“Per diem” payments are payments made to employees to cover living expenses incurred while they are away from home for work, such as during overseas business trips, training or conferences. These may include expenses for meals, transport, accommodation and other incidentals such as laundry.
If the per diem is a reimbursement of actual expenses incurred for official purposes:
CPF contributions are not payable if the payment reimburses expenses actually incurred for official purposes, such as accommodation or meals. As an employer, you must be able to prove that the reimbursements are for expenses incurred for official purposes. The amount reimbursed should not exceed the actual expenses incurred.
If the per diem is paid upfront based on a genuine estimate of expenses:
CPF contributions are not payable if the payment is made upfront based on a genuine and reasonable estimate of the expenses expected to be incurred for official purposes. As an employer, you must be able to show that the estimate reasonably reflects the expenses that employees are expected to necessarily incur such as accommodation or meals, during the overseas trip.
If the per diem is paid as a lump sum allowance:
CPF contributions are payable if the per diem is a lump sum allowance that is not based on a genuine estimate of expected expenses, as it increases the employee’s wages rather than reimburse expenses incurred for official purposes.
