On or about 14 December 2018, the Inland Revenue Authority of Singapore (IRAS) has published the e-Tax Guide: Change in Basis for Computing Taxable Car Benefit on its website.
This e-Tax guide replaces the previous two guides “Change in Basis for Computing Taxable Car Benefit” and “Basis for Computing Taxable Car Benefit” which were published on 22 October 1994 and 28 Jan 1995 respectively.
Generally, the following car and car-related benefits are taxable:
- car provided by an employer
- driver / chauffeur services (annual cost of driver x (private mileage / total mileage)
- reimbursement of seasons or daily car park charges (when an employee drivers from home to work or parks his own car at the airport prior to go on business trips)
- allowance on ERP charges
- road tax, repair and maintenance of employee’s own vehicle
From Year of Assessment 2020, there is a revised formula to be used by employers to compute their employees’ taxable car benefits:
A. New Car (where the employer is the first owner)
value of benefit = 3/7 [(car cost – PARF rebate)/10 + actual running and maintenance costs incurred by the employer]
B. Second-hand Car
value of benefit (less than 10 years old at the time of purchase) = 3/7 [{(car cost – PARF rebate)/remaining period to expiry of the COE} + actual running and maintenance costs incurred by the employer]
value of benefit (more than 10 years old at the time of purchase) = 3/7 [{(car cost – PARF rebate)/renewed COE} + actual running and maintenance costs incurred by the employer]
C. Car with Renewed COE
value of benefit = 3/7 [{(Amount payable on renewal of COE) – (Amount of PARF rebate which would be granted on the first COE if de-registered between 9 and 10 years old)} / (Remaining period from the date of renewed COE to expiry date) + actual running and maintenance costs incurred by the employer]
D. Leased Car
value of benefit = 3/7 (rental costs incurred by employee + actual running and maintenance costs incurred by the employer)
Source: IRAS website, 17 December 2018