Employers need to comply with the Inland Revenue Authority of Singapore (IRAS) rules set out for taxes on gifts.If an employer desires to give cash or non-cash gifts to their employees, they may do so provided the monetary value of the gift is not substantial. Additionally, the gift must be available in general to all of the employees. If it does exceed a certain threshold, the full value of the gift is taxable.
Employers may give their employees gifts on:
Gifts for special events and on festive occasions are taxable, while those for bereavement are not.
Effective 2008, the exemption threshold for gift tax in Singapore has been increased from S$100 to S$200 by law.
Since the exemption threshold for gift tax is S$200, any gift that exceeds S$200 in value is taxable. So if, for example, a certain gift is worth S$300 – the entire amount will be taxable.
If, however, the employer provides an assortment of gifts with values of S$150, S$100, S$199 and such, all falling below S$200 – the employer will not be taxed.
This means that in the case that an employee gets S$200 as a cash gift on his recent wedding, a gift of S$75 on his birthday, and a Christmas gift worth S$120 that same year, none of the gifts are taxable since they do not exceed S$200.
Alternatively, if a baby gift of S$275 is given to an employee by their employer, the taxable value is S$275.
The key to remember here is that the total value of one gift cannot exceed S$200 in order to avoid paying gift tax. Should the employer give their employees multiple gifts, all worth less than S$200 each, no gift tax will be levied – regardless of how many gifts are given.