Singapore Tax obligations :
- New start-up Company
- Sole Proprietorship
30 Oct 2015
Presented by
Ms Nancy Lau
DID : (65) 6580 1838
nancylau@fiduciaryasia.com
Agenda
A. Basis of Assessment and Tax Obligation
i. Sole-proprietorship (self-employ person)
ii. Company (Pte. Ltd.)
B. Taxable income & Deductions against
Income
C. Capital Allowance (CA)
D. Productivity and Innovation Credit (PIC)
E. Late Filing or Non-Filing of Tax Returns
(A) Basis of Assessment
Income is assessable on a preceding financial year basis
Year of Assessment (YA)
• year in which income tax is charged
• current YA is YA 2015 (for income earn in year 2014)
Basis Period for a YA
the period of income relevant to the YA
e.g.
1 Jan 2014 to 31 Dec 2014 (YA 2015)
1 Oct 2013 to 30 Sep 2014 (YA 2015)
1 Jul 2014 to 30 Jun 2015 (YA 2016)
(A) Tax Obligation
i. Sole-proprietorship
A self employed person is
- a person who carries on a trade, business,
profession, or vocation.
A self-employed can be operating as a:
- Sole-proprietor
- Partner of a partnership business
(Normal partnership, Limited Liability Partnership, Limited
Partnership
(A) Tax Obligation
i. Sole-proprietorship
• File your Income Tax Returns (Form B) & make compulsory
Medisave contributions
•
If you are a Precedent Partner of a partnership, you need to file
Form P in addition to Form B
•
Comply with Income Tax Law requirements:
 Keep a proper record & accounts of your business for 5
years
 Report a complete & accurate set of business income in
your Tax Returns
(A) Tax Obligation
i. Sole-proprietorship (individual)
 Filing Modes & Due Date
- Paper File Form B (15 April)
- e-File Form B (18 April)

Report business income under “Sole-Proprietorship” in the
“Trade, Business, Profession or Vocation” section of Form
B as follows :
 Revenue
 Gross Profit / Loss;
 Allowable business expenses &
 Adjusted profit / loss
(A) Tax Obligation
ii.
Company (Pte. Ltd.)
2 tax filing obligations:

Estimate Chargeable Income
When ? – within 3 months after end of accounting period

Income Tax Return (Form C/ C-S)
When ? – By 30 November of each year
(A) Tax Obligation
ii.
Company (Pte. Ltd.)
• Corporate Tax Rates is 17%
• Tax Exemption Schemes
Partial tax exemption for companies
Chargeable
income
% exempted
from Tax
Amount
exempted
from Tax
Tax exemption scheme for new start-up
companies*
Chargeable
income
% exempted
from Tax
Amount
exempted
from Tax
First $10,000
@75%
=$7,500
First $100,000
@100%
=$100,000
Next $290,000
@50%
=$145,000
Next $200,000
@50%
=$100,000
=$152,500
Total $300,000
Total $300,000
* The exemption is available only for the first three YAs.
=$200,000
(B) Taxable income &
Deductions against Income
a) Income tax is payable on:
Income accruing in or derived from
Singapore
(i.e. income sourced in
Singapore)
Income received in Singapore from
outside Singapore
(i.e. foreign income received
in Singapore)
E.g. Trade income of a company
carrying on business in Singapore
E.g. Interest income from a foreign
bank outside Singapore that is
remitted to Singapore
b) Deductions against Income
•
•
•
•
Deductions allowed for expenses wholly and exclusively incurred in the
production of income
Expenses must be revenue in nature (e.g. normal day-to-day operating expenses
Expenses must be incurred (i.e. not contingent liability or estimated amount)
Deduction must not be prohibited under the Income Tax Act (e.g. private plated
car expenses even if incurred for business purposes)
(B) Taxable income &
Deductions against Income
Examples of Non-deductible Expenses
Private and Domestic
Expenses
Capital Expenditure
Claim of Estimated
Purchases or
Expenses
Unreasonable Claim
of Remuneration to
Related Parties (e.g.
Family members of
director)
•
•
Not incurred for business
E.g. Directors’ private expenses on entertainment or
vacation
•
E.g. Expenses incurred in acquiring capital assets or
expenses to incorporate a company
•
Required to make claims based on actual amounts
incurred, with supporting receipts/invoices
•
•
Related parties do not work in company
Payments do not commensurate with level of
services performed
To be deductible, payments must be reasonable
having regard to similar services performed by an
independent Employee
•
(B) Taxable income &
Deductions against Income
Deduction for Expenditure Incurred on Renovation or Refurbishment
(R&R) Works under Section 14Q
• Granted over 3 consecutive years on a straight-line basis so long as
company continues to carry on that trade for which the R&R costs were
incurred
• Subject to an expenditure cap of $300,000* for every relevant threeyear period
• Granted separately from the capital allowance framework for plant &
machinery
• Examples of qualifying expenditure (if they do not affect structure of the
business premises)
•
•
•
•
General electrical installation
and lighting
Kitchen and sanitary fittings
Door and window
Fixed partition
•
•
•
•
Wall covering
Flooring
False ceiling and cornice
More examples are available at
IRAS’ website iras.gov.sg
(B) Taxable income &
Deductions against Income
Deduction for Expenditure Incurred on Renovation or Refurbishment
(R&R) Works under Section 14Q
• Excludes expenditure relating to structural changes made to business
premises and any:
a) design fees or professional fees
b) Antique
c) any type of fine arts
d) any works carried out in relation to a place of residence provided or
to be provided to the company’s employees (applies to expenditure
incurred from 18 Dec 2012)
•
Deduction against income => Forms part of adjusted loss
– Available for carry forward & carry back
– Prior to YA 2013, unutilised S14Q deduction is not allowed
– to be transferred under group relief system
(C) Capital Allowance
•
•
•
•
Capital allowances given in place of depreciation and other capital
expenditure, which are not tax-deductible
Given on qualifying fixed assets bought and used for trade purposes
Not part of setting or part of premises in which business is carried on
(e.g. renovation expenditure => Does not qualify for capital allowance)
Examples of qualifying fixed assets:
•
•
•
•
•
Carpet
Electrical and electronic
equipment (e.g. air-conditioning
system, security/alarm system,
sprinkler system and electrical
appliances)
Furniture and fixtures
Industrial plant and machinery
Motorcycle and bicycle
•
•
•
•
Motor vehicle (goods
/commercial vehicle such as
lorry, truck and van) – Except Splate
Movable partition
Office equipment (e.g. computer,
printer, photocopier, fax machine
and telecommunication
equipment)
Venetian blind and curtain
(C) Capital Allowance
How to
calculate
Qualifying assets
Annual
allowance (AA)
Over working
life of asset
•
•
Apply to all qualifying assets
•
[Section 19]
3-year write-off
Initial allowance
(IA) = 20% of cost
AA = (80% of cost) /
No. of years of
working life
Apply to all qualifying assets
AA = 1/3 of cost
•
•
AA = 100% of cost
[Section 19A(1)]
1-year write-off
(for specific
assets)
[Section 19A(2)]
1-year write-off
(only for lowvalue assets)
[Section 19A(10)]
Computers
Prescribed automation equipment listed in
Income Tax (Automation Equipment) Rules
2004; and Amendment Rules 2010
(effective from 15 Dec 2010)
Low-value assets
• Cost of each asset not more than $5,000*
• Total claim for 1-year write-off of all such
assets capped at $30,000 per YA
* Before YA 2013, it was $1,000
AA = 100% of cost
(D) Productivity and Innovation
Credit (PIC)
i.
Overview - 6 activities covered under scheme:
•
•
•
•
•
•
Purchase/Leasing of PIC IT and Automation Equipment
Training of Employees
Acquisition/Licensing of Intellectual Property
Registration of Intellectual Property
Research & Development
Approved Design Project
ii. Tax Benefits under PIC
Years of Assessment (“YA”)
2011 to 2018
400% tax deductions
/allowances
400% tax deductions/
allowances on
expenditure on each of
the 6 activities for
financial years 2010 to
2017
2013 to 2015
Cash payout
PIC Bonus
(Expire in YA 2015*)
Opt for cash payout in
place of tax
deductions/ allowances
for financial years
2010 to 2017
Dollar for dollar
matching on qualifying
expenditure, subject to
the cap of $15,000
over the 3-year period
(D) Productivity and Innovation
Credit (PIC)
(ii) Tax Benefits under PIC
 400% tax deductions/allowances on up to $400,000 expenditure per
year in each of the 6 activities
To allow max PIC benefits, the spending cap across YAs for each
activity is as shown below:
Years of
Assessment
Expenditure Cap per
Activity
Tax Deduction per
Activity
2011 and 2012
(Combined)
$800,000
$3,200,000
(400% x $800,000)
2013 to 2015
(Combined)
$1,200,000
$4,800,000
(400% x $1,200,000)
2016 to 2018
(Combined)
$1,200,000
$4,800,000
(400% x $1,200,000)
Note:
 Expenditure is net of grant or subsidy by the government or statutory board
 Expenditure exceeding the cap can still enjoy deduction based on existing rules
(D) Productivity and Innovation
Credit (PIC)
(ii) Tax Benefits under PIC
•
Cash Payout Option
– Option to convert expenditure of up to $100,000 in all 6 activities per YA
– At 30% (YAs 2011 and 2012) / 60% (YAs 2013 to 2018) cash payout rate
$100,000
Expenditure incurred during
the basis period for YA 2015
60%
$60 000
Cash Payout for YA 2015
– Expenditure converted is not tax deductible
– Cash payout is non-taxable
– Conditions to apply:
• Employed at least 3 local employees* (Singapore Citizens or PRs with CPF
contributions) in the last 3 months of the quarter or combined quarters in the
basis period for the relevant YA
• Carrying on business operations in Singapore
– PIC cash payout application form submit must after the end of each
quarter or combined quarters in the financial year but not later than the
income tax filing due date
(D) Productivity and Innovation
Credit (PIC)
(ii) Tax Benefits under PIC
Examples
Current Automation Equipment in “PIC IT and Automation Equipment List"
includes:
Facsimile
Optical character reader
Automated kitchen equipment (for F&B industry only)
Laser printer
Mainframe/Computers
Milling machines
Interactive shopping carts
Automated housekeeping
Office system software
Automatic storage and retrieval system of warehouses
Automated seating systems for convention or exhibition centre
Automotive navigation systems
More examples are available at the IRAS website.
(E) Late Filing or
Non-Filing of Tax Returns
Actions Taken for Late/Non-Filing:
i.
Sole-proprietorship (individual)
• Issue an estimated Notice of Assessment;
• Impose a late filing fee;
• Summon the taxpayer to Court where the penalty can be twice the tax
assessed by IRAS;
• Issue a Warrant of Arrest.
ii.
Company (Pte. Ltd.)
• Issue an estimated Notice of Assessment (NOA). The company is required
to pay the tax amount based on this estimated NOA within one month;
• Impose a penalty for not filing;
• Issue a Section 65B(3) notice to the director followed by a summons to the
director; and/ or
• Summon the officer responsible for running of the company to Court. The
penalty imposed could be twice the tax amount assessed
FIDUCIARY ASIA TAX
ADVISORS PTE LTD
SOLUTION PROVIDER TAX AND STRUCTURES
Thank You