The short answer
- File IR21 at least one month before a non-citizen employee stops work, is posted overseas, or leaves Singapore for more than three months.
- From the moment you know, hold back all money due to the employee until IRAS issues its clearance directive.
- Late or missing filings can draw a fine of up to S$5,000, and an employer that pays out early can become liable for the employee's unpaid tax.
- Singapore citizens are outside IR21. Permanent residents need it only when leaving permanently or in the other listed cases.
When IR21 is required
Employers must seek tax clearance for an employee who is not a Singapore citizen when the employee:
- stops working for the company, by resignation, termination or the end of a contract;
- is posted to an overseas office; or
- leaves Singapore for more than three months.
Common exceptions include permanent residents who are not leaving permanently and employees who worked in Singapore for 60 days or less in the year (directors excluded). Check the IRAS list before relying on an exception.
The steps and deadlines
- File IR21 on myTax Portal at least one month before the last working day or the departure date, whichever is earlier. Report all income for the year, including any bonus or leave pay still to be paid.
- Withhold all money due from the date you know the employee will leave: salary, bonus, leave pay, allowances and gratuities.
- Wait for the clearance directive. IRAS assesses the tax and tells you how much to pay over and how much to release. E-filed cases are often cleared within about a week.
- Pay the tax from the withheld money and release the balance to the employee.
What goes wrong
| Mistake | Consequence |
|---|---|
| Filing late because the departure was sudden | File immediately with the reason; late or no filing can draw a fine of up to S$5,000 |
| Releasing final pay before the directive | The employer can become liable for the employee's unpaid tax |
| Forgetting a bonus paid after departure | A further IR21 is needed for the extra income |
| Treating an overseas posting as "not leaving" | Postings abroad trigger IR21 even if employment continues |
Seconded staff from India
A manager seconded from an Indian group and recalled at short notice is the classic case. Plan for it: agree in the secondment letter that the Singapore entity can hold back final pay, keep the employee's income records current, and file the day the recall is decided. Keep the Singapore notice of assessment and proof of payment, so the employee can claim credit for Singapore tax in India.
Share options and IR21
A departing employee with unexercised share options is treated as having exercised them before leaving, and the deemed gain is taxed through the IR21 process, unless the company is on IRAS's tracking arrangement. Include option details in the IR21, and agree with the employee how any tax on the deemed gain will be funded, since no cash has been received from the shares. See why your ESOP needs a valuation.
Questions people ask
When must IR21 be filed?
At least one month before a non-citizen employee stops work, is posted overseas, or leaves Singapore for more than three months, whichever comes first.
What must the employer hold back?
All money due to the employee from the date it knows of the departure, until IRAS issues the clearance directive.
Do permanent residents need IR21?
Only when leaving Singapore permanently, being posted overseas, or in the other listed cases. A permanent resident who stays usually does not.
What if the employee leaves at short notice?
File immediately and explain the reason. Late or missing filings can draw a fine of up to S$5,000.
Someone leaving soon?
Send us the departure date. We file IR21 and settle the tax so final pay is released on time.
Sources
- IRAS: Tax clearance for employees (IR21)
- Omni HR: IR21 and tax clearance guide for Singapore employers (secondary source)
General information only, last reviewed 11 November 2026. It is not advice for your situation. Laws and practice change, and the official sources linked above prevail. Speak to a qualified adviser before you act. Northwise does not file with Indian authorities; India-side work is done by independent licensed firms.
