Which stage of business is this at?
Scope Of Tax
How income is assessed?
Answer: Income is assessed on a preceding year basis. This means that the basis period for any Year of Assessment (YA) generally refers to the financial year ending in the year preceding the YA.
What is the meaning of Companies with December financial year end?
Ans: Your company’s accounts are to be prepared up to 31 December each year. The basis period for each YA is the preceding calendar year ended 31 December. Example, your company’s basis period for YA 2008 is from 1 Jan 2007 to 31 Dec 2007.
What is the meaning of Companies with non-December financial year end?
Answer: Your company’s accounts are prepared up to the financial month for each year. Assuming your financial year end is 30th June, your accounts are prepared up to 30th June each year. The basis period for each YA is the preceding accounting year ended 30th June. Example, your company’s basis period for YA 2008 is from 1st Jul 2006 to 30th Jun 2007.
What is the procedure of taxing a company(both foreign and local) in Singapore?
Answer: A company, regardless of whether it is a local or a foreign company, will be taxed on its:
- income accruing in or derived from Singapore; or
- income received in Singapore from outside Singapore
When And How To File Income
How to file ECI? When and how to file income
Answer: For details on filing ECI, refer to Filing Estimated Chargeable Income (ECI).
How to file Form C ? When and how to file income
Answer: For details on the filing and completion of Form C, refer to Filing Income Tax Form (Form C). You may also refer to the guide on “Essential Information for Newly Incorporated Companies” (287KB)
What is Estimated Chargeable Income (ECI) ? When and how to file income
Answer: Your company has to furnish an estimate of its chargeable income known as Estimated Chargeable Income (ECI) within three months from the end of its accounting period. For example, if your company’s financial year end is 31 Dec, you have to furnish ECI for the accounting period ending 31 Dec 2007 by 31 Mar 2008.
What is Form C? When and how to file income
Answer: Your company is required to declare its income by completing an Income Tax Form for companies, known as Form C, each year. The due date for filing of Form C for each YA is as follows:
|2007 and before||31 Jul of each year|
|2008 onwards||30 Nov of each year*|
* IRAS is pleased to inform that in response to feedback from companies, 30 Nov will be the filing deadline from Year of Assessment 2009 instead of 31 Oct as announced previously. When will the Form C be sent to my company IRAS will send the first Form C to a newly incorporated company in the second year following the year of incorporation. Example:
|Year of incorporation||Year in which your company will receive its first Form C||Remarks|
|2007||2009||Form C for Year of Assessment (YA) 2009 will be sent to your company in Mar/Apr 2009.This Form C is for your company to declare its income for the financial year ending in year 2008.|
Thereafter, Form C for subsequent YAs will be sent to your company in Mar/Apr every year. Do I need to request for my company’s first Form C to be sent earlier You may need to request for the first Form C to be sent to you earlier, that is, in the year immediately after the year of incorporation (instead of the second year following the year of incorporation) under certain circumstances. Please note that income is assessed on a preceding year basis. This means that the basis period for any YA generally refers to the financial year ending in the year preceding the YA. Example 1 Your company is incorporated on 1 Jul 2007 and its financial year end is 30 Jun. If your company’s first set of accounts covered the period from the date of incorporation (1 Jul 2007) to 30 Jun 2008, your accounts is for YA 2009. You do not need to request for Form C for YA 2008. Example 2 Your company is incorporated on 1 Jul 2007 and its financial year end is the 31 Dec.
- If your company’s first set of accounts covered the period from the date of incorporation (1 Jul 2007) to 31 Dec 2007, your accounts is for YA 2008. In this case, you have to request for Form C for YA 2008.
- You can request for Form C via the form Request for Form C for Newly Incorporated Companies or Companies Granted Waiver to Submit Form C/Change of Particulars (36KB).
- If your company’s first set of accounts covered the period from the date of incorporation (1 Jul 2007) to 31 Dec 2008, your accounts is for YA 2009. In this case, since the first set of accounts is for YA 2009, you do not need to request for Form C for YA 2008. Your accounts for the period from 1 Jul 2007 to 31 Dec 2008 is to be submitted with the Form C for YA 2009, which will be sent to your company in Mar/Apr 2009.When you file Form C for YA 2009, please note that you need to submit separate tax computations for YA 2008 and YA 2009 since your accounts covered a period of more than 12 months. You have to apportion the income for the period from 1 Jul 2007 to 31 Dec 2007 (YA 2008) and 1 Jan 2008 to 31 Dec 2008 (YA 2009). When submitting Form C for YA 2009, please attach a covering letter stating that you have enclosed the tax computations for YA 2008 and YA 2009.
When to file?
Answer: The company has to file a complete set of returns (i.e. Form C, audited/unaudited accounts and tax computation) by the following dates:
|Year of Assessment||Filing deadline|
|2007||31 Jul 2007|
|2008||30 Nov 2008|
|2009 and thereafter||30 Nov of each year*|
* IRAS is pleased to inform that in response to feedback from companies, 30 Nov will be the filing deadline from Year of Assessment 2009 instead of 31 Oct.
Filing Estimated Chargeable Income (ECI)
5.As How do I get single Acknowledgement Statement for ECI filing for multiple clients? Filing Estimated Chargeable Income (ECI)
Answer: You will have to e-File the ECI for each company separately if you wish to receive single acknowledgement statement.
As a tax agent, can I e-File ECI for multiple clients in one submission? Filing Estimated Chargeable Income (ECI)
Answer: Yes. You can e-File for up to a maximum of six clients in one submission. A consolidated acknowledgement will be given for the cases e-Filed.
Can I e-File ECI if the company’s accounting month shown on the e-Filing screen or the ECI letter received from IRAS is incorrect? Filing Estimated Chargeable Income (ECI)
Answer: Yes. You can proceed to e-File the ECI or furnish ECI via ECI Form. Please write in to inform us on the change in the company’s accounting month or complete and fax the form “Request For Form C For Newly Incorporated Companies or Companies Granted Waiver to Submit Form C /Change Of Particulars” at + 65 6351 4360.
FAQs (38KB) Filing Estimated Chargeable Income (ECI) Active
Answer: Alternatively, you may write in to let us know your reason for making the revision and provide your revised ECI amount. Please note that where there is a significant difference between the ECI provided and the chargeable income reported in the Form C, we may require the company to provide an explanation.
How to complete the ECI Form ? Filing Estimated Chargeable Income (ECI) Claiming Double Tax Relief – What is double tax relief (DTR)? If you receive foreign income Active
Answer: Section A Section A is only applicable if you are claiming tax exemption for new start-up companies. You do not need to complete this section if your company does not qualify for tax exemption for new start-up companies (e.g. your company is not a newly incorporated company and you are filing ECI for your company’s fourth or subsequent YA ). Refer to Tax Exemption Scheme for New Start-up Companies for more details on this scheme. How to claim for tax exemption for new start-up companies? Fill in “1” in the first box to indicate “Yes” to confirm that your company satisfies all the qualifying conditions; and Fill in your company’s first YA in YYYY format Section B Fill in your company’s revenue figure. Please refer to Declaration of Amount of Revenue in ECI Form for more information. Section C Fill in your company’s ECI amount in the first row, in the box next to the pre-filled prevailing corporate tax rate. Please refer to Things to note when you declare ECI amount.Section D (only applicable to ECI Form with request for payment by instalments) Under payment plan:
- Fill in “A” if you are requesting for GIRO plan
- Fill in “B” if you are requesting for self-pay plan
How to file? Filing Estimated Chargeable Income (ECI)
Answer: You may file your company’s ECI:
- electronically via myTax Portal; or
- by completing and submitting an ECI Form.
- To encourage you to e-File, the number of instalments you get for e-Filing your company’s ECI is more than that for paper-filing.
With effect from Year of Assessment (YA) 2008, the number of instalments allowed to e-Filers and paper-filers of ECI are as follows:
|No. of instalments given|
|ECI filed within:||e-filers||Paper-filers|
|1 month from accounting year-end||10||5|
|2 months from accounting year-end||8||4|
|3 months from accounting year-end||6||3|
|After 3 months from accounting year-end||No instalments allowed|
For e-Filers, e-File by the 26th of each qualifying month to enjoy the maximum number of instalments allowable for that month. For paper-filers, your ECI Form should reach us by the 24th of each qualifying month to enjoy the maximum number of instalments allowable for that month. Example: December year-end company
|e-File by||Number of instalments||Paper-file by||Number of instalments|
|26th January||10||24th January||5|
|26th February||8||24th February||4|
|26th March||6||24th March||3|
|After 26th March||No instalments||After 24th March||No instalments|
If your company qualifies for instalments and has previously paid its tax by instalments, the instalment plan will be sent to your company together with your Notice of Assessment (NOA). However, if your company has not paid its tax by instalment previously, or your company is filing ECI for the first time, instalments will not be given automatically. In this case, if you wish to pay your tax by instalment, you will need to request for the instalment plan.
- Please inform us of your preference to pay tax by instalments before you file your ECI. You can email us at email@example.com or contact us at telephone number 1800 356 8622.
- For e-filers, if we update your request for instalments before you e-File, the instalment plan will be sent to your company together with the NOA after you e-File.
- For paper filers, you need to complete and submit the ECI Form (with request for payment by instalments). i.e. Form IRIN322. Please note that to enjoy the maximum number of instalments allowable for each qualifying month, this form must reach us by the 24th of that month.
- If you wish to pay by GIRO, you must complete and submit GIRO Application Form.
- Please note that companies that are not registered in Singapore do not qualify for payments by instalments.
- For more details on payment, refer to How to pay.
Things to note when you declare ECI amount
- The amount of ECI declared must be before the deduction of the exempt amount under partial tax exemption or tax exemption scheme for new start-up companies. We will automatically allow the appropriate exempt amount.
- If your ECI amount is nil (e.g. your company is in a loss position or it is dormant and has no income), you must declare “0” ECI amount.
- If you are claiming unutilised losses, capital allowances or donations brought forward from previous YA, your ECI amount must take into account the unutilised losses, capital allowances, or donations claimed.
- If you are claiming loss items under Group Relief System, the ECI amount must take into account the loss items transferred or claimed under group relief.
- If there is a claim for tax deducted at source on franked dividends, the ECI amount filled in must be the regrossed amount calculated based on the net tax payable after deducting the tax deducted at source on franked dividends. For an example on how to calculate regrossed ECI amount, refer to the Explanatory Notes to ECI Form.
- The first row, with the pre-filled prevailing corporate tax rate, is for you to fill in your ECI amount to be taxed at the prevailing corporate tax rate.
- The second row is for you to fill in ECI amount to be taxed at a concessionary tax rate of 10%. You do not need to fill in “0” in the second row if your company does not have any income to be taxed at the concessionary rate of 10%. That is, the box in the second row must be blank if the tax rate of 10% is not applicable.
- The third row is for you to fill in income to be taxed at any other rate, which is different from the pre-filled prevailing corporate tax rate or 10%. You do not need to complete the third row if your company does not have any income to be taxed at a rate other than the prevailing corporate tax rate or 10%. That is, the third row must be blank if it is not applicable.
How to submit ECI Form? Filing Estimated Chargeable Income (ECI)
Answer: You can submit the completed and signed ECI form to us by post or fax. Our fax number is +65 6351 4360. Our mailing address is: Inland Revenue Authority of Singapore 55 Newton Road Revenue House Singapore 307987 We do not send acknowledgement for ECI Forms received. Your company will receive the estimated assessment once we have processed your ECI Form. However, please note that we do not issue Notice of Assessment to your company if you have declared a “0” ECI amount.
If I am authorised as a Filing Estimated Chargeable Income (ECI)
Answer: As a “Preparer”, although you can enter the ECI amount for your company in myTax Portal, you cannot submit the filing details to IRAS. You have to submit your e-filing details to the person authorised as your “Approver”. Only the “Approver” can submit the filing details to IRAS. If your company wants you to file ECI to IRAS, your company must authorised you as an “Approver” instead of “Preparer” so that you can submit the filing details to IRAS.
What if I don’t file? Filing Estimated Chargeable Income (ECI)
Answer: If your company does not submit the ECI within three months from the end of its financial year, we may issue a Notice of Assessment (NOA) based on our estimation of your company’s income. If you do not agree with our estimated assessment, you must object in writing within 30 days from the date of the NOA. Otherwise, the estimated assessment will be treated as final, even if the actual income based on your Form C and accounts submitted subsequently is lower than our estimates. This means we will not amend your estimated assessment based on your Form C and accounts since there is no valid objection to the estimated assessment within the stipulated time.
What if I e-Filed the ECI beyond three months after the end of the company’s accounting period? Filing Estimated Chargeable Income (ECI)
Answer: You can e-File the ECI if no assessment for the YA has been issued to the company. However, no instalments will be granted if a company files its ECI beyond three months after the end of its accounting period.
What if the company is Investment Holding Company? Filing Estimated Chargeable Income (ECI)
Answer: YA 2005 to 2008 If your company is an investment holding company deriving only non-trade income (e.g. interest, dividend or rental income), you do not need to furnish ECI if your non-trade income is to be assessed on a calendar year basis, i.e. assessment is based on the income derived for the period of Jan to Dec for each year, regardless of the financial year end of the company. However, if your non-trade income is to be assessed on an accounting year basis, your company would need to file ECI within three months after the end of its financial year-end. For details on assessment of non-trade income on accounting year basis, refer to “Simplification of Income Tax Rules and Procedures – Assessment of Non-Trade Income and Deduction of Approved Donations on an Accounting Year Basis” (132KB). YA 2009 onwards Starting from YA 2009, all non-trade income of a company must be assessed on an accounting year basis. This means that all investment holding companies must file ECI within three months after the end of its financial year-end. For more details, you may refer to the Supplementary Circular “Simplification Of Income Tax Rules And Procedures – Assessment Of Non-Trade Income And Deduction Of Approved Donations On An Accounting Year Basis ” (125KB). Your company needs to furnish Estimated Chargeable Income (ECI) within three months from the end of its financial year. For example:
|E.g. no||Financial year-end||Due date for filing ECI||Period covered in the accounts||Year of Assessment (YA)||Due date for filing ECI for that particular YA|
|1||31 Dec||31 Mar of the following year||1 Jan 2009 to 31 Dec 2009||2010||31 Mar 2010|
|2||31 Mar||30 Jun||1 Apr 2009 to 31 Mar 2010||2011||30 Jun 2010|
If you submit your company’s ECI within the qualifying period, you can pay your tax in instalments. It is better for your company to submit the ECI earlier, as the earlier the ECI is submitted, the higher the number of payment installments given. To encourage you to e-File, with effect from YA 2008, the number of instalments given to those who file ECI electronically is more than that given to those who file ECI using paper ECI Forms. To find out how to file ECI and the number of instalments allowed, refer to How to File.
What is e-Filing of ECI? Filing Estimated Chargeable Income (ECI)
Answer: You can e-File ECI to us if you have been authorised as an “Approver” for “Corporate tax matters” by your company. Any staff or director of the company, or a third party (e.g. tax agent), can be authorised as an “Approver” for “Corporate tax matters” via e-Services Authorisation System (EASY) using the company’s e-Services Access Code. For more details on EASY, please refer to user guide for EASY. After the authorisation via EASY, the authorised person can e-File for the company via myTax Portal using his personal SingPass or IRAS PIN. You will receive an acknowledgement statement upon successful submission of the ECI. Begin e-File User Guide FAQs Filing ECI using ECI Form Besides e-Filing, you can also file ECI by completing and submitting an ECI Form. However, please note that the number of instalments given for paper filing is lesser than that for e-Filing. There are three types of ECI Forms:
- ECI Form (for company)
- ECI Form (with request for payment by instalments)
- ECI Form (for tax agent)
You can download the relevant ECI Form at Estimated Chargeable Income (ECI) Forms. You can also request for a fax copy of the ECI Form by using the self-help options at the Corporate Tax Integrated Phone Service 1800-356 8622.
What is the Declaration of amount of revenue in ECI Form? Filing Estimated Chargeable Income (ECI)
Answer: Revenue refers to a company’s main source of income, and excludes items like gain on disposal of fixed assets. If your company is an investment holding company, your main source of income will be your investment income. Companies have been disclosing revenue data in your Income Tax Return (Form C). From 1 Jan 2009, companies will also be required to declare the revenue amount in the ECI Form. Information on the revenue of businesses is one of the key economic data used for policy-making, as well as for regular assessment of performance and development of industries and businesses. There is also an increasing need for more frequent and timely collation of comprehensive economic data in view of the rapid economic changes in recent years. Instead of imposing additional survey reporting on businesses, it is more efficient and cost effective to collect such economic data through existing channels such as the ECI Form. Where the audited accounts are not available, you can refer to the company’s management accounts for the purpose of declaring the revenue amount. If the revenue amount based on audited accounts be different from that declared in the ECI Form, and there is no change in your ECI, you are not required to revise the revenue figure.
What is the meaning of ECI? Filing Estimated Chargeable Income (ECI)
Answer: ECI means Estimated Chargeable Income. It is an estimate of a company’s chargeable income for a Year of Assessment (YA).
What should I do if I encounter an error while e-Filing the ECI via myTax Portal? How to revise ECI amount? Filing Estimated Chargeable Income (ECI)
- After the filing of ECI, if you wish to revise the ECI amount, you can do so by:
- Submitting an ECI Form (regardless of whether you have previously provided an ECI by e-Filing or by submitting an ECI Form); or
- e-Filing the revised ECI amount via myTax Portal under “Object/Revise Assessment” if you have been authorised as an “Approver” for “Corporate tax matters” via EASY.
For more details on e-Service “Object/Revise Assessment”, please refer to: User guides: For company (340KB) For tax agent (360KB)
Who needs to file? Filing Estimated Chargeable Income (ECI)
Answer: A company has to furnish Estimated Chargeable Income (ECI) within three months after the end of its financial year end. You may refer to When to File for more details. We will send a letter to your company towards the end of your financial year-end to notify you to file ECI. Even if the company estimates its chargeable income as zero, it still has to file a “Nil” ECI. You may refer to How to File for more details
Will the NOAs be displayed if I e-File ECI for multiple clients? Filing Estimated Chargeable Income (ECI)
Answer: No. Upon successful submission to IRAS, you will receive a consolidated acknowledgement statement for all the companies e-Filed. The NOAs will be sent to your clients.
Will the NOAs be displayed if I e-File ECI for multiple clients?
Answer: No. Upon successful submission to IRAS, you will receive a consolidated acknowledgement statement for all the companies e-Filed. The NOAs will be sent to your clients.
Does “Purchases” include opening stock?
What is the amount to be declared in Box 1a?
Answer: The amount to be declared is the adjusted profit/loss figure after deducting unutilised capital allowances brought forward, current year capital allowances and unutilised losses brought forward.
Boxes 11 and 13 Chargeable income – Should the chargeable income be the amount before or after deducting the exempt amount under the partial exemption scheme or tax exemption scheme for new start-up companies?
Answer: The chargeable income to be declared should be the amount before deducting the exempt amount. IRAS will compute the exempt amount under the partial tax exemption scheme or tax exemption scheme for new start-up companies* when finalising the assessment. *Applicable to new companies which satisfy the qualifying conditions and have indicated so on Part IV on Page 1 of the Form C.
Can I submit only Page 1 of Form C if Box 1 is checked but Box 2 is not checked?
Answer: Only Page 1 of Form C needs to be submitted by the company if the company did not carry on business, had no income in the preceding year, and the company also does not have any unutilised losses, capital allowances, or donations to be carried forward. However, such company could have owned investments during the basis period, only that such investments do not generate any income for the year of assessment. With the insertion of Box 2, the above requirement does not change. As such, if the company does own investments (hence Box 2 is unchecked), but the company did not carry on business, had no income in the preceding year (hence Box 1 is checked), then the company can still submit only Page 1 on Form C – provided that the company also does not have any unutilised losses or donations to be carried forward.
Can the amount of trade receivables, net of provision be entered if the amount of gross amount of trade receivables is not available anywhere in the accounts?
Answer: Yes, the amount of trade receivables, net of provision amount can be used if the gross amount of trade receivables is not available anywhere in the accounts. The figure should also include third party and related trade debts.
Can the company fill in the required figure as per the description in the company’s audited accounts? If there is no such description in the accounts, can the figure be that of the total of all expenses after the gross profit line?
Answer: The company can fill in the required figure as per the description in the company’s audited accounts. Where there is no such description in the accounts, the total of all expenses after the gross profit line can be used as long as the company is of the view that this figure is for sales, general and administrative expenses. Finance cost need not be included in box 38 unless the company has included Finance cost as part of Sales, General and Administrative Expenses.
Does “Purchases” refer to cost of sales?
Answer: No. However, if the figure for “purchases” is not available in the accounts, insert the figure for “cost of sales” instead, if this figure is available.
Does part X include new assets purchased under hire purchase? If yes, should the cost of the assets be the principal cost or principal repayments made during the year?
Answer: Part X includes assets purchased under hire purchase where cost of assets refers to the principal cost.
Does the “amount” represent gross sale proceeds or net profit? Does receipt mean cash receipt? Is a waiver of loan excluded, in the Box 28 Receipts claimed as not taxable (Including real estate)?
Answer: This represents net profit. Receipts here include both cash and non-cash receipts. A waiver of loan is therefore included.
Does trade payables include third party trade creditors, inter-company trade payables, accrued operating expenses, and hire purchase creditors?
Answer: The amount of trade payables includes third party trade payables and inter-company trade payables, but excludes accrued operating expenses and hire purchase creditors.
How to arrive at the adjusted profit/loss figure?
Answer: This is the amount after adjusting the net profit/loss as per the accounts for non-taxable items, separate source income, and disallowable expenses. To note: The amount to be declared in Box 1a should be the amount before deducting the exempt amount under the partial tax exemption scheme/tax exemption scheme for new start-up companies*. If the amount is a loss/negative figure, enter “X” in the box on the extreme left hand side. You may download the Basic Tax Calculator for help in computing the adjusted profit/loss and chargeable income. * Applicable to new companies which satisfy the qualifying conditions and have indicated so on Part IV on Page 1 of the Form C.
How to arrive at Trust distribution?
Answer: Trust distribution made out of income already taxed at the trustee level need not be included in this box. Amount to be delcared include REIT distribution. Note: You must attach a list showing details of distributions received.
How to complete Form C?
Answer: The Form C is a declaration form used by a company to declare its income. Please ensure that all the necessary sections in the Form C are correctly completed and that it gives a full and true account of the company’s income. In completing the Form C, please note: All lines must be completed. Any field that is not applicable should be filled in as “0” Do not indicate remarks such as “See attached” or “As per tax computation” on the Form C The declaration section on page one of the Form C must be signed by the person making the return. Guide to completing Form C for Year of Assessment 2009 onwards
Page 1 of Form C: Part IV – How do I claim for tax exemption scheme for new start-up companies?
Answer: You must complete Part IV on page 1 of the Form C as follows: 1. Confirm whether the company satisfied all qualifying conditions by entering “1” (Yes) or “2” (No). 2. State the first YA upon incorporation in YYYY format.
Page 4 of Form C: Part IX (Other information) – Where should the amount of additional expenses incurred for back years (commonly termed as prior years’ adjustments) be indicated?
Answer: There is no provision for this item in the Form C. However, the adjustments may be reflected in the tax computation and supporting schedules.Please indicate “1” (Yes) in Box 19 since there is a claim for unutilised capital allowances in section 1 of Part VII.
Page 4 of Form C: Part VIII (Claim of unutilised capital allowances, losses, or donations) – If the company has an adjusted loss but unutilised capital allowances brought forward has been used to offset income from separate source/balancing charge, how should they file File C?
Answer: Please indicate “1” (Yes) in Box 19 since there is a claim for unutilised capital allowances in section 1 of Part VII.
Page 5 of Form C: Part X (Capital allowances / industrial building allowances on new assets) – If the company is claiming capital allowance for the first time for assets purchased in previous years, should ‘1’ be entered (for ‘Yes’) or ‘2’ (for ‘No’)?
Answer: The amount to be declared is the cost of new assets purchased during the year for which capital allowances and/or industrial building allowances can be claimed.
Page 5 of Form C: Part XI (Deduction claimed under Section 14Q for expenditure on renovation or refurbishment works) – What is the amount to be declared in Box 32?
Answer: The amount to be declared is the current year qualifying R&R expenses incurred or n renovation or refurbishing business premises. This is subject to a cap of $150,000 for each relevant three consecutive basis periods.
Pages 2 and 3 of Form C: Part VII (Assessment information) – If the tax computation and accounts are maintained in a currency other than the Singapore dollars, how do we complete the Form C to show that the currency is not Singapore dollars?
Answer: Form C should be completed in Singapore dollars and not in the foreign currency. Please refer to the IRAS circular on ‘Filing of Income Tax Computations and Financial Statements in Functional Currencies other than Singapore Dollars‘ for details.
Should I include the cost of the new assets purchased during the year of I defer the capital allowance and/or industrial building allowance claim?
Should the amounts filled in Boxes 21 to 26 be before or after group relief?
Answer: This should be the amounts after group relief.
Should the chargeable income include concessionary income?
Answer: Yes, the amount should include income taxed at normal rate and concessionary rates. (Details of the concessionary income should also be filled in Box 14).
Should the chargeable income include exempt income arising from tax incentives?
Answer: No. Exempted income arising from tax incentives should be filled in Box 18.
Should the gross rent or net rent after deducting rental expenses be declared?
Answer: The net rent is to be declared.
What amount should be filled in Box 1D if the net rent is negative?
Answer: If the net rent is negative, enter “0”. However, if the negative rent is a result of Industrial Building Allowances claimed against the rent, enter the negative amount with an “X” in the box on the extreme left hand side to indicate loss/negative amount.
What does this Box 34 Revenue refer to?
Answer: This refers to the main income source of a company. For instance, the revenue of an investment company would be its investment income.
What is to be entered in the Box 12 Loss claimed from transferer company?
Answer: The amount to be entered is the current year losses transferred from other companies within the group under the Group Relief system. If you are claiming the group relief, please complete Form GR-B and submit together with Form C.
What is to be filled in the Box 8 Current year capital allowances / losses carried back?
Answer: The amount to be entered is the current year capital allowances/losses to be carried back to the three immediate preceding years of assessment, subject to a maximum of $200,000* *This enhanced loss carry-back scheme applies only for YA2009 and 2010.
What is to be filled in this Box 36 Gross profit/loss?
Answer: This refers to the amount after taking into account the cost of goods sold. If there is no cost of goods sold, the gross profit should be the same amount as the revenue. If the amount is a loss/negative figure, enter “X” in the box on the extreme left hand side.
What is to be included in the Box 39 Directors’ fees and directors’ remuneration?
Answer: The amount should include both directors’ fees and directors’ remuneration. Directors’ remuneration includes salaries, leave pay, commissions, bonuses, gratuities, allowances, other emoluments paid in cash and contributions made to approve pension or provident funds which are deductible under the Act.
What is to be written in the Box7, Loss transferred to claiment company?
Answer: The amount to be entered is the current year losses to be transferred to other companies within the group under the Group Relief system. If you are transferring losses under the Group Relief system, please complete Form GR-A and submit together with Form C.
What kind of income should be included in this section, Box 2, foreign income received in Singapore?
Answer: This refers to income sourced outside Singapore and is remitted to Singapore, e.g.
- Foreign dividends and interest income received from overseas. For foreign dividends, if double tax relief is claimed, the amount to be entered should be the regrossed amount net of allowable expenses (if any).
- Profits of overseas branches or permanent establishments remitted to Singapore.
Please exclude foreign income remitted into Singapore but exempted under Section 13(8) of the Income Tax Act.
Question : What should be written in the Box 45 Total (Add Boxes 34 up to 44)?
Answer: This is the total of all the POSITIVE amounts of boxes 34 to 44 LESS any NEGATIVE amounts and it serves as a control total. If the total of boxes 34 to 44 is a negative amount and greater than the positive amounts of other boxes from 34 to 44 , then box 45 would be a negative amount. Enter “X” in the box on the extreme left-hand side if the total is a negative amount
Question : When should Box 20 be completed?
Answer: Only when Box 19a is indicated with “1” (Yes), i.e., there is a substantial change in the company’s shareholders and their shareholdings and the company is applying for a waiver of the shareholding test under Sections 23(5) and 37(15).
Question : Where should I declare any foreign income not remitted to Singapore?
Answer: This need not be indicated in the Form C. However, the amount should be shown in your tax computation.
Question : Where the accounts have an item called “Other receivables, deposits, and prepayments”, can a figure that represents the total of the three components be used? On the other hand, if there is no such item in the account, is the figure ‘0’ to be filled?
Answer: If there is a breakdown of “Other receivables, deposits, and prepayments” in the Notes to the Accounts, please fill in the figure for “Other receivables” in box 41. However, if there is no such breakdown, the figure for “Other receivables, deposits, and prepayments” can be used. In the case where the item “Other receivables, deposits, and prepayments” is not available anywhere in the accounts, please fill in the figure ‘0’.
Question : Where unutilised capital allowances/losses are claimed and part of the capital allowances/losses is to be disregarded for certain periods (i.e. company is not claiming for a waiver under Sections 23(5) and 37(15) of the Income Tax Act)?
Answer: Box 19 is to be completed with “1” (Yes) Box 19a is to be completed with “2” (No) You may leave Box 20 blank since no unutilised capital allowance/loss is claimed under Sections 23(5) and 37(15). The amount of capital allowances/losses disregarded should be shown in the tax computation.
How to claim for Section 14Q deduction? Business expenses
Answer: If you wish to claim for Section 14Q deduction on the qualifying expenditure, you have to show the Section 14Q deduction in your tax computation and submit an itemised list of the renovation or refurbishment works. You also have to confirm on the itemised list that the renovation or refurbishment works do not require the approval of the Commissioner of Building Control. For more details on the Section 14Q deduction, please refer to the e-Tax Guide “Deduction For Expenditure Incurred On Renovation or Refurbishment Works” (124KB).Donations Donations are not deductible expenses as they are not incurred in the production of income. However, you can claim for deduction on donations made to an approved Institution of a Public Character (IPC) or the Singapore Government which benefit the local community. For approved donations made on or after 1 Jan 2002, you can claim for double deduction, that is, twice the amount donated. For approved donations with naming opportunity, only single deduction is allowed if the donations was made before 1 Jan 2005. However, double deduction is allowed for donations with naming opportunity made on or after 1 Jan 2005. To encourage greater charitable giving in Singapore during the economic downturn, approved donations made during 1 Jan 2009 to 31 Dec 2009 will qualify for 2.5 times deduction. With effect from Year of Assessment (YA) 2003, any unutilised donations can be carried forward to set-off against the income for the subsequent YA up to a maximum of 5 years if there is no substantial change in shareholders. For more details on donations and tax deductions, please refer to Charities / IPCs.
How to qualify for tax deduction under the purview of business expenses? Business expenses
Answer: Generally, you can claim deduction for expenses that are wholly and exclusively incurred in the production of income. To qualify for tax deduction, the expenses must also satisfy the following conditions:
- The expenses must be revenue in nature, (generally refers to the normal day-to-day operating expenses). Capital expenditure is not allowable as a tax deduction.
- The deduction must not be prohibited under the Income Tax Act.
- The expenses must be incurred. Contingent liability is not allowable as a tax deduction.
|Deductible expenses||Not deductible expenses|
|Accounting fee Administrative expenses Advertisement Auditors’ remuneration||Amortisation|
|Bad debts (trade debtors) Bank charges Book-keeping services||Bad debts (non-trade debtors)|
|Commission CPF, skill development levy, foreign workers’ levy||CPF contributions (Voluntary*) Certificate of entitlement (COE) for motor vehicles**|
|Directors’ fees Directors’ remuneration||Depreciation (you may claim capital allowances)Donations|
|Entertainment Exchange loss (trade and revenue in nature) Exhibition expenses||Entrance fee (country club or other clubs) Exchange loss (non-trade or capital in nature)|
|Fixed assets written off Fixed assets acquisition cost Fines|
|Impairment loss on trade debts Insurance (e.g. fire, workmen compensation) Interest expenses||Impairment loss on non-trade debts Income tax Installation of fixed assets Insurance (certain life insurance) Interest expenses (interest adjustment)|
|Legal and professional fees (trade and revenue transactions)||Legal and professional fees (non-trade or capital transactions|
|Medical expenses (restricted to 1% of total remuneration) Motor vehicle expenses (goods / commercial vehicles, e.g. van, lorry and bus)||Medical expenses (amount exceeding 1% of total remuneration) Motor vehicle expenses (“S” plate private passenger cars)|
|Periodicals & newspapers Postage Printing & stationery Property tax Provision for bad and doubtful debts (specific)(note impairment loss on trade debts) Provision for obsolete stocks (specific)||Penalties Preliminary expenses Private and domestic expenses Private hire car Provision for bad and doubtful debts (general)(note impairment loss on trade debts) Provision for obsolete stocks (general)|
|Rental of business premises Repairs and maintenance Restoration costs (according to tenancy agreement) Research and development||Renovation or refurbishment works (you may claim Section 14Q deduction for qualifying expenditure incurred from 16 Feb 2008 to 15 Feb 2013)|
|Secretarial fees Staff remunerations (salary, bonus and allowances) Staff training Staff welfare/benefits Stock obsolescence|
|Tax fees (service fees paid to tax agent) Telephone Transport (public transport and goods / commercial vehicles) Travelling||Transport (“S” plate private passenger cars)|
|Wages Water & electricity|
*Voluntary CPF contributions refer to CPF contributions exceeding the statutory rate and CPF contributions for foreign employees holding professional visit pass, employment pass or work permit **If the vehicle qualifies for capital allowance (goods / commercial vehicle), you can include the cost of COE to the cost of vehicle and claim capital allowance Section 14Q deduction for expenditure incurred on renovation or refurbishment works Currently, capital expenditure incurred on renovation or refurbishment works (R&R costs) carried out on the business premises is not allowable as a tax deduction (unless the R&R costs constitute expenditure on repairs or replacements with no element of improvement). Such R&R costs also do not qualify for capital allowances (unless they form part of an industrial building which qualifies for industrial building allowances) because they are incurred in relation to the business setting within which the business is carried on and not on the provision of “plant or machinery”. To help businesses, particularly small and medium enterprises, reduce their business costs, tax deduction will be granted on all qualifying R&R costs incurred during the period 16 Feb 2008 to 15 Feb 2013 under Section 14Q of the Income Tax Act. Under Section 14Q, the amount of R&R costs that will qualify for tax deduction is subject to an expenditure cap of $150,000 for every relevant three-year period, starting from the year in which the R&R costs were incurred and a deduction is claimed by the company. Section 14Q deduction must be claimed over three consecutive Years of Assessment (YAs), starting from the YA relating to the basis period in which the R&R costs were first incurred (i.e 1/3 of the R&R costs can be claimed each YA over the three consecutive YAs). Any amount of qualifying R&R costs, which are not claimed in the YA relating to the basis period in which they were first incurred, will not qualify for deduction in subsequent YAs. If your company permanently ceases business in any of the three YAs, it will not be allowed a deduction on the balance of the R&R costs. Special provisions for YAs 2010 and 2011 To encourage companies to refit their business premises during the current period of economic downturn, companies that incur qualifying R&R expenses in the basis periods relating to YAs 2010 and 2011 can claim such expenses over one year instead of over three years. The accelerated write-down from three years to one year will have a direct impact of reducing the income tax payable by companies, thereby easing the cash-flow pressures that companies may face. The cap of $150,000 for every relevant three-year period remains unchanged. Section 14Q deduction is to be deducted from the adjusted profit/loss after allowance has been made to other tax deductions. Any amount of Section 14Q deduction that could not be fully utilised will form part of the adjusted trade loss of the company. However, the unutilised Section 14Q deduction cannot be transferred under the group relief system. The adjusted trade loss (after deducting Section 14Q deduction) can be offset against other income of the company. The amount of unutilised trade losses, if any can be: – carried forward to offset against the company’s assessable income for future YAs if there is no substantial change in the shareholders and their shareholdings; or – carried back to the immediate preceding YA to be offset against the assessable income under the loss carry-back relief. For examples on how to compute Section 14Q deduction, please refer to the Annex to the e-Tax Guide “Deduction For Expenditure Incurred on Renovation or Refurbishment Works”
What about buying Life insurance policies? Business expenses
Answer: If it is your company policy to buy insurance policies for the employees and the beneficiaries of the policy are the employees, the life insurance premiums paid are tax-deductible expenses as it constitutes as staff cost. (Please note that the life insurance premiums are taxable as employment benefits of the employees and these benefits must be declared in their Form IR8A) If your company is the beneficiary, the insurance premiums are not deductible unless they satisfy the conditions of a “keyman” insurance. For details on deductibility of “keyman” insurance, please refer to “Keyman” insurance: Deductibility of premiums – addendum to practice note 1993/IT/5 dated 25 Feb 1993 (100KB).
What about Motor vehicle expenses? Business expenses
Answer: Motor vehicle expenses incurred in respect of private passenger cars (S-plate cars) are not deductible for income tax purposes regardless of whether the cars have been used for business purposes (except where the company is carrying on business of hiring out cars or providing driving instruction). The deduction is specifically prohibited under the Income Tax Act. Reimbursement of employees’ S-plate car expenses incurred by employees for company’s business is also not deductible. However, if your company pays transport allowance to the employees as part of their remuneration package, the transport allowance is a deductible expense, as it is part of staff cost. (Please note that the transport allowance is taxable as part of the employment income for your employees) If you own Q-plate business passenger cars that were registered before 1 Apr 1998, motor vehicle expenses relating to these Q-plate cars are allowable but subject to a capping of: 35,000 _ __ x motor vehicle expenses relating to that vehicle Cost of vehicle Motor vehicle expenses for foreign registered cars used exclusively outside Singapore are deductible if the expenses are incurred for business purposes. For more details on deductibility of motor vehicle expenses, please refer to Changes in Tax Treatment of Motor cars consequent to Vehicle Tax Rationalisation (126KB). Private hire car With effect from 1 Apr 1998, private hire car expenses and hiring charges (SZ-plate or S-plate cars) and are not deductible for income tax purposes. Deduction is not allowed regardless of whether the hired cars have been used for business purposes, except where the company is carrying on business of hiring out cars or providing driving instruction. The private hire car expenses and hiring charges for foreign rental cars used exclusively outside Singapore are deductible if the cars are used for business purposes. For more details on deductibility of motor vehicle expenses, please refer to Changes in Tax Treatment of Motor cars consequent to Vehicle Tax Rationalisation (126KB). Research & development expenses With effect from YA 2003, if your company is carrying on a trade in manufacturing; or carrying on a business for the provision of any services; your company can claim deductions for research & development (R&D) expenditure related to that trade or business: incurred by your company; or incurred on R&D activities outsourced to any R&D organisations For R&D services that are outsourced to overseas R&D organisations, the ownership rights of any intellectual property created must belong to your company. Your company has to complete a declaration form to undertake that the benefit of the R&D work will go to your company. To claim the tax deduction for R&D outsourced to an overseas R&D organisation, please refer to Further Details on Enhanced Tax Deduction for Research & Development. In addition, your company may enjoy double tax deduction on the R&D expenditure incurred if it is approved by Economic Development Board (EDB). From YA 2009 to YA 2013 With effect from Year of Assessment 2009, the changes in tax deductions for R&D expenses are as follows: Removal of the requirement that R&D expenses incurred must be related to the existing trade or business in respect of R&D done in Singapore; That is, if the R&D is done in Singapore, your company can qualify for tax deduction regardless of whether the R&D expenses are incurred in respect of your company’s existing trade or business. Enhanced deduction for qualifying R&D expenses under Section 14D in respect of R&D done in Singapore The tax deduction has been raised from 100% to 150% of qualifying R&D expenditure incurred on R&D done in Singapore. New R&D tax allowance (RDA) scheme The allowance will be given up to an amount of 50% of the first $300,000 of the company’s chargeable income. For the purpose of this scheme, companies are required to declare their Base Year and Base Expenditure via myTax Portal. For more details on this e-Service, please refer to “Research & Development Allowance Account”. New R&D Incentive for start-up Enterprise (RISE) scheme Under RISE, a qualifying start-up company is allowed to surrender their tax adjusted losses in exchange for a cash grant computed at a prescribed rate, subject to certain conditions. You can view the summary of the R&D-related income tax changes. For more details, please refer to e-Tax Guide “Research And Development Tax Measures”.
What are included in Medical expenses? Business expenses
Answer: With effect from 1 Apr 2004 From 1 Apr 2004, the amount of medical expenses deductible is subject to a cap of 1% of the total remuneration accrued for the year. However, if your company has implemented the Portable Medical Benefits Scheme (PMBS) or Transferable Medical Insurance Scheme (TMIS) and it meets the qualifying conditions under the respective schemes, the capping for medical expenses is 2% of the total remuneration.With effect from YA 2008 From YA 2008, in recognition that employers’ provision of portable medical shield plans or ad-hoc contributions to the Medisave accounts of employees achieve the same objective as the PMBS and TMIS, your company will be granted a tax deduction of up to 2% of the total remuneration if your company:
- has provided your employees with inpatient medical insurance benefits in the form of portable medical shield plans (but the deduction will exclude premiums for riders that cover deductibles and co-payments); or
- has made ad-hoc contributions to your employees’ Medisave accounts (subject to a cap of $1,500 per employee per year) during the relevant basis period.
- Tax deduction will remain capped at 1% of total remuneration if your company is not on PMBS/TMIS or does not provide portable medical shield plans or make ad-hoc medisave contributions for your employees.
For more details on the schemes and the qualifying conditions, please refer to the MOM website – “Implement Portable Medical Benefits and Enjoy Higher Tax Deduction For Medical Expenses” Example: (for medical expenses incurred after 1 Apr 2004 but before YA 2008)
|Total remuneration*||Medical expenses**||Company not implementing PMBS or TMIS||Company implementing PMBS or TMIS|
|Amount deductible (capped at 1% of total remuneration)||Amount not deductible||Amount deductible (capped at 2% of total remuneration)||Amount not deductible|
* Total remuneration includes:
- employees’ salaries, allowances & bonuses;
- directors’ remuneration;
- CPF contributions
- directors’ fees;
- medical expenses;
- cash allowances in lieu of medical expenses and benefits-in-kind
Medical expenses include:
- maternity health care;
- natal care;
- preventive and therapeutic treatment expenses;
- provision of a medical clinic by the employer;
- cash allowance in lieu of medical expenses;
- dental expenses;
- premium incurred on medical and dental insurance; and
- contributions made by a company to the employees’ CPF medisave accounts, subject to a maximum deduction of $1,500 for that year for each employee (does not include employees who are holding a professional visit pass, an employment pass or a work permit).
- Impairment loss on trade debts
Under FRS 39, impairment losses are incurred under certain circumstances described in the Accounting Standard*. For income tax purposes, impairment losses incurred on financial assets on revenue account will be allowed as a deduction and any reversal amount will be taxed. With the adoption of FRS 39, general and specific provision for bad and doubtful debts would no longer be made. There is no differentiation between general and specific provision for doubtful debts and impairment losses on debts will be deductible as long as the debts are relating to trade and are revenue in nature. However, for companies that opted for pre-FRS 39 tax treatment, only specific provision for doubtful debts will be deductible for tax purposes. General provision for doubtful debts will continue to be not deductible for tax purposes. To facilitate the review of claims for impairment loss in respect of bad or doubtful debts, please provide the following information, where applicable, in your tax computation:
- details of debts (name and amount owing by each debtor) which was not incurred in respect of the trade or business such as loans and advances;
- details of debts which were taken over in the case of a transfer or merger of business;
- details of debts in respect of a trade that had ceased, including any activity granted with pioneer incentive that had ceased;
- segregation of debts relating to the different tax rate categories.
The following additional information is required for trade debts owing by related parties, where the amount of impairment loss exceeds $250,000:
- relationship between the company and the trade debtor;
- whether normal credit policy and terms were extended to the related party. If not, please provide the reasons for the extended credit policy and terms;
- whether steps were taken to recover and enforce the debts. If not, please provide the reasons for not enforcing the debts;
- reasons why the related party was unable to repay the trade debt.
*Paragraphs 58 to 62 of FRS 39
What are the factors that include Qualifying expenditure? Business expenses
Answer: The following items will generally qualify for Section 14Q deduction if they do not affect the structure of the business premises:
- General electrical installation and wiring to supply electricity;
- General lighting;
- Hot/cold water system (pipes, water tanks etc);
- Gas system;
- Kitchen fittings (sinks, pipes etc);
- Sanitary fittings (toilet bowls, urinals, plumbing, toilet cubicles, vanity tops, wash basins etc.);
- Doors, gates and roller shutters (manual or automated);
- Fixed partitions (glass or otherwise);
- Wall coverings (such as paint, wall-paper etc.);
- Floorings (marble, tiles, laminated wood, parquet etc.);
- False ceilings and cornices;
- Ornamental features or decorations that are not fine art (mirrors, drawings, pictures, decorative columns etc.);
- Canopies or awnings (retractable or non-retractable);
- Windows (including the grilles etc.);
- Fitting rooms in retail outlets.
No deduction will be allowed on expenditure relating to:
- Any designer fees or professional fees;
- Any antique; or
- Any type of fine art including painting, drawing, print, calligraphy, mosaic, sculpture, pottery or art installation.
What is Interest adjustment?
Answer: Interest expenses relating to non-income producing assets are not deductible for income tax purposes. As such, you have to make interest adjustments in your tax computation if there are any interest expenses applicable to non-income producing assets. What are non-income producing assets? Non-income producing assets are assets which do not produce any income. Examples of non-income producing assets are: Vacant properties, Investments in shares/securities which have not yielded dividends, Interest-free loan or amount owing by non-trade/sundry debtors, Interest-free loan or amount owing by related companies (non-trade)/shareholders. Interest adjustments are normally made using the total asset method. This method works on the principle that total funds are used to finance total assets. Under the total asset method, interest adjustment (disallowable interest expense) = Cost of non-income producing assets x Interest expenses Cost of total assets* * The cost of total assets should be stated at cost, that is, without taking into account any provisions made (e.g. provision for depreciation and bad debts) and valuation surplus / deficit Interest-free loan on amount owing by directors Interest adjustment is not required for interest-free loan or amount owing by directors as it constitutes staff cost. The interest-free benefits are taxable as employment benefits of the directors. (Note: Interest benefits must be included in directors’ Form IR8A). The interest-free benefits can be calculated based on: Interest-free loan due from each director as at the Balance Sheet date multiply by the average prime lending rates You can refer to Monetary Authority of Singapore (MAS) website for the prime lending rates . When you file Form C for the company, you need to furnish the details of the interest-free loans to individual directors/shareholders in the Appendix to Form C (Form IRIN 312).
Tips For SMEs On Form C Filing
Checklist to guide companies in filing Form C? Tips for SMEs on Form C Filing
Answer: The following checklist is to guide companies in ensuring a prompt and complete filing of Form C.
Due date for filing of Form C Tips for SMEs on Form C
Answer: Whether a company has made profits or losses in the preceding accounting year ended in 2008, it is required to file its Form C together with the company’s financial accounts, tax computation and relevant supporting documents. A full set of these documents must be submitted to IRAS by 30 November 2009.
Have you done the following in preparation of your Form C submission?
- Preparation of AccountsPrepare a full set of accounts according to the Companies Act, including:
- Directors’ report
- Auditor’s report (except for companies that enjoy audit exemption*)
- Balance sheet
- Profit and loss statement
- Notes to the accounts
- Statement by Directors
- Prepared a detailed profit and loss statement
- Preparation of Tax Computation and Supporting Schedules
- Prepared tax computation
- Collated all relevant donation receipts to support claims if you have not given your tax reference number to the IPCs
- Completion of Form C and Appendices
- Read the explanatory notes to Form C and Appendices before completing the forms
- Where applicable, declared in Form C that your company has satisfied all qualifying conditions to claim tax exemption for new start-up companies
- Ensured the chargeable income declared is before exempt amounts
- Signed and completed all parts of the forms
*Under the Companies Act, dormant companies and exempt private companies with annual revenue of not more than $5million are not required to have their accounts audited. An exempt private companies are companies which
- has not more than 20 shareholders and none of them is a corporation; or is wholly owned by the Government, which the Minister, in the national interest, declares by notification in the Gazette to be an exempt private company.
Common tax concessions and rules for companies Below are some of the more common tax concessions that companies may benefit from by way of a reduction in income tax. Tax Exemption Scheme for New Start-Up Companies The tax exemption scheme for new start-up companies was first introduced in YA 2005 and enhanced in YA 2008 to support entrepreneurship and to help local enterprises grow. Details of the tax exemption are as follows:-
|Tax exemption on the 1st $ 300,000 chargeable income|
|100% exemption on the 1st $100,000 chargeable income||$100,000|
|50% exemption on the next $200,000 chargeable income||$100,000|
|Maximum exempt amount each year||$200,000|
To qualify for the scheme in YA 2009, a company must have any of its first three YAs upon incorporation falling in YA 2009. In addition, the company must:
- be incorporated in Singapore (other than a company limited by guarantee);
- be a tax resident in Singapore for YA 2009; and
- have no more than 20 shareholders throughout the basis period for YA 2009 where:
- all of the shareholders are individuals beneficially holding the shares in their own names; or
- at least one shareholder is an individual beneficially holding at least 10% of the issued ordinary shares of the company.
All other companies, including non start-up companies, will be accorded partial tax exemption. Companies can enjoy a partial tax exemption on normal chargeable income of up to $300,000.
Details of the partial tax exemption are as follows:-
|Partial tax exemption on the 1st $ 300,000 chargeable income|
|75% exemption on the 1st $10,000 chargeable income||$7,500|
|50% exemption on the next $290,000 chargeable income||$145,000|
|Maximum exempt amount each year||$152,500|
- Renovation and Refurbishment Costs – Tax deduction under Section 14QWith effect from YA 2009, companies can claim for tax deduction on qualifying capital expenditure incurred on renovation or refurbishment works (R&R costs) between 16 February 2008 and 15 February 2013. Claims are capped at $150,000 in equal portions over three years – a maximum of $50,000 a year.For example, a company which spent $200,000 in March 2008 on R&R costs can claim a tax deduction of $50,000 ($150,000/3) for YA 2009 to YA 2011.
- Capital Allowance – Tax deduction under Section 19A(1)With effect from YA 2009, companies that purchase commercial vehicles with maximum laden weight not exceeding 3,000 kg and motor cycles for business purposes will be able to claim capital allowance over three years. Previously, such assets were granted capital allowance over their prescribed working life, which is generally six years.
- Loss Carry-Back Relief SystemAs announced in 2009 Budget, the loss carry-back relief scheme has been enhanced for YAs 2009 and 2010. Companies can carry back their current year unutilised capital allowances and/or trade losses to the previous three YAs, subject to conditions. The amount of capital allowances and/or trade losses that can be carried back has also been increased from $100,000 to $200,000.For example, a company which has incurred a trade loss of $300,000 in YA 2009 can carry back $200,000 (the maximum) to YA 2006. This loss will be offset against the assessable income of the company, thus reducing the tax amount. Based on the difference, a tax refund will then be paid to the company.
- Carry Forward of Unutilised Capital Allowances, Losses and/or DonationsCompanies can carry forward the current year unutilised capital allowances, losses and/or donations to offset against the assessable income for the subsequent YAs, subject to certain conditions.
- Training Costs (Net of Grant) Many companies send staff for training courses to enhance their level of skills and productivity. To encourage Singaporeans to upgrade their skills so they can stay employed or seek re-employment, the Government also provides course fee subsidies to companies that send their workers for training.Companies that incur costs for the training of staff in areas relevant to the business will be generally entitled to claim a deduction for such expenses incurred. If companies receive or obtain government grants that help to reduce their training costs, only the training costs net of grant (i.e. actual costs borne by companies), will be tax deductible.
- Tax exemption will be granted on foreign-sourced dividends, foreign branch profits, and foreign-sourced service income remitted into Singapore on or after 1st June 2003, subject to the two conditions below:
- The foreign income had been subjected to tax in the foreign country from which they were received.
- The highest corporate tax rate (headline tax rate) of the foreign country from which the income was received is at least 15%.
- Retrenchment costs incurred in the process of streamlining business operations and to improve company’s profitability are tax deductible.
- Interest and other borrowing costs, which are incurred as substitute for interest expense or to reduce the interest costs, for the purpose of financing business operations are tax deductible.
- Donations made to an approved Institution of a Public Character (IPC) or the Singapore Government that benefit the local community will qualify for double tax deduction.
- View the mistakes commonly made by companies in their income tax filing and their tax computations.
- Tax exemption will be granted on foreign-sourced dividends, foreign branch profits, and foreign-sourced service income remitted into Singapore on or after 1st June 2003, subject to the two conditions below:
A case study illustrating how companies can lower their tax burden by claiming the various tax concessions can be found here.
Penalties For Filing A Wrong Return
How to inform IRAS? Penalties for filing a wrong return
Answer: By post: Inland Revenue Authority of Singapore 55 Newton Road, 3rd storey, Revenue House
Offences for filing a wrong return? Penalties for filing a wrong return
Answer: A person who files a wrong return due to negligence or without reasonable excuse can be brought to court. If convicted under Section 95, the person may pay a penalty up to two times the amount of tax undercharged. A fine or an imprisonment will also be imposed. If a person is found to be evading tax, he can pay a penalty up to three times (if convicted under Section 96), or up to four times (if convicted under Section 96A) of the tax undercharged. A fine or an imprisonment will also be imposed. Informing IRAS voluntarily on the omissions or errors made
Why you should inform IRAS voluntarily?
Answer: Instead of imposing maximum penalties of up to 200% of tax undercharged for submission of incorrect Income Tax returns due to negligence or without reasonable excuse, IRAS is prepared to waive the penalty or accord a reduced penalty of 5% p.a. for first-time voluntary disclosures which meet the qualifying conditions under the IRAS Voluntary Disclosure Program.