Overview of Transport Expense Reimbursement

Reimbursement of transport expenses refers to compensating employees for costs incurred during work-related travel. However, not all expenses qualify for tax deductibility. The deductibility depends on:

• The purpose of the transport expense.
• The type of transport involved.
• Specific conditions outlined in the Income Tax Act 1947.

For example, motor vehicle expenses for private cars are generally non-deductible, even if incurred for business purposes.

To clarify, we’ve compiled a table summarizing the deductibility of common transport expenses:

Deductibility of Common Transport Reimbursements

S/N	Nature of Expenses	Deductible/Non-Deductible
1	Expenses for discharging official duties (e.g., traveling from office to meet a client, traveling between external venues for business purposes).	Deductible except for expenses related to private car usage.*
2	Mileage on private cars.	Non-Deductible, even if incurred for business purposes.
3	Expenses for overtime transport (e.g., taxi/private hire car services for working beyond official hours).	Deductible, provided the reimbursement is for ad-hoc overtime and available to all employees.
4	Travel between home and office.	Non-Deductible, as these are personal commuting expenses.
5	Travel between home and airport for business purposes (e.g., overseas business trips).	Deductible except for private car expenses.*
6	Trips made by home-based employees between home and external business venues.	Deductibility depends on specific circumstances and compliance with guidelines.
7	ERP charges/mileage incurred for business purposes.	Deductible (excluding private car expenses*).
8	Car park charges at the airport during business trips.	Deductible.
9	Car park charges for client meetings.	Deductible, provided the travel is for business purposes.
10	Foreign-registered cars used exclusively outside Singapore (e.g., rental cars in Malaysia).	Deductible, if used for business purposes.

*Private cars refer to:

• S-plated private cars
• Business cars (e.g., Q-plated and RU-plated business cars registered on/after April 1, 1998).

For Q-plated and RU-plated cars registered before April 1, 1998, deductibility is capped based on the following formula:

$35,000 x Motor vehicle expenses related to that vehicle / Cost of the vehicle.

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Key Takeaways

1. Clarify the nature of your travel to determine if it qualifies for reimbursement.
2. Private car expenses are non-deductible, even for work-related purposes.
3. Expenses like ERP charges, car park fees for business trips, and foreign-registered vehicles (used outside Singapore) are deductible, provided they meet business-related criteria.
4. Reimbursements for overtime transport are deductible if they are part of an established company policy for working beyond official hours.

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