Singapore VCC insights

IR21 Singapore for Fund and Family Office Executives: Unvested Awards, Deferred Bonuses and Carry

By VCC Editorial Team · Published 8 November 2026

Short answer: When a non-citizen executive leaves a Singapore family office or fund manager, the employer notifies IRAS on Form IR21 at least one month before cessation and withhold all monies due from the day it learns of the departure. Unvested awards and unexercised options granted in Singapore are taxed as if exercised one month before cessation, or at grant if later.

IR21 Singapore tax clearance is usually treated as a payroll formality, but for a portfolio manager or family office head the departure file is rarely small: deferred bonuses, unvested awards in an unlisted management company and carried interest all sit alongside the final salary. This note covers the employer duties of a single family office (SFO) or fund manager, the deemed exercise rule in section 10(7) of the Income Tax Act 1947 (ITA), and carried interest after the Monetary Authority of Singapore (MAS) announcement of 19 August 2026. Provisions were checked on Singapore Statutes Online and the IRAS website on 8 November 2026.

This article is general information only and is not legal, tax or immigration advice. For matters needing legal advice, we work with a panel of experienced Singapore law firms.

When does IR21 Singapore tax clearance apply to a departing family office or fund executive?

It applies whenever a non-citizen employee ceases employment in Singapore, starts an overseas posting, or leaves for more than three months. IRAS confirms that it covers all work pass holders, including Personalised Employment Pass and Overseas Networks & Expertise (ONE) Pass holders.

The statutory source is section 68 of the ITA. Section 68(5) requires the employer to give written notice “not later than one month before” the individual ceases to be employed in Singapore. Section 68(6) imposes the same notice for an employee leaving for more than three months, and section 68(6A) excludes citizens and employees who must leave Singapore at frequent intervals in the course of their work. Section 68(3) treats the manager or principal officer of a company as the employer, which matters in a lean SFO.

For a family office the exemptions are narrow. IRAS does not require clearance for Singapore citizens, for Singapore permanent residents (SPRs) who sign a Letter of Undertaking that they are not leaving permanently, for intra-group transfers on a merger or restructuring (notified through myTax Mail with the waiver template), or for short postings of up to six months on the conditions IRAS sets. An SPR posted overseas still needs clearance unless those posting conditions are met. If you hired the executive through the route described in our note on the family office Employment Pass, assume clearance is required.

What must the employer withhold, and from when?

Everything payable to the employee, from the date the employer becomes aware of the impending cessation or departure. IRAS lists overtime pay, leave pay, allowances, reimbursements, gratuities and lump sum payments, and the statute itself refers to “any moneys whatsoever”.

Two IRAS answers matter for senior departures. First, withholding starts at resignation, not at the last day: in IRAS’s own example, an employee who resigns on 2 March with three months’ notice has monies withheld from 2 March. Second, where the executive is placed on gardening leave, IRAS expects clearance to be sought at the start of the gardening leave, with an Amended Form IR21 if figures later change.

IRAS does not allow the employer to dock part of each monthly salary to build a tax reserve. If nothing can be withheld (for example, salary was paid in advance), the reason must be stated on the form. Otherwise the employer may be liable for the tax the employee owes. A family office board should therefore treat the departure as a governance event, alongside the steps in revoking family office access after a staff exit.

How is each element of an executive package treated on departure?

Salary and cash bonuses go on the IR21, unvested equity is taxed under the deemed exercise rule, and later payments need a further IR21 before release.

Package element	Position at tax clearance	Source
Salary to last day, leave pay, allowances	Reported on Form IR21 for each calendar year not already sent through the Auto-Inclusion Scheme	IRAS: How to complete the Form IR21
Salary in lieu of notice; gratuity for past services	Taxable	IRAS: Tax clearance for employees, FAQ 12
Compensation for loss of office	Generally not taxable as a capital receipt; IRAS may ask for the termination agreement and basis of the sum	IRAS FAQs 12 and 13
Deferred bonus paid after departure	Additional or Amended Form IR21 must be filed before the monies are released	IRAS: additional income payable
Unexercised options, unvested or restricted share awards granted in Singapore	Deemed gain under section 10(7) ITA, reported in the IR21 appendix	ITA s 10(7); IRAS e-Tax Guide (30 January 2026)
Phantom shares and share appreciation rights	Excluded from IRAS’s definition of employee share ownership plans, so outside the deemed exercise rule; cash paid under them is still employment remuneration	IRAS e-Tax Guide, para 3.2
Carried interest and other profit-related returns	Depends on how the arrangement is structured; the proposed MAS exemption is not yet law	MAS media release, 19 August 2026

How does the deemed exercise rule tax unvested shares and options?

Section 10(7) treats any unexercised option, unvested award or restricted share granted on or after 1 January 2003 while the individual was exercising employment in Singapore as income derived one month before cessation, or on the grant date if that is later. The gain is the open market price on that date less the amount paid for the shares.

The rule applies to individuals who, immediately before cessation, are neither citizens nor SPRs, and to SPRs leaving Singapore permanently; IRAS also applies it to SPRs posted overseas. It reaches restricted awards where a moratorium on sale has not lifted, which catches the lock-ups typical of manager equity plans. The employer reports the deemed gains with the IR21.

For a fund management company or family office holding company, the valuation point is the hardest part. Shares in an unlisted manager have no open market price. IRAS’s e-Tax Guide states that the net asset value of the shares may be used where an open market price is not readily available. A manager with large accrued performance fees should document its valuation method before filing, not after IRAS queries it.

What if the shares fall in value or the award is forfeited?

The executive can apply to revise the assessment. Under section 10(7AA), if the award is exercised or vests within 5 years after the year of the deemed date and the actual gain is lower, the actual gain is taxed instead. Under section 10(7AB), if the award lapses, is forfeited or is cancelled within that period, section 10(7) does not apply at all.

Section 10(7AC) requires the application to be made within the same 5-year window. The forfeiture limb matters for executives who leave as “bad leavers” and lose unvested awards: without an application, they would remain taxed on a gain they will never receive. IRAS’s web page still illustrates a four-year reassessment window, while the amended Act and the January 2026 e-Tax Guide refer to five years; a prudent executive diarises the earlier date and keeps the leaver notice and plan rules on file.

The employee-side mechanics are covered in our sister site’s guide to the deemed exercise rule for stock options and RSUs.

Can a fund manager use the Tracking Option instead?

Only if it meets the conditions IRAS imposes under section 10(7A), and most boutique managers and SFOs will not. Under the Tracking Option the employer undertakes to report actual gains when the award is exercised or vests, and to collect and pay the tax, so the deemed exercise rule is not applied.

The e-Tax Guide sets conditions that have the force of law. The employer must be a Singapore company or registered branch, have at least two years of tracking experience on its HR system, meet a capital test (top 25% of the Straits Times Industrial Index by market capitalisation, or a recognised index for a foreign parent) or give a banker’s guarantee per employee, and have a clean three-year tax record. It must apply in writing two months before the employee ceases employment, report each realisation event within 30 days on an additional IR21, and file an annual status return by 31 January. A failure can lead to a deemed exercise assessment and a penalty of up to 200% of the tax.

A subsidiary of a large listed asset manager may qualify; a two-person SFO should plan on the deemed exercise basis.

Where does carried interest stand after the MAS announcement of 19 August 2026?

No exemption is in force yet. MAS and the Ministry of Finance plan to exempt profit-related returns from fund management services to qualifying funds, expected to take effect from the Year of Assessment 2027, with further details to be announced at Budget 2027.

The proposal is limited to funds qualifying under sections 13D, 13O, 13OA, 13U and 13V of the ITA that are managed by Singapore-based managers, and states that it does not apply to ordinary salaries, bonuses or other forms of employee remuneration. It will cover a share of fund profits contractually received by corporate entities, partnerships or individuals, directly or indirectly, for fund management services. See our analysis of what is known before Budget 2027 covers the open questions.

For tax clearance the point is narrower. The deemed exercise rule is drafted around rights to acquire shares, so carry held through a limited partnership interest is not a share option. Carry-linked pay from the Singapore employment that falls due after departure is additional income needing a further IR21 before release. Do not file on the assumption that a future exemption will apply.

What is the timeline and checklist for an executive departure?

Work backwards from the last day of employment, not the last day in the office.

Point in time	Action	Basis
Day resignation or departure becomes known	Start withholding all monies due	IRAS step-by-step guide
At least 2 months before cessation	Apply for the Tracking Option, if eligible	e-Tax Guide, para 17.2
Start of gardening leave, or at least 1 month before cessation	File Form IR21 on myTax Portal	ITA s 68(5); IRAS FAQ 4
Within about 7 working days of e-filing	IRAS processes the form	IRAS step-by-step guide
Within 10 days of the Directive to Pay Tax	Remit tax from withheld monies; release the balance	IRAS step-by-step guide
Before any later payment (deferred bonus, carry-linked pay)	File Additional or Amended Form IR21 and wait for clearance	IRAS tax clearance page
Within 5 years after the year of the deemed date	Executive applies to revise the deemed gain if lower or forfeited	ITA s 10(7AA) to (7AC)

1. Confirm citizenship and pass status, and whether an SPR will sign a Letter of Undertaking.
2. Freeze payroll releases and expense reimbursements the day notice is received.
3. Obtain a schedule of all awards from the plan administrator: grant dates, vesting dates, exercise prices and moratoria.
4. Agree a valuation basis for unlisted manager or holding company shares, with working papers.
5. Map deferred bonus and carry payment dates beyond the cessation date.
6. Have the IR21 signed by a director, the company secretary, a manager or an authorised person, and file it on myTax Portal.
7. Diarise each later payment and each 5-year revision deadline, and give the executive a written breakdown.

Principals arriving face different charges, compared in six home-country departure taxes. For a general walkthrough of the form, see the guide to Form IR21 and tax clearance, and the calculators on our free tools page. Primary sources: section 68 of the Income Tax Act 1947, the IRAS tax clearance page and the MAS media release of 19 August 2026.

Frequently asked questions

Does an SFO with a single employee still have to file an IR21?

Yes, if that employee is a non-citizen who is ceasing employment or leaving for more than three months. Section 68 has no headcount threshold, and the manager or principal officer is treated as the employer.

What happens if the executive resigns with immediate effect?

File as soon as possible and state the reason for short notice on the form. IRAS generally allows a 10-day grace period and treats an immediate resignation as a valid reason; the fine of up to S$5,000 is for employers without one.

Are unvested awards in an offshore parent caught by the deemed exercise rule?

Yes, if they were granted while the executive was exercising employment in Singapore. Section 10(7) turns on where the employment was exercised at grant, not on where the issuing company is incorporated.

Can the deemed gain be reversed if the executive forfeits awards as a bad leaver?

Yes. Section 10(7AB) disapplies the deemed exercise rule if the award lapses, is forfeited or is cancelled within 5 years after the year of the deemed date, provided the executive applies under section 10(7AC).

Need help with this? Call, SMS or WhatsApp +65 8501 7133, or email hello@rafflescorporateservices.com. Raffles Corporate Services works with a panel of corporate and employment law firms; this article is general information, not legal advice.

Last reviewed: 8 November 2026. The Editorial Team, Variable Capital Companies Act.