity and innovation, including staff suggestion and Work Improvement Teams (WITS) award
  3. Benefits given to encourage upgrading of skills and knowledge building
  • Subsidies for course fees
  • Training fees for staff development
  • Scholarships awards
  • Examination fees
  1. 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)
  1. Gifts (cash/ non-cash) not exceeding $200 in value for special occasions like birthdays, weddings, births of child and festive seasons
  2. Bereavement gifts 
  3. Childcare subsidy provided by employers to employees who send their children to licenced childcare centres
  4. Death gratuities/Disability payments/Workmen compensation
  5. Ad-hoc overtime meal allowance and reimbursement
  6. Interest benefits arising from interest-free or subsidised interest loans provided by employers to employees
  7. Reimbursement on car park charges for work purposes
  8. Reimbursement on ERP Charges incurred for work purposes
  9. Reimbursement on mileage for business usage
  10. 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
  11. 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.

Tip: Ensure timely and accurate submission of IR8A and Appendix 8A with the Auto Inclusion Scheme (AIS) to avoid penalties. Learn more about IR8A and Auto Inclusion Scheme (AIS) guide for employers!

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:

  1. Accommodation and related benefits provided by employer
    1. Residence rented by the employer
    2. Place of residence
    3. Utilities
    4. Housekeeping cost
  2. Cost of home leave passages and incidental benefits provided to employee and their family 
  3. Interest payments or loans provided by employer
  4. Insurance premiums paid by the employer 
  5. Educational expenses, including tutor provided
  6. Car benefits
  7. 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.

Note: Please refer to IRAS’ Reporting Employee Earnings page for the latest forms and IRAS’ Explanatory Note on Form IR8A and Appendix 8A for more information. 

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!

Prepare IR8A and Appendix 8A submissions for Benefits-in-Kind with Payboy HR Software!

Payroll processing as well as IR8A and Appendix 8A submission can be daunting tasks. Managing these complexities becomes even more challenging when overseeing a diverse workforce with varying working arrangements. 

With our fully compliant, customisable, and integrated payroll processing module, you can submit IR8A and Appendix 8A through XML File or API easily and also enjoy additional features that are designed to save you time and effort.

  1. 100% compliance and 100% peace of mind
    • Forget about payroll and SDL calculations, CPF contributions, and IR8A submissions. Our software will automatically calculate them for you and keep you compliant with the latest regulations from MOM, CPF, and IRAS.
  2. Covers any work arrangement
  3. Transparent, Accurate, and Simple
    • Have full visibility on how payroll is calculated automatically based on shifts, attendance, leave, and submitted claims within an intuitive experience.
  4. Customisable itemised payslips
  5. Fully integrated with your preferred platforms
    • We’ll fit into your ecosystem seamlessly and keep your finance team happy. Learn more about our seamless integrations with Xero, Financio, and Quickbooks.

Streamline your HR processes with Payboy today!

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With our wide range of modules, you can customise a solution to meet the specific needs of your business:

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Time Attendance | Shift Scheduling | Appraisal System | Inventory Management

Project Costing | Training Management 

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Reach out to us if you are keen for a free demo on how we can help you save hours and give you some peace of mind on payroll and other HR matters so that you can focus on your business and people.
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