Following recent advisories and compliance reviews by the Inland Revenue Authority of Singapore (IRAS)—as reported by The Straits Times, which flagged over 3,000 taxpayers for making false, incorrect, or unsupported employment expense claims—we want to take a moment to address some prevalent myths circulating online and through misleading text messages.
As an accounting firm dedicated to helping our clients stay compliant and financially secure, we want to clarify what can and cannot be claimed as an employment expense, and why shortcuts or “rules of thumb” shared on social media can land you in serious trouble with the taxman.
Common Misconception: "Can I claim a percentage (e.g., XX%) of my entertainment, meals, or lifestyle expenses?"
The Short Answer: No.
One of the most persistent myths is the belief that employees can claim a flat percentage or blanket estimate of personal expenses—such as dining out, entertainment, client meals, or even general phone and internet bills—under employment deductions.
Under Singapore tax rules, employment expenses must meet strict criteria to be deductible. They must be:
Wholly and exclusively incurred in the production of your employment income.
Incurred for the purpose of carrying out your official duties.
Not reimbursed by your employer.
Not capital or private in nature.
What is NOT Allowable (The Pitfalls to Avoid):
ntertainment and Client Meals: Expenses incurred for social purposes, building goodwill, meeting potential clients, or meals shared with colleagues/clients are strictly private/non-allowable in nature. You cannot claim a portion of a dinner or entertainment bill just because work topics were discussed.
Personal Meals & Overtime Food: Meals eaten during regular working hours or while working overtime are personal expenses and cannot be claimed.
Private Transport & Car Expenses: Public transport for commuting between home and the workplace, as well as private car expenses (e.g., cars with “S” plates) used for work travel, are non-deductible.
Estimates & Broad Percentages: IRAS does not accept claims based on arbitrary estimates or broad percentages without proper records.
What Can You Actually Claim?
While strict, IRAS does permit certain genuine out-of-pocket expenses that are not reimbursed by your employer. Examples include:
Official Business Travel: Public transport costs (bus, MRT, taxi) incurred strictly when traveling from your office to a client’s location, or airfare/accommodation for overseas business trips.
Working From Home (WFH) Incremental Costs: Incremental electricity or telecommunication charges directly attributable to working from home (e.g., the differential increase in utility bills caused by WFH, backed by comparative bills). Note that pre-existing Wi-Fi subscriptions set up prior to WFH generally cannot be claimed.
The Risks of Non-Compliance
IRAS utilizes advanced data analytics and ongoing compliance checks to identify errant claims. Relying on unverified advice, templates, or misleading chat messages can lead to severe consequences:
Recovery of tax undercharged plus penalties of up to 3 times the tax undercharged.
Legal prosecution, which may carry fines of up to $10,000, imprisonment of up to three years, or both.
How We Can Help
Tax regulations can be complex, and interpreting what qualifies as an allowable deduction requires careful evaluation of your specific employment contract and expense logs. If you have mistakenly submitted incorrect claims or are unsure about what can be legally deducted, it is crucial to rectify them proactively via the Amend Tax Bill digital service on the myTax Portal.
If your business or employees require professional guidance on individual tax compliance, expense policies, or corporate tax advisory, reach out to our team today. Let us help you navigate your tax obligations with complete confidence and peace of mind.