Petty Cash for Singapore SMEs: Controls & GST

A renovation contractor in Ubi keeps S$1,000 in a cash tin in the office. On the last Friday of September the admin executive counts it: S$312 in notes and coins, S$566 in receipts, a handwritten note that says "Jason took $80 for site lunch, will claim", and a S$42 gap nobody can explain. Among the receipts are a S$188 hardware-store slip from a card terminal that shows only a total, a S$95 supermarket run for the pantry, S$140 of parking, and a wet-market receipt with nothing printed on it but "$60".

The bookkeeper tops the tin back up to S$1,000, posts S$688 to "General expenses", and claims input tax on the lot.

Three things went wrong in that one count, and they are the three things this guide covers. The float did not balance and nobody owns the difference. Half the receipts would not support a GST claim if IRAS asked for them. And the whole month's spend landed in one account, so nobody will ever know what the business actually buys with cash. There is a quiet fourth problem: most of those payments could have gone through a card or PayNow with a photographed receipt, and the tin exists mostly out of habit.

What petty cash is for, and what it is not

Petty cash is a small, fixed sum of physical cash kept on the premises to pay for things a bank transfer or card cannot sensibly handle. In a Singapore SME in 2026 that list is shorter than it used to be:

Cash-only vendors. Some wet-market and hawker purchases, small hardware shops, cash-on-delivery couriers.
Small on-the-spot reimbursements. A staff member who paid S$12 for a courier out of pocket and would rather have the money today than in next month's claims run.
Genuine one-offs. A cash deposit for an equipment rental, coupon parking at the few carparks that still use it.

The list of what petty cash is not for matters more, because these are the habits that turn a float into a problem:

Staff advances or loans. "I'll pay it back Friday" is an unrecorded loan, not an expense. An IOU in the tin is not cash and not a voucher.
Wages or casual labour. These go through payroll, with CPF and a record, however small the amount.
Supplier invoices. Anything with an invoice attached goes through accounts payable, however convenient the cash is.
Anything above the per-payment cap. Set one (S$100 to S$200 is typical) and route larger spend through a purchase order or an expense claim.
Top-ups from the till. A retail or F&B business that pays expenses out of the day's takings understates both its sales and its expenses, and breaks the cash register tape that IRAS lists among the records supporting revenue. Sales cash is banked in full. Petty cash is funded from the bank.

The imprest system in five steps

The method that works is the imprest system, and it works because of one equation: cash in the tin plus vouchers for money paid out equals the float, at every moment. If the equation fails, someone knows immediately rather than at month end.

Set the float (say S$500)
→ custodian pays out only against a signed voucher with the receipt attached
→ cash + vouchers = S$500 at all times
→ replenish from the bank for exactly the total of the vouchers
→ post each voucher to its own expense account; the petty cash account stays at S$500

Set the float. Size it to two to four weeks of normal cash spend. If you replenish weekly, the float is too small. If the same notes sit untouched for three months, it is too large and the controls around it will relax. Xero's Singapore petty cash guide puts typical floats between S$100 and S$1,000, and the lower end is right for most office-based SMEs.
Appoint one custodian. One named person holds the key to the lockbox and signs for every payment out. Not the bookkeeper who posts the entries, and not the person who approves the replenishment. Three roles, at least two people.
Pay out only against a voucher. Every payment gets a numbered voucher: date, amount, what it was for, who received the cash, who approved it, and the receipt stapled or photographed to it. No receipt, no payment. The exception is a voucher signed by both the recipient and a manager explaining why there is no receipt, and that exception should be rare enough to notice.
Replenish for the voucher total. When the cash runs low, the custodian totals the vouchers, a manager checks them against the cash remaining, and the business withdraws or transfers exactly that total. The float returns to its fixed amount. A difference between the count and the vouchers is investigated now, not absorbed into the top-up.
Post the vouchers, not the top-up. Each voucher is posted to the right expense account and tax code, with the replenishment payment as the other side. The petty cash account in the ledger stays at the float amount and only moves when you deliberately change the float.

In Xero and most cloud accounting tools, set petty cash up as a bank account with no bank feed. Record each voucher as a spend-money transaction from that account with the receipt image attached, and each replenishment as a transfer from the main bank account. The month-end reconciliation becomes a count: the ledger balance should equal the cash in the tin plus any vouchers not yet posted.

What IRAS needs to see on the receipt

Two tax regimes care about what is in the tin. GST cares about each purchase. Corporate income tax cares about whether the expense is supported at all.

GST: the input tax claim lives or dies on the document

If your business is GST-registered, the input tax on a petty cash purchase is claimable only when IRAS's conditions for claiming input tax are met. For local purchases, that means a tax invoice addressed to your business or, where the total including GST is S$1,000 or less, a simplified tax invoice. IRAS's invoicing rules require a simplified tax invoice to show six things:

the supplier's name, address and GST registration number
the date of issue
an identifying number
a description of the goods or services
the total amount payable including GST
a statement such as "price payable includes GST"

Most receipts from GST-registered retailers meet this. Many petty cash receipts do not:

A card-terminal slip with a total and an approval code proves payment, not GST. It is not a tax invoice.
A handwritten "received with thanks" chit from a stall or small contractor with no GST registration number means no GST was charged, so there is nothing to claim. Posting it with a standard-rated tax code overclaims.
A supermarket receipt that mixes the pantry run with someone's lunch. Private spend is not claimable. Split the receipt or do not claim it.
A S$1,200 purchase on a simplified receipt. Above S$1,000 you need a full tax invoice addressed to the business, which is also a sign the purchase should never have come out of the tin.

Three details catch businesses out even when the receipt is perfect:

Blocked categories stay blocked. Regulations 26 and 27 of the GST (General) Regulations disallow input tax on the costs and running expenses of a motor car (petrol, parking, washing), on club subscription fees charged by sports and recreation clubs, on most staff medical expenses, on benefits for staff's family members, and on anything involving betting or lotteries. Parking and petrol are the most common petty cash lines in a business that runs a company car, and the GST on them is not claimable unless the vehicle falls outside IRAS's definition of a motor car. Check the motor vehicles section of IRAS's input tax page for vans, lorries and other commercial vehicles before assuming. A pay-per-trip private-hire ride, by contrast, is claimable if the receipt shows GST charged.
Reimbursements through the tin are fine, with evidence. Where a staff member pays first and is repaid from petty cash, IRAS allows the business to claim the input tax if the employee was acting as the business's agent. The signed voucher and the reimbursement record are that evidence, and any private items on the same receipt must be separated out.
Entertainment has its own concession, and staff meals are not entertainment. IRAS accepts, as an administrative concession, a receipt carrying all the simplified-tax-invoice details to support a claim on food and drink entertainment above S$1,000, provided you keep payment evidence and a note of who was entertained, why, and by whom. A team lunch paid from the tin is a fringe benefit instead, and input tax on employee benefits is claimable only where the benefit has a close nexus to the business.

There is a timing rule too. IRAS expects input tax to be claimed in the accounting period that matches the invoice date. A June receipt that surfaces in a September replenishment belongs in the earlier quarter's return, not the later one. Replenishing and posting at least monthly keeps petty cash receipts inside the quarter they belong to, and keeps them out of the GST data errors that surface at filing.

Income tax: a receipt for every purchase, kept for five years

For corporate income tax, IRAS's record keeping requirements are blunt. A company must retain its source documents and be able to explain every transaction relating to income, expenses and purchases, for at least five years from the relevant Year of Assessment. IRAS's record keeping checklist lists "invoice received or receipt received" against every purchase for GST-registered and non-GST-registered businesses alike. IRAS also says that keeping only bank statements amounts to poor record keeping and can attract penalties of up to S$5,000. For GST-registered businesses the same five-year rule applies to GST records, counted from the end of the accounting period, and an input tax claim you cannot support is disallowed.

Source documents may be kept physically or electronically without asking IRAS first. A photograph stored against the ledger entry satisfies the rule and outlasts thermal paper, which fades long before five years are up. That is the same discipline as the rest of your GST record-keeping and document retention.

One carve-out for the smallest businesses: IRAS's Simplified Record Keeping lets a sole proprietorship or partnership with revenue of S$200,000 or less in each of the past two financial years, assets under S$100,000, and no GST registration keep daily revenue, daily purchases and monthly expense records instead of every receipt. It does not apply to companies or to GST-registered businesses, so for most readers here the receipt rule stands.

Code it properly, or you have learned nothing

"General expenses S$688" tells you nothing, even before the GST question. Petty cash spend should be posted line by line to the same accounts as everything else: pantry supplies to staff welfare, parking to transport, the hardware run to repairs and maintenance, the courier to delivery costs. A tin that produces 30 vouchers a month is 30 ledger lines, each with its own tax code.

If that sounds like too much work, the answer is to put less through the tin, not to post it in a lump. The chart of accounts guide makes the same point about "Miscellaneous" accounts generally: one catch-all account, reviewed monthly and emptied. Petty cash is where that rule gets tested.

Coded properly, the petty cash ledger is a useful report. It shows you exactly what the business cannot buy any other way, which is the list of what to fix.

The controls that stop leakage

Petty cash fraud in small businesses is small, boring and repeated: a S$40 "loan" that is replaced before the count, then not replaced; a receipt from a personal errand slipped into the pile; a replenishment that creeps up S$50 a month while the business stays flat. IRAS itself lists seeing "whether there is internal fraud or theft" among the reasons a company should keep good records. The controls are not complicated, and none of them requires suspecting a particular person.

Control	What it stops
One custodian, one key, one tin	Everyone's hands in the box, and arguments about who took what
Voucher signed by recipient and approver, receipt attached	Payments nobody authorised
Per-payment cap of S$100 to S$200	Supplier bills and personal spending routed through cash
No IOUs, no advances, no cashing of personal cheques	The float turning into an informal loan book
Replenish only against vouchers, approved by someone who reads them	Topping up a tin nobody reconciled
Surprise count by a non-custodian, monthly and at every replenishment	Borrowing and replacing cash ahead of a scheduled count
Differences investigated above a small tolerance, with small ones posted to a cash over-and-short account	A S$42 gap becoming S$420 by hiding in the next voucher
Signed handover count when the custodian goes on leave	A difference with no owner
Never funded from sales takings	Understated revenue and a broken cash register record

Patterns worth a second look when you review the vouchers: round amounts, the same vendor every week with nothing to show for it, "misc" or "sundries" as the description, receipts that are photographs of photographs, one person's vouchers repeatedly missing receipts, and a replenishment total rising while activity is not.

The point of the design is that taking S$40 "until Friday" cannot be done quietly. Once that is true, most of the problem goes away on its own.

When to retire the tin

Pull the vouchers from the last three months and ask of each one: could this have been paid by corporate card, debit card, or PayNow from the business account?

For most office-based SMEs the honest answer is "almost all of them". A card or PayNow payment is recorded by the bank the moment it happens, lands in the bank feed for reconciliation, and can carry a photographed receipt from the point of spend. Cash is recorded when someone fills in a voucher, which is later, and reconciled when someone counts, which is later still. The handling cost of a S$15 cash payment, from voucher to count to replenishment to posting, is often more than S$15.

The tin earns its place in a few kinds of business: field crews buying at cash-only stalls and markets, F&B outlets with daily wet-market runs, operations that take or make cash-on-delivery payments. If that is you, keep a small float and run it with the controls above.

Everywhere else, replace it:

A company debit or corporate card for named staff with a limit, with the receipt photographed into the same capture flow as supplier invoices. Receipt data extraction reads the merchant, date, amount and GST, so the posting is a confirmation rather than a typing job.
Expense claims for employee-paid spend, on a fixed reimbursement cycle, so nobody needs cash back today.
PayNow from the business account for the cash-only vendors who now take PayNow, which is most of them.

A middle step for businesses that are not ready to go cashless: digitise the tin. Keep the cash, but photograph each receipt into the capture inbox the moment it is paid, record the voucher in the accounting system with the image attached, and treat the count as a reconciliation of the ledger balance. The paper petty cash book disappears, and the data lands where the GST return is built from.

For GST-registered businesses coming under the GST InvoiceNow requirement, there is a practical reason to do this now. IRAS allows petty cash purchase data to be aggregated when invoice data is transmitted, which is straightforward when each purchase is already a coded record with a tax code and nearly impossible when the month is one line called "General expenses".

Put it on the month-end checklist

Whatever you decide about the tin, petty cash belongs on the month-end close checklist with four steps: count the cash with a second person present, reconcile the count to the ledger balance and the unposted vouchers, replenish against the vouchers, and post every voucher to its account and tax code before the GST return is prepared. The signed count sheet goes in the same place as the bank reconciliation. If the step keeps taking longer than it should, that is the data point for retiring the tin.

The bottom line

Petty cash is a fixed float run on the imprest method: one custodian, a voucher for every payment, replenishment against vouchers, and a ledger balance that never moves unless the float does.
A GST claim needs a tax invoice, or a simplified tax invoice with the six IRAS details for purchases of S$1,000 or less. Card slips and handwritten chits do not qualify, and blocked categories stay blocked whatever the receipt says.
Receipts are kept for five years, electronically if you prefer, and every voucher is coded to a real account rather than "General expenses".
The controls that matter are a per-payment cap, no IOUs, segregated roles, and surprise counts by someone other than the custodian.
Most of what the tin pays for today can go through a card or PayNow with receipt capture. Shrink it to the genuinely cash-only spend, or retire it.

Use the Calcudesk automation ROI calculator to estimate what cash handling, claims and manual posting cost you each month. If the tin still balances only on paper and receipts still arrive in a pile at month end, send us an enquiry and we will map the cash and card spend before recommending what to replace it with.