How Australian Expats Should Manage The Singapore Exit Tax – With more and more Australians moving to Singapore each year, it is very important to understand the local tax concessions and drawbacks when leaving as well.
Often when we head abroad, we don’t often think too much about whether or not there is an exit tax.
Not too many Australian expats plan this far ahead when looking to leave Singapore.
We are often stressed and focusing on getting over there, getting the family set up, schooling, visas, finding a rental, one could argue the list is endless.
In a earlier article where I wrote about the Singapore Exit Tax That No One Talks About, I discussed the hidden exit tax of Singapore requiring employees to do a deemed exercise on all future vesting employer shares, options or equity based incentives.
The issue that arises is paying tax on employer shares which we can’t even sell down yet and thus the inequitable situation arises.
Paying tax on something I can’t realise the benefit on for another 2 to 5 years.
With the IRAS implementing the deemed exercise rule, there is also the opportunity to do a tax refund claim back.
The Australian expat can apply for a reassessment of the tax liability, within 4 years of the expat’s assessment in which the deemed exercise took place.
This is a great opportunity to receive a potential refund and while it is at the discretion of the Singapore IRAS, it is part of the taxation framework.
When applying for the tax reassessment, you will be required to provide the relevant documentation such as the date the shares exercised and the market price on that date.
We are often provided with our login to some sort of portal which reflects our equity based compensation plan with all the relevant vesting schedules.
This tax reassessment is a terrific opportunity for Australian expats, especially with the market volatility we’ve seen this year alone.
The Singapore tax year is over the calendar year, similar to the US and most share indices are down more than 10% since CYTD.
Therefore, this presents a fantastic opportunity for a tax refund claim back based on any expats being caught out last calendar year.
If you think you might have the opportunity to claim back taxes from pre-vested shares, we highly recommend seeking professional tax advice, as your tax refund could be waiting after this calendar year.