Announcement from IRAS (15 January 2025) The Inland Revenue Authority of Singapore (IRAS) has announced new rules on transport expense reimbursements. Starting immediately, businesses must keep clear records of travel details, including receipts and employee declarations, to qualify for tax deductions. Companies should review their reimbursement policies to stay compliant with the latest tax guidelines.
Reimbursement of Transport Expenses for Employees
Many companies reimburse employees for transport costs incurred during work-related travel. However, not all reimbursements are tax-deductible. The key factor is whether the expense meets the official tax deductibility conditions.
One important rule: Expenses related to private cars—whether paid by employees or reimbursed by the company—are not tax-deductible under the Income Tax Act 1947, even if used for business purposes.
Here’s a simple guide to what transport reimbursements can be deducted:
S/N | Nature of Expenses | Deductible or Non-Deductible |
1 | Travel for work purposes (e.g., meeting clients, business meetings, traveling between client locations) | Deductible, except for private car expenses* |
2 | Mileage on private cars | Non-deductible, even for business purposes |
3 | Late-night transport (e.g., taxi or private hire car from office to home after overtime work) | Deductible if provided on an ad-hoc basis and available to all staff |
4 | Daily commute between home and office | Non-deductible as it is personal travel |
5 | Travel between home and airport for business trips | Deductible, except for private car expenses* |
6 | Home-based employees traveling to external business venues | Deductible, except for private car expenses* |
7 | ERP charges/mileage for business purposes | Deductible, except for private car expenses* |
8 | Car park fees for work trips (e.g., airport parking for overseas business trips) | Deductible, except for private car expenses* |
9 | Car park fees for client meetings | Deductible, except for private car expenses* |
10 | Foreign-registered rental cars used outside Singapore (e.g., Malaysia) | Deductible if for business purposes |
What Counts as a Private Car?
- S-plated private cars
- Business cars (Q-plated and RU-plated business cars registered on or after 1 April 1998)
For Q-plated and RU-plated business cars registered before 1 April 1998, deductibility is capped using this formula:
- $35,000 × (Motor vehicle expenses related to that vehicle / Cost of vehicle)