Identify each payment component
Compensation for loss of office and payments for restrictive covenants are capital in nature and not taxable under the source guidance. Payment in lieu of notice, ex-gratia and gratuity recognising past service are taxable. Outplacement support is non-taxable only where the stated conditions are met, including availability only to retrenched staff, the employer’s qualifying support costs and no cash or other alternative compensation for declining it. An employer’s label alone does not determine treatment.
Entitlement year and declaration
Taxable components belong to the year in which the employee becomes legally entitled, usually the retrenchment year, rather than the payment date. The source illustrates a 2025 retrenchment paid in 2026 being assessed in YA 2026. Non-AIS employees declare taxable components under “Employment – Others”; AIS employers submit the information electronically. Obtain the component breakdown from the employer and review payment assistance separately if needed.
Official source
A concise, independent Apex Gateway guide based on the official English source, not a reproduction of the complete document. Consult the original for full conditions, exceptions and subsequent updates.
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