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Tax Clearance and ESPP tax

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juvenchan
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Tax Clearance and ESPP tax

Post by juvenchan » Wed, 29 Aug 2018 5:52 pm

Hi,

I am in negotitaions with the same company on possible relocation to another country, but because I have ESPP (employment stock purchase plan) involved, how will Singapore tax me on that?

*****background on ESPP: 2 purchase periods every year (May 1st and Nov 1st), 1-year restriction period after purchase (cannot sell any ESPP shares within the first year of ownership)

Let's say if I exit Singapore on Oct 30th 2018,
1) For my ESPP purchased on Nov 1st 2017 (restriction will be lifted on Nov 1st 2018), am I subject to pay tax (Tax Clearance) for it?
2) For my ESPP purchased on May 1st 2018 (restriction will be lifted on May 1st 2019), will it be counted as taxable income for Fiscal year 2018 or 2019?
2a) Will there be 2 fiscal tax years due to the selling restriction rule?

Is it better to exit Singapore before or after the upcoming ESPP purchase period (Nov 1st 2018)? Which option allows me to save some cost on income tax? (assume the next country has the same income tax system and rate)

Thanks in advance, looking to get some advices from you all! :D

J

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PNGMK
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Re: Tax Clearance and ESPP tax

Post by PNGMK » Wed, 29 Aug 2018 8:45 pm

Firstly there's no capital gains tax in Singapore and any dividends out of the USA or another country would most likely be subject to withholding at origin so you don't owe taxes on those here either if there is a dual taxation agreement (and even then only if resident in Singapore at the declaration date).

IF you haven't actually sold the shares it's hard to argue you've received a benefit - I assume the benefit is either a discounted price for the share or they vest with some additional benefit? This would fall under "other income" I think for IRAS.

My view, and this is not legal or CPA advice, is that you should pay tax only on what the company declares on your IR8A and nothing else (i.e. don't volunteer additional information if not requested).

I have a similar issue - we get discounted shares and my employer rolls up the discount and reports it to IRAS on my IR8A under "other". Once that's cleared there's nothing further to explain to the tax man.
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