Give Notice to Your Employer

Your employer must file the Form IR21 at least one month before you cease employment with them, go on an overseas posting or leave Singapore for more than three months. For example, if you tender your resignation on 14 Aug 2020 with your last day of employment being 13 Oct 2020, your employer is required to file the Form IR21 by 14 Sep 2020. Hence, please give sufficient notice to your employer so that they can file the Form IR21 for you early.

This will also give you time to settle all your income tax before you either leave Singapore or start your new job.

Employer Notifies IRAS and Withholds All Monies Due to You

In the Form IR21, your employer will report your employment details and income earned up to your last day of employment or the day before your departure from Singapore.

To ensure that you pay all your income tax, your employer is required to withhold the payment of all monies (including salary, bonus, overtime pay, leave pay, allowances, gratuities, lump sum payments, etc.) due to you from the date they are aware of your impending cessation of employment or departure from Singapore.

You should check with your employer whether the Form IR21 has been filed.

IRAS Processes Your Tax Clearance

Generally, 80% of e-Filed Form IR21 will be processed within 7 working days. For paper-filed forms, 80% are processed within 21 days.
Processing time may take longer if information given in the Form IR21 is incomplete or when IRAS needs clarification on the submitted information.

IRAS Determines Your Tax Liability

Based on the income information in the Form IR21, IRAS will work out your tax liability. You will be assessed on:

• The income earned in the current year up to the date you cease employment, go on an overseas posting or depart from Singapore for more than three months; and
• The income earned in the preceding year that has not been assessed at the point of tax clearance.

Taxable Income

Income that will be assessed to tax by IRAS includes the following:

• Employment income such as:

  • Salary in lieu of notice
  • Gratuity for past services payable at the end of contract
  • Existing share options or awards if you have any existing share options or awards which have yet to be exercised or vested, you will be deemed to have derived gains from these at the point of tax clearance. This also applies to those with selling restrictions. Please refer to Deemed Exercise Rule for more information.

• Severance payments

  Severance payments that constitute compensation for loss of office may not be taxable. Your employer should provide IRAS with the necessary information such as the reason for paying and the basis for arriving at the severance payment for IRAS’ review.

• Withdrawal from SRS Scheme

  If you have been contributing to the Supplementary Retirement Scheme (SRS) and plan to make a withdrawal from your SRS account, such an early withdrawal is taxable Your SRS Operator will withhold tax on the withdrawal based on the prevailing withholding tax rate. If you wish to claim a refund of the withholding tax, you should provide IRAS with the SRS Statement of Contribution/Withdrawal (for Tax Clearance) Form (80KB, DOC), duly certified by the SRS Operator.

Employer Receives Clearance Directive

Once your tax liability has been determined, IRAS will send a Clearance Directive to your employer. Your employer must remit to IRAS the amount payable as stated in the Directive. If the withheld monies are more than the amount payable stated in the Directive, your employer will release the balance to you.

Employee Receives the Tax Bill (Notice of Assessment) and Statement of Account

IRAS will send the tax bill detailing your tax payable computation for each year of assessment and the Statement of Account indicating your tax balance to you by post. You can also view the electronic copy of your tax bill at myTax Portal using your SingPass or IRAS Unique Account.

Pay Your Tax

Upon tax clearance,Your existing GIRO instalment plan will be terminated;

1. Your deferred tax payment, granted to you on gains from share options and awards, plus interest will become due immediately; and
2. If the monies withheld from you by your employer are insufficient, you are required to pay the amount of shortfall as stated in the Statement of Account within seven days of the date of the Statement of Account. For details on how to pay, please refer to Payment Options. Please note that GIRO instalments are not applicable to tax clearance cases.If your tax balance is not settled, IRAS may take the following enforcement actions to recover the unpaid tax:
   • Appoint your bank, employer, tenant or lawyer as an agent to pay the tax;
   • Issue a travel restriction order to stop you from leaving Singapore; and/or
   • Take legal action against you.
3. However, if you will be re-employed by another Singapore employer immediately after your cessation of employment and wish to continue paying your income tax via GIRO instalments, you can send an emailto IRAS once you have the following documents:
   1. A copy of your new work pass/the in-principle approval letter from the Ministry of Manpower; and
   2. A signed copy of your new employment contract/a confirmation letter from your new employer, that indicates the commencement date of your new employment.