As a small business owner in Singapore, managing employee travel expenses efficiently is crucial. At Counto, we’re committed to helping you understand and navigate the complexities of per diem allowances, especially with the recent updates for 2024. Let’s dive into the essentials of per diem allowances and how they apply to your business.
A per diem allowance is a fixed daily amount provided to employees for business-related travel expenses, covering meals, accommodation, and incidental costs.
The Inland Revenue Authority of Singapore (IRAS) has updated the acceptable per diem rates for 2024. These rates apply to Singapore-based employees on overseas business trips and foreign employees travelling to Singapore for business.
Key points to remember:
1. Rates are applicable on a calendar year basis.
2. For trips in 2024, use the “2024 Acceptable Rates” table.
3. Excess amounts are taxable in the Year of Assessment 2025.
Understanding the tax treatment is crucial for compliance:
1. Allowance less than or equal to Acceptable Rate:
2. Allowance greater than Acceptable Rate:
Example: If the IRAS acceptable rate for Japan is 162 SGD per day, and you provide 180 SGD:
1. Non-taxable items:
2. Currency conversion: Use a consistent exchange rate source for foreign currency allowances.
3. Cross-country travel: When an employee travels across multiple countries in a day, the comparison should reflect the actual consumption pattern.
4. Trip duration: IRAS accepts the number of days determined by the employer’s HR policy, as long as it doesn’t exceed the total trip length.
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Creating a clear policy is essential for smooth implementation:
Proper accounting is crucial for financial accuracy and tax compliance. At Counto, we recommend:
As experts in Singapore accounting and tax services, Counto offers comprehensive support for managing per diem allowances:
Per diem allowances can significantly streamline travel expense management for small businesses in Singapore. By understanding IRAS guidelines, implementing a clear policy, and partnering with trusted accounting firms like Counto, you can efficiently manage these allowances while staying compliant with local regulations.
Counto is the trusted provider of accounting, tax preparation and CFO services for startups and SMEs. Get accounting plans that combine bookkeeping with corporate tax filing to help you stay compliant at an affordable price. To learn more, speak to us directly on our chatbot, email us at [email protected], or contact us using this form.
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