Tax on unvested stock when leaving Singapore

[zzm9980]

Hello,

I have been told that if your company grants you stock which vests over a period of time (Say RSUs or Options), Singapore will tax all of a foreigner's unvested RSUs or Options as if they had vested upon terminating employment and leaving Singapore. Is anyone familiar with this or have dealt with this? Seems extremely harsh given lots of incentives like this vest over multi-year periods and there is no guarantee someone would be employed at with the same company long enough to have their entire grant vest.

[PNGMK]

My purely personal view is that there is no way the IRAS can knw if you have unvested options or stock grants if you do not declare them (assuming we're talking about an offshore corp here - not one registered in Singapore). If you cash (sell) the granted shares once non resident in Singapore I assume you'd then declare the income in the jurisdiction you reside in.

I too have been wondering about this as I had some grants which vested last year but I have since left that employer. The employer has never shown the grants on my IRA8 form. The grants are held in a ML account in the USA and so the IRAS would not have any holdings reported to them (even if they do?)...

I'm assuming that unless I crystallize the grant by selling the shares that I have no actual cash income to report from that grant.

I could be completely wrong tho.

[zzm9980]

My purely personal view is that there is no way the IRAS can knw if you have unvested options or stock grants if you do not declare them

My employer automatically declares my income to IRAS, including grants (RSUs) as they become vested, for the year they vest. I have no idea what would happen if I left Singapore. If I left my company and then Singapore, the unvested grants would immediately be nulled upon leaving the company. But if I were to transfer within my company outside of Singapore, this seems like it could be an issue.

[zzm9980]

It seems to be covered here, and in the PDF they link:
http://www.iras.gov.sg/irasHome/page04.aspx?id=8896

[PNGMK]

My purely personal view is that there is no way the IRAS can knw if you have unvested options or stock grants if you do not declare them

My employer automatically declares my income to IRAS, including grants (RSUs) as they become vested, for the year they vest. I have no idea what would happen if I left Singapore. If I left my company and then Singapore, the unvested grants would immediately be nulled upon leaving the company. But if I were to transfer within my company outside of Singapore, this seems like it could be an issue.

How do they value them for tax purposes? When my last tranche of XYZ vested last year it was $7/share.... today it's $15/share.

[zzm9980]

How do they value them for tax purposes? When my last tranche of XYZ vested last year it was $7/share.... today it's $15/share.

IRAS takes the value per share 30 days prior to your leaving Singapore, or the date of the grant (for cases in which you're granted shares immediately before departing Singapore), whichever is later. You're allowed to ask IRAS to recalculate your assessment within 4 years under certain circumstances: e.g., the shares plummet in value.

[katbh]

The problem is the pesky IR21. The employer has to file this one month before you cease employment or before your employment pass is cancelled. THEY declare this on the form. So if you are leaving, ask for a copy of the IR21 so that you can see what they have declared to IRAS.

[Steve1960]

And I thought the UK IRS was bad enough! At least they only tax vested shares. I would love to hear from someone with experience of claiming back overpaid tax in Singapore after leaving the country. I imagine some don't even bother which is a nice bonus for the IRS here.

[zzm9980]

The problem is the pesky IR21. The employer has to file this one month before you cease employment or before your employment pass is cancelled. THEY declare this on the form. So if you are leaving, ask for a copy of the IR21 so that you can see what they have declared to IRAS.

Yes, that's my problem, the employer will be obliged to tell all of this to IRAS.

So let's say I were to xfer, keeping my unvested shares and leaving Singapore. I have unvested shares worth ~4x my annual income. IRAS can only sink their claws into my last month salary and accrued PTO. What happens next? Do they let me keep making Giro payments until I'm paid off? Do they go after my employer? (Note I'm a PEP holder, that may be relevant here) Will I be thrown in Jail at Changi if I have an outstanding balance? Should I just not pay and use HKG as my future transit point for SE Asian trips?

I'm genuinely curious here, as an internal transfer (promotion) was something I was genuinely considering to get off the Dot. Surely I can't be the first person on the board to have been in this situation.

[PNGMK]

The problem is the pesky IR21. The employer has to file this one month before you cease employment or before your employment pass is cancelled. THEY declare this on the form. So if you are leaving, ask for a copy of the IR21 so that you can see what they have declared to IRAS.

Yes, that's my problem, the employer will be obliged to tell all of this to IRAS.

So let's say I were to xfer, keeping my unvested shares and leaving Singapore. I have unvested shares worth ~4x my annual income. IRAS can only sink their claws into my last month salary and accrued PTO. What happens next? Do they let me keep making Giro payments until I'm paid off? Do they go after my employer? (Note I'm a PEP holder, that may be relevant here) Will I be thrown in Jail at Changi if I have an outstanding balance? Should I just not pay and use HKG as my future transit point for SE Asian trips?

I'm genuinely curious here, as an internal transfer (promotion) was something I was genuinely considering to get off the Dot. Surely I can't be the first person on the board to have been in this situation.

Why not ring IRAS and ask? IT will take a few calls before you get someone who can actually even understand the issues but they're pretty helpful.

[zzm9980]

The problem is the pesky IR21. The employer has to file this one month before you cease employment or before your employment pass is cancelled. THEY declare this on the form. So if you are leaving, ask for a copy of the IR21 so that you can see what they have declared to IRAS.

Yes, that's my problem, the employer will be obliged to tell all of this to IRAS.

So let's say I were to xfer, keeping my unvested shares and leaving Singapore. I have unvested shares worth ~4x my annual income. IRAS can only sink their claws into my last month salary and accrued PTO. What happens next? Do they let me keep making Giro payments until I'm paid off? Do they go after my employer? (Note I'm a PEP holder, that may be relevant here) Will I be thrown in Jail at Changi if I have an outstanding balance? Should I just not pay and use HKG as my future transit point for SE Asian trips?

I'm genuinely curious here, as an internal transfer (promotion) was something I was genuinely considering to get off the Dot. Surely I can't be the first person on the board to have been in this situation.

Why not ring IRAS and ask? IT will take a few calls before you get someone who can actually even understand the issues but they're pretty helpful.

I have a meeting with an internal tax consultant scheduled in the next week or two. I figured I'd ask them first before raising awareness to IRAS about me. I don't trust them to not flag me and be expecting the money

[zzm9980]

Deloitte told me that as I do not own property in Singapore, IRAS would not offer a payment plan. The individual tax payer (not employer) is liable for the charge, and I would be required to pay before leaving the country. She added IRAS will notify ICA.

And I thought I was only joking about the 'arrested at Changi' option!

[katbh]

I was wondering recently if the moving companies or the ports have some sort of notification system to tell the ICA and IRAS when people are leaving.
Two sets of families that I know, were stopped at the airport at Christmas and made to pay tax for the year (that was not due until April following year). Their EPs had not been cancelled and so IRAS should not have been notified, but both families had sent furniture/shipment to their own countries in the previous months. How would ICA have known?

[PNGMK]

I was wondering recently if the moving companies or the ports have some sort of notification system to tell the ICA and IRAS when people are leaving.
Two sets of families that I know, were stopped at the airport at Christmas and made to pay tax for the year (that was not due until April following year). Their EPs had not been cancelled and so IRAS should not have been notified, but both families had sent furniture/shipment to their own countries in the previous months. How would ICA have known?

Customs declaration with their FIN on it. I helped someone escape Singapore by shipping out their household AFTER they had left. (And yes, they did actually pay IRAS from offshore, they had other reasons to leave over night).

[zzm9980]

I was wondering recently if the moving companies or the ports have some sort of notification system to tell the ICA and IRAS when people are leaving.
Two sets of families that I know, were stopped at the airport at Christmas and made to pay tax for the year (that was not due until April following year). Their EPs had not been cancelled and so IRAS should not have been notified, but both families had sent furniture/shipment to their own countries in the previous months. How would ICA have known?

Customs declaration with their FIN on it. I helped someone escape Singapore by shipping out their household AFTER they had left. (And yes, they did actually pay IRAS from offshore, they had other reasons to leave over night).

This is a bit disconcerting.