ACCT 615
Lecture 1
ACCT 615 AY 24 25 T2 L1
1
Taxation
2
TAXATION - ACCT 615
• Instructor: Prof. Sum Yee Loong (ylsum@smu.edu.sg)
• TAs: Valerie Chng (Gp 1), Ernest Neo (Gp 2).
email: Valeriechng.2021@accountancy.smu.edu.sg,
Ernest.Neo.2022@accountancy.smu.edu.sg,
•
Recommended texts
– Wolters Kluwer Singapore Tax Workbook 27th edition
– Income Tax Act (Cap 134)
– Goods and Services Tax Act (Cap 117A)
3
Academic Integrity
All acts of academic dishonesty (including, but not limited to plagiarism,
cheating, fabrication, facilitation of act of academic dishonesty by others,
unauthorised possession of exam questions or tempering with the
academic work of other students) are serious offences. All work (whether
oral or written) submitted for purposes of assessment must be the
student’s own work. Penalties for violation of the policy range from zero
marks for the component assessment to expulsion, depending on the
nature of the offense. When in doubt, students should consult the
instructors of the course. Details on the SMU Code of Academic Integrity
may be accessed at http://www.smuscd.org/resources.html.
4
Course Objectives
• Provide a broad understanding of the Singapore
taxation system
•
Able to compute Singapore tax liabilities for:
- a corporate entity
- a resident individual
- a non-resident
5
Course Assessment
Components:
- Class Participation
- Group Project
- Mid-Term Test (Wk 7)
- Final Exam
Total
6
%
10
20
20
50
100
Course Outline
•
•
•
•
•
•
•
•
•
•
•
•
•
•
7
Overview
Income
Deductions
Capital Allowances (Wear & Tear Allowances)
Industrial Building/Land Intensification
Allowance
Taxation of Individuals
Taxation of Non-residents
Stamp Duty
Taxation of Companies
Group Relief, M&A Allowance/Double
Deduction
Sustainability and Carbon Tax
Tax Administration
Taxation of Partnerships
GST
Please note that the slides only serve as indications for topics
and important points that should be understood.
The slides are not meant to be notes for the lecture.
References should be made to the relevant chapters of the
Workbook.
8
Refer to Chapter 1:
Paragraphs 1-101 – 1-105.
9
Overview
10
Objectives
•
provide a broad overview of taxation
•
looking at basic Singapore tax concepts
including:
- Residency
- Year of Assessment
- Basis of Assessment
- Basis Period
11
Outline
• Principles of Taxation
• Objectives of Taxation
• Sources of Tax Law
• Types of Taxes & Levies
• Basic Tax Concepts
• Basis of Taxation
12
Principles of Taxation
• Equity Principle
• Efficiency Principle
Equity Principle
• Benefits Principle
• Ability to Pay Principle
Benefits Principle
• Ideal
• May be difficult to implement
Benefits Principle
• Ideal
- pay based on usage;
e.g. Pay to:
-go to gym,
- park your car,
- go to the park.
Benefits Principle
• May be difficult to implement:
- difficulty in measuring benefit
Benefits Principle
• How to measure benefits from:
- building of roads,
- building of schools,
- building of hospitals,
- public security,
- national defence.
Ability to Pay Principle
• Tax imposed on taxpayers
able to pay
Ability to Pay Principle
• The higher the income, the greater
the ability to pay tax;
- hence, Progressive Rates
Personal Tax Rates
21
Chargeable
Income
Tax Rate
%
Tax
$
On the first
20,000
0
0
On the next
10,000
2
200
On the first
30,000
On the next
10,000
On the first
40,000
On the next
40,000
On the first
80,000
On the next
40,000
On the first
120,000
On the next
40,000
On the first
160,000
On the next
40,000
On the first
200,000
On the next
40,000
On the first
240,000
On the next
40,000
On the first
280,000
On the next
40,000
On the first
320,000
On the next
180,000
On the first
500,000
On the next
500,000
On the first
1,000,000
Excess over
1,000,000
200
3.5
350
550
7
2.800
3,350
11.5
4,600
7,950
15
6,000
13,950
18
7,200
21,150
19
7,600
28,750
19.5
7,800
36,550
20
8,000
44,550
22
39,600
84,150
23
115,000
199,150
24
Efficiency Principle
• Administrative Efficiency
• Compliance Efficiency
Efficiency Principle
• Administrative Efficiency
- measures how efficient the tax
authorities are in collecting tax
Efficiency Principle
• Compliance Efficiency
- Measures how much it costs the
taxpayers to comply with tax
requirements
Objectives of Taxation
(i)
(ii)
Fiscal:
- financing of government expenditure
Economic:
- support growth and competitiveness through
provision of exemptions and tax incentives
(iii) Redistribution of wealth and income
(iv) Social:
- reduction of cigarette consumption, reduction
of pollution, control of traffic congestion
- encourage procreation
- encourage philanthropy
25
Sources of Tax Law & Practice
26
(i)
(ii)
Income Tax Act
Economic Expansion Incentives Act
(iii)
(iv)
(v)
(vi)
Goods and Services Tax Act
Subsidiary Legislations
Tax Cases
IRAS E-guides
Types of Taxes & Levies
(i)
Corporate Income Tax
(ii)
(iii)
(iv)
(v)
Individual Income Tax
GST
Property Tax
Customs & Excise Duties
(vi)
Stamp Duties
(vii) Betting Taxes
(viii) Road Tax
(ix)
(x)
(xi)
27
COEs
ERP
Other Levies; e.g. Foreign Workers’ Levies
Systems of Taxation
• Worldwide basis
• Territorial basis
28
Worldwide Basis
• Residents of the country taxed
on all income wherever arising
29
Territorial Basis
• Tax imposed only on income
arising within the country
30
Singapore
• Territorial basis
31
Singapore’s Territorial Basis
• Income accruing in or derived from Singapore
- taxable
32
Singapore’s Territorial Basis
• For Individuals:
- Overseas income not taxable
33
Singapore’s Territorial Basis
• For Companies:
- Overseas income taxable if
remitted or deemed remitted
34
Remittance
35
Remittance
• Actual remittance
• Deemed remittance
36
Deemed Remittance
• Section 10(25)
– Applied towards satisfaction of any debt
in respect of business or trade carried on
in Singapore
- i.e. overseas income used to pay a
trade debt
37
Deemed Remittance
• Section 10(25)
– Purchase of movable property brought into SG
- overseas income used to buy an asset, e.g.
equipment, and this is brought back to SG
38
Section 10(25) does not apply to:•
39
N.R. company with no operations in
Singapore
- o/s company sending money to its
SG bank account, this remittance
is not taxable
Section 10(25) does not apply to:•
40
Overseas investments
- SG company uses o/s income to make an
o/s investment – no deemed remittance
Section 10(25) does not apply to:•
41
Remittance from “mixed-pool” of capital and
income
- SG company deposits surplus funds into an
o/s bank account, interest accrues and
credited into the same account, some funds
from bank account remitted to SG,
- Capital deemed remitted first
Residence
• Individual
- quantitative test
- qualitative test
42
Residence
Quantitative Test
Count actual number of days in SG:
- if in SG* for 183 days or more in the year:
- resident
* Physically in SG or exercising employment in SG
43
Residence
Qualitative Test
Normally resident in SG, but overseas
temporarily*, still considered resident.
* Singaporean sent o/s to work
44
Concessionary Treatment
for Foreigners
- 3-year concession
- 183-day concession
45
Concessionary Treatment
for Foreigners
3-year concession
- Foreigner physically in or working
in SG for 3 consecutive years
- resident for all 3 years.
46
Concessionary Treatment for
Foreigners
183-day concession
- Foreigner working in SG for at
least 183 days spanning 2 years
- resident for both years.
47
Residence
• Company is resident in SG if:
- management and control
of its business is in SG
48
Income Tax
• Tax imposed on “Income”
- only income is taxable,
e.g. capital gains are not income,
so not taxable
49
Personal Tax Computation
Pro-forma
$
$
Earned Income
S10(1)(a) Adj. profit
x
CA
(x)
S10(1)(b)
x
x
x
Unearned Income
S10(1)(d),(e),(f),(g)
x
Statutory Income (SI)
x
Donations
(x)
Assessable Income (AI)
x
Personal Reliefs
(x)
Chargeable Income (CI)
x
Tax on CI
Tax payable:
50
x
Personal Tax Rates
51
Chargeable
Income
Tax Rate
%
Tax
$
On the first
20,000
0
0
On the next
10,000
2
200
On the first
30,000
On the next
10,000
On the first
40,000
On the next
40,000
On the first
80,000
On the next
40,000
On the first
120,000
On the next
40,000
On the first
160,000
On the next
40,000
On the first
200,000
On the next
40,000
On the first
240,000
On the next
40,000
On the first
280,000
On the next
40,000
On the first
320,000
On the next
180,000
On the first
500,000
On the next
500,000
On the first
1,000,000
Excess over
1,000,000
200
3.5
350
550
7
2.800
3,350
11.5
4,600
7,950
15
6,000
13,950
18
7,200
21,150
19
7,600
28,750
19.5
7,800
36,550
20
8,000
44,550
22
39,600
84,150
23
115,000
199,150
24
Corporate Tax Computation
Pro-forma
$
S10(1)(a) Adj. profit
x
CA
(x)
Losses
$
x
(x)
x
Other Income:
- S10(1)(d)
x
- S10(1)(e)
x
- S10(1)(f)
x
- S10(1)(g)
x
x
x
Donations
(x)
x
M&A Allowance, M&A DD
(x)
Chargeable Income (CI)
x
PTE:
- 1st $10k @ 75%
x
- Next $190k @ 50%
x
Net CI
(x)
x
Tax on Net CI @17%
52
Tax payable:
x
Year of Assessment (YA)
or
Tax Year
53
Year of Assessment
54
• Commences
1 Jan
• Ends
31 Dec
YA 2025
• 1.1.25 - 31.12.25
55
Basis of Assessment
• Basis upon which tax of a
taxpayer for a Year of
Assessment is determined
56
Basis of Assessment
- Preceding year basis
- YA 2025 tax is based on
income arising in 2024
57
Income arising in 2024
(1.1.24 – 31.12.24)
- Assessable in YA 2025
58
1.1.24
31.12.24
1.1.24
31.12.24
Income
31.12.25
Taxable in YA 2025
1.1.25
Income
Taxable in YA 2026
59
31.12.25
Basis of Assessment
• Bus/Trade/Prof or Vocation
• Preceding a/c period
60
Basis of Assessment
• “Preceding a/c period”
- a/c period ending in the year
preceding the Year of Assessment
61
Basis of Assessment
YA 2025
• Accounting period
ending in 2024
62
• If company makes up a/cs
annually to 31 December
63
YE 31.12.24
(1.1.24 – 31.12.24)
- a/c period ends in 2024, so
profits of this a/c period
assessable in YA 2025
64
1.1.24
31.12.24
31.12.25
31.12.24
1.1.24
Income for Y/E 31.12.24
Taxable in YA 2025
1.1.25
31.12.25
Income for Y/E 31.12.25
Taxable in YA 2026
65
YE 30.6.24
(1.7.23 – 30.6.24)
• a/c period ends in 2024, so
profits of this a/c period
assessable in YA 2025
66
31.12.23
1.1.23
1.7.23
31.12.25
31.12.24
30.6.24
Income of Y/E 30.6.24
Taxable YA 2025
1.7.24
30.6.25
Income of Y/E 30.6.25
Taxable in YA 2026
67
BASIS PERIOD
- Period, profits or gains of
which will be assessable for a
year of assessment
68
A Ltd
Financial year to 31 March
69
YE 31.3.24
(1.4.23 – 31.3.24)
• Assessable
YA 2025
70
YA 2025
• Basis period
1/4/23 - 31/3/24
71
Basis Period
1/1/23
1/4/23
31/12/23
31/12/24
31/3/24
Income of Y/E 31.3.24
Taxable in YA 2025
31/3/25
1/4/24
Income of Y/E 31.3.25
Taxable in YA 2026
72
31/12/25
Charging Section
S10(1)
(a)
(b)
(c)
(d)
(e)
(f)
Business, trade, profession or vocation
Employment
(deleted)
Dividends, interest, discounts
Pension, charge, annuity
Rents, royalties, premiums and other
profits arising from property
(g) Any other income (all other kinds of income)
73
For Companies
All income* assessable based on:
- accounting basis
*including:
(i)
Business or trading profits
(ii) Interest income
(iii) Rental income, etc.
74
For Individuals:
- S10(1)(a) income:
- assessable based on accounting basis;
- other income:
- assessable based on preceding year basis.
75
Example
Joe is a marketing manager at Tip Top Ltd.
He also runs a part-time business selling
limited edition toys. He makes up accounts
for his part-time business to 31 March
annually.
76
Joe
YA 2025
- Employment Income
- basis period: 1/1/24 - 31/12/24
- S10(1)(a) Income
- basis period: 1/4/23 – 31/3/24
77
Joe
YA 2025
1/1/23
31/12/23
31/12/24
1/1/24
31/12/24
S10(1)(b) income
Taxable YA 2025
1/4/23
31/3/24
S10(1)(a) income
Taxable YA 2025
78
31/12/25
Commencement
79
Commencement
First accounting period:
- up to 12 months
- this a/c period is basis
period for 1 YA
80
First accounting period
up to 12 months
A Ltd was incorporated on 1 April
2025 and makes up its accounts to
31 December.
(i) P/E 31.12.25 (9 months)
(ii) Y/E 31.12.26 (12 months)
(iii) Y/E 31.12.27 (12 months)
81
A Ltd
31/12/25
1/1/25
1/4/25
31/12/27
31/12/26
31/12/25
(9 m)
YA 2026
1/1/26
31/12/26
(12 m)
YA 2027
1/1/27
(12 m)
YA 2028
82
31/12/27
First accounting period
up to 12 months
B Ltd was incorporated on 1 April
2025 and makes up its accounts to
31 March.
(i) Y/E 31.3.26 (12 months)
(ii) Y/E 31.3.27 (12 months)
(iii) Y/E 31.3.28 (12 months)
83
B Ltd
1.1.25
31.12.25
1.4.25
31.12.26
31.12.27
31.3.26
(12 m)
YA 2027
1.4.26
31.3.27
(12 m)
YA 2028
1.4.27
31.3.28
(12 m)
YA 2029
84
31.12.28
Commencement
First accounting period:
- More than 12 months
- this a/c period is basis
periods for 2 YAs
85
First accounting period
more than 12 months
C Ltd was incorporated on 1 July
2025 and makes up its accounts
to 31 December.
1st accounting period of 18 months:
P/E 31.12.26 (18-month period)
86
First accounting period
more than 12 months
C Ltd
1st accounting period of 18 months:
- 1.7.25 – 31.12.26
This 18-month accounting period is
basis periods for 2 YAs:
- YA 26 & YA 27
87
C Ltd
YA 2026:
Basis period: 1.7.25 – 31.12.25
Basis period: 6 months
YA 2027:
Basis period: 1.1.26 – 31.12.26
Basis period: 12 months
88
C Ltd
1.7.25
31.12.26
31.12.25
(18-m a/c period)
1.7.25
31.12.25
(6 m)
YA 2026
1.1.26
(12 m)
YA 2027
89
31.12.26
First accounting period
more than 12 months
(continued)
1st 3 accounting periods of C Ltd:
(i) P/E 31.12.26 (18 months)
(ii) Y/E 31.12.27 (12 months)
(iii) Y/E 31.12.28 (12 months)
90
C Ltd
31.12.25
1.1.25
1.7.25
31.12.26
31.12.27
31.12.28
31.12.25
(6 m)
YA 2026
1.1.26
31.12.26
(12 m)
YA 2027
1.1.27
(12 m)
YA 2028
31.12.27
1.1.28
(12 m)
YA 2029
91
31.12.28
Change of accounting date
92
Change of accounting date
Period of change:
- less than 12 months
93
Change of Accounting
Date
“Period of Change” less than 12 months
D Ltd
(i) Y/E 31.12.23
(ii) Y/E 31.12.24
(iii) P/E 30.6.25 (“Period of Change” – 6 months)
(iv) Y/E 30.6.26
94
First apply “simple” PY Basis
D Ltd
(i) Y/E 31.12.23
(ii) Y/E 31.12.24
(iii) P/E 30.6.25
(iv) Y/E 30.6.26
95
- YA 2024
- YA 2025
- YA 2026
- YA 2027
D Ltd
1.1.23
31.12.23
1.1.23
31.12.24
31.12.25
31.12.26
31.12.23
(12 m)
YA 2024
1.1.24
31.12.24
(12 m)
YA 2025
1.1.25
30.6.25
(6 m)
YA 2026
1.7.26
30.6.26
(12 m)
YA 2027
96
Change of Accounting
Date
“Period of Change” less than 12 months
E Ltd
(i)
(ii)
Y/E 31.3.24
Y/E 31.3.25
(iii) P/E 31.12.25 (“Period of Change” – 9 months)
(iv) Y/E 31.12.26
97
First apply “simple” PY Basis
E Ltd
(i)
(ii)
(iii)
(iv)
98
Y/E 31.3.24
Y/E 31.3.25
P/E 31.12.25
Y/E 31.12.26
- YA 2025
- YA 2026
- YA 2026
- YA 2027
E Ltd
1.1.23
31.12.23
1.4.23
31.12.25
31.12.24
31.12.26
31.3.24
(12 m)
YA 2025
31.3.25
1.4.24
(12 m)
YA 2026
1.4.25
31.12.25
(9 m)
YA 2026
1.1.26
31.12.26
(12 m)
YA 2027
99
Change of Accounting
Date
“Period of Change” more than 12 months
F Ltd
(i)
(ii)
(iii)
(iv)
100
Y/E 30.4.23
Y/E 30.4.24
P/E 31.7.25 (“Period of Change” – 15 months)
Y/E 31.7.26
First apply “simple” PY Basis
F Ltd
(i)
(ii)
(iii)
(iv)
101
Y/E 30.4.23
Y/E 30.4.24
P/E 31.7.25
Y/E 31.7.26
- YA 2024
- YA 2025
- YA 2026
- YA 2027
F Ltd
1.1.22
31.12.22
1.5.22
31.12.23
31.12.24
31.12.25
31.12.26
30.4.23
(12 m)
YA 2024
1.5.23
(12 m)
30.4.24
YA 2025
1.5.24
31.7.25
(15 m)
YA 2026
1.8.25
31.7.26
(12 m)
YA 2027
102
Change of Accounting
Date
“Period of Change” more than 12 months
G Ltd
(i)
(ii)
Y/E 31.12.23
Y/E 31.12.24
(iii) P/E 31.3.26 (“Period of Change” – 15 months)
(iv) Y/E 31.3.27
103
First apply “simple” PY Basis
G Ltd
(i)
(ii)
(iii)
(iv)
Y/E 31.12.23
Y/E 31.12.24
P/E 31.3.26
Y/E 31.3.27
* YA 2026 is “missing”
104
- YA 2024
- YA 2025*
- YA 2027*
- YA 2028
Apply “simple” PY Basis
G Ltd
(i)
(ii)
(iii)
(iv)
Y/E 31.12.23
Y/E 31.12.24
Y/E 31.3.26*
Y/E 31.3.27
- YA 2024
- YA 2025
- YA 2027
- YA 2028
*Accounting period 1.1.25 – 31.3.26 is basis periods
for 2 YAs: YA 2026 (“missing” YA) & YA 2027
YA 2026
1.1.25 – 31.12.25 (12-month basis period)
“Missing YA”
YA 2027
105
1.1.26 – 31.3.26 (3-month basis period)
G Ltd
1.1.23
31.12.23
1.1.23
31.12.23
31.12.24
31.12.25
31.12.26
31.12.27
(12 m)
YA 2024
31.12.24
1.1.24
(12 m)
YA 2025
1.1.25
31.12.25
(12 m)
YA 2026
1.1.26
31.3.26
(3 m)
YA 2027
31.3.27
1.4.26
(12 m)
YA 2028
106
Attempt:
Q. 1.3 - 1.7, Q1.11 - 1.15.
107
END
108