Singapore Tax Cheat Sheet

Taxation of business:
Note:
1. Order of set-off: UCA and CA to set off the TBP income first, then non-trade income till statutory income is zero. If there is still statutory income, set off UL,TBP loss, UD, then current year donation.
2. Need to add back donation charged to P/L since donation is prohibited for deduction. Only APPROVED donation is a qualifying loss item to arrive at AI. From 01/01/09, allow 250% deduction. Unutilized donation can be carried forward for a maximum of 5 YAs.
3. Singapore Sourced Dividends ~ paid by SR Company Effect from 1/1/08, all SGP sourced div. will be governed under é 1-tier corporate tax system exempt in é hands of é S/H (NT, less out)
Income Tax Computation for YA 2012
Net accounting profit
Less: Non-taxable income previously credited
Add: Expense charged but not deductible
Less: Expense deductible but not charged in P/L
Add: Taxable income not credited to P/L
Less: Special deductions Further deductions
Adjusted trade profits [S10(1)(a)] If negative set(0), transfer to trade loss
Add: Balancing charge subtotal_______________
Less: CA brought forward Biz continuity test, S/H test (50) Current yr CA (i.e. FIFO basis) Biz continuity test, S/H test (50) Balancing allowance
Add: Non-trade income (less any allowable expense) [non S10(1)(a)]
Note: add non-trade only if trade income has been fully set off
Less: CA brought forward Biz continuity test, S/H test (50) Current yr CA Biz continuity test, S/H test (50)
Statutory Income
Less: Trade losses brought forward S/H test (50) Current yr trade losses (i.e. FIFO) S/H test (50) Approved donations brought forward S/H test, Max 5 yr offset Current yr approved donations (i.e. FIFO) S/H test, Max 5 yr offset
Assessable Income
Less: Group relief (Current yr CA) Ord S/H test (75%, Sg incorp) Group relief (Current yr T/L & donation) Ord S/H test Unabsorbed CA carry back Biz continuity test, S/H test (50) Unabsorbed trade loss carry back S/H test (50)
Assessable Income before exemption
Less: NCTR =0.75x10,000+290,000x0.5(if more than 290,000)
Chargeable Income
Tax @ 17%
Less: Relief from double taxation (DTR) [source-by-source, cant aggregate] Tax refund (W/H applicable) =17% x (Gross FSI - chargeable income) Net tax payable
Business Continuity Test: ensures that there is no substantial change in trade or business carried on. Trade must carry on in BP but not just at end of BP
Shareholding Test: requires é company’s S/H & their S/Hings to be substantially é same (50% or more of total no. of issued shares) If it is complex cross-holding structure, look at ultimate S/H in the hands of the last mentioned company. Only compare two dates, no need to main.
1. Get common shareholders on the two dates 2. Calculate the shareholdings of them % of total no. of issued shares
Relevant Dates for Carry Forward From To
UCA Last day of YA UCA arose from previously FIRST DAY of YA of which unabsorbed amounts to be utilised
UL/UD Last Calendar Day UL was incurred previously/
UD was made
UD – Max 5 years! Relevant Dates for Carry Back From To
UCA First day of YA UCA arose from previously Last Day of YA of which unabsorbed amounts to be utilised
UL First Calendar Day UL was incurred previously Priority in Sequence
Carry-Forward
[50% S/H test] Group relief (After AI)
75% ordinary S/H test Carry-back (after group relief) [50% S/H test]
FIFO basis, prior year CA, T/L, donation first, followed by current year CA, T/L & donation.
No need to make due claim, given automatically. Current year unabsorbed CA, T/L and donation against claimant’s AI. After utilizing all the possible loss items for group relief, then left-over – c/b, then left-over – b/fCurrent year unabsorbed CA, T/L. against AI of the immediate preceding YA. CA followed by T/L. Limit: lower of amt of the loss item, AI or $100k. Carry back is given on DUE claim.
New Corporate Tax Regime (NCTR) applies to both SR & NR companies, but do not apply to NR co’s income that is subjected to a final withholding tax, rmbr: final w/h tax, no deduction, no NCTR.
75% on 1st $10k CI before NCTR, and 50% of next $290k CI before NCTR. CI > $300k, effectively NCTR exempt amount = $152,500
From backwards, if chargeable income > 147,500, add exempt amount of $152,500
For newly SG incorporated and SR company, Full Tax Exemption Scheme: exempts first $100k, and 50% of next $200k for the first 3 YAs since incorporated date.
S14(1)(d) Bad/doubtful debts
Trade debt: credit sale in ordinary course of biz S10(1)(a)
Previously included as trading receipt of claimant, hence bad staff loan/loan to supplier are ND.
Claimant’s biz not ceased At end of BP; Estimated to be irrecoverable only specific provision is D. Upon recovery, taxable!
S14(1)(é) CPF Obligatory contribution D (excess/voluntary ND)
Exchange difference: Examine underlying nature, if capital – ND, if revenue (including exchange gain on interest payment on loan to buy capital)– D. Concession: realization does not matter.
Further Deductions: Additional to S14 & special deductions
S14B: Exp relating to approved trade fairs/exhibitions or trade missions or to maintain overseas trade office (original sum, D, further D depends on approved no. of EE), exclude set-up, entertainment costs.
Special Deductions: Given when none allowed under S14/S15 prohibitions
S14A: Patenting costs/registration of IPR (see PIC),
S14H: exp on building modifications to facilitate work & mobility of disabled employee, S14D: R&D exp (see PIC),
S14Q R&R incurred between 16/2/08 – 15/2/13: 1) Fixtures, fittings and installations. No structural change, exclude designer fee, works of fine art. 2) Cap at 300K over 3years, straight-line write-off. 3) YA10/11, one-yr write-off, Cap still applies. Unutilized R&R can carry-back, carry-forward, but not for group relief.
Capital Allowances:
Tax depreciation against S10(1)(a) income: TBP
S19B: Intellectual Property Rights – acquisition of IPR. WDA p.a. = 20% x CE. Enhanced WDA = 20% (300%x[lower of CE incurred in BP or $400K] A combined cap of $1.2M over 3 yrs applies for YA2013 – 2015
CA on acquisition of IPR: straight-line basis over 5 years on Capex (net of legal and registration fees, stamp duty, and other costs)
P&M (Note: carpets and venetian blinds are plant):
Three tests: Stock-in trade; business use test (apparatus); premises /building test(movable). In the premises test, premises are generally not plant unless it is a mean of production, must perform a functional role, must not be merely a passive (housing, sheltering biz) part of é premise in which biz is conducted plant. If it is standard items in a building not plant, but possible to claim IBA if it is IB.
NOT P&M:door closer, sanitary fittings, wall paper, false ceilings, water tank, awning, restaurant sewers
Qualifying expenditure (QE): purchase taxes, customs, delivery costs, installation, alteration incidental to installation, travelling, professional fee, capital improvements to existing P&M, exchange losses Exclude interest and financing charges.
S19: IA: 20% not deferrable, AA: 80%/n, where n = taxable life in 6th Schedule, deferrable, assets must be use at the end of the basis period.
S19(A)(1): 3-year write-down, All P/M eligible except S-plate cars.
AA: 1/3 CE incurred in BP
S19(A)(2): AA: 100% PAE, computers, efficiency-related equipments, website, robots, generator, photocopiers etc.
Enhanced allowance (under PIC)= (300%x[lower of CE incurred in BP or $400K] A combined cap of $1.2M over 3 yrs applies for YA2013 – 2015
Simplification measure S19A(10A)-(10C) 100% claim for P/M costing no more than $5000 per item, aggregate of such claims restricted to $30,000 per YA
LIA: 25% IA, and 5% AA, and for AA, asset must be in use. 8 industries: pharmaceuticals, petrochemicals, petroleum, chemical specialities, semiconductor-wafer, aerospace, marine & offshore, solar cell.
Industrial Building Allowances( up to 22.2.2010): Premises that does not qualify for P&M
Must be used for the purpose of a qualifying trade which is:
S18(1)(c) manufacture of goods or materials or processing. warehouse is IBS only if the business is to rent out storage to public, or goods subject to treatment in the storage(cold storage).
S18(1) Welfare building eligible: canteen, recreation rooms, washroom
Other e.g. of IBA: Walls, fences, dam, drains, well, landscaping, road, car park, loading bay, railway, bridge, tunnel, of permanent structure.
Not eligible~ hotel, dwelling house, retail shop, showroom, admin office.
S18(7)(b) When some part of the building is not IBA, then if $ on non-qualifying parts < 10% Total construction cost, Total CC qualifies for IBA, otherwise, to apportion using floor area as a basis.
IA: 25%, construction/improvement on existing building/purchaser, but purchaser can only claim IA if no IA has been claimed by constructor etc.
If trade has not commenced yet, all the QE deemed to incur on the commencement date. Non-deferrable
AA: 3%, person entitled to an interest (freehold/leasehold) for the building, and building must be in use at the end of relevant YA.
Construction cost Exclude: land-related expenses, and interest on funds to finance construction, since interest is tax deductible. Legal fee, stamp duty, commission related to purchase are not claimable.
S24 Transfer P&M or Building between Related Parties Assume SP = TWDV, thus no BC/BA, buyer continues CA as if no sale. Condition: Transfer between related parties, asset used in production of taxable income b4 & after transfer, asset not previously leased by seller to buyer, transfer is not tax-motivated, tax benefits depending on the tax positions of the parties.
If S19A elected, treate it as if no sale, If S19 elected, then the claimant company can claim AA based on TWDV transferred.
Balancing Adjustments:destroy/disposal/ scrapped/private use/cease using.
Balance allowance: TWDV > SP, deductible, put together with CA to offset trade-income.
Balancing charge: TWDV < SP (Taxable – restricted to total CA claimed), excess is capital gain, not taxable.
TWDV: tax value of asset after claimed CA at the end of YA immediately b4 the event. Sales proceeds: selling price, insurance compensation money, net of any expenses incurred on disposal. OMV(if no longer in use!!).
Income:
S10(1): Income tax shall, subject to é provisions of this act, be payable at rate or rates specified hereinafter for each YA upon é income of any person accruing in or derived from SGP or received in SGP from o/s SGP
Accruing in: source rule, and S12: deemed source
Received in SGP from outside SGP: S10(25)
(1) remitted to, transmitted or brought into SGP
(2) applied in or towards satisfaction of any debt incurred in respect of a trade or business carried on in SGP.
(3) applied to purchase any movable property which is brought into SGP.
Capital vs. Revenue receipts: SGP does not impost tax on capital gains.
Whiteman & Wheatcroft’s 5 Propositions: Taxability of receipts
WW1: Payments for the sale of the assets of a business are prime facie capital receipts.
WW2: Payments received for the destruction of the recipient’s profit-making apparatus are receipts of a capital nature.
WW3: Payments in lieu of trading receipts are of a revenue nature. E.g. compensation for non-performance of contract, insurance for trade related loss, compensation in excess of the repairment cost for damage of goods.
WW4: Payments made in return for the imposition of substantial restrictions on the activities of a trader are on a capital account. e.g. sterilized asset, restrictive covenants.
WW5: Payments of a recurrent nature are more likely to be treated as revenue receipts.
S10(1) Heads of Charge (Types of Income, differ from Capital Receipts)
(a) Gains or profits from any trade, biz, profession, vocation
Badges of trade Whether income is from trade or not.
#1 Subject matter of realization: ready market, acquired in large qty trading, Asset for personal enjoyment, yield periodic income eg rent non-trading,
#2 Period of ownership: short trading,
#3 Freq of similar transactions: very frequent trading,
#4 Supplementary work to increase saleability for working capital trading #5 Circumstances for realisation: planned trading; exigencies, opportunities, forced salenon-trading
#6 Motive: existence of ST profit trading, (b) Gains or profits from any employment
(d) Dividends, interests or discounts (for SSI dividend, date of accrual: date of payment of the dividend voucher, but might be one-tier tax exempt) (f) Rents, royalties, premiums & any other property related profits (may be income or capital, see whether there is loss of ownership upon sale)
(g) Any gains or profits of an income nature not falling within any of é preceding paragraphs
Concept of PE: determine whether a person with some presence in SGP has a source of trading income in SGP, PE is a condition for IRAS to impose tax on non-resident person:
Have PE trading in SGP SSI, liable to tax, to the extent to which such gains are not directly attributable to that part of operations carried on outside SGP. Treat PE as a separate and distinct entity.
No PE trading with SGP FSI, as long as no remittance, NT.
But if the gains/profits of the NR is w.r.t S12 payments, i.e. deemed source rule, then NR is liable to SGP w/h tax regardless of PE, although there are different rates between PE/no-PE, and sometimes treaty might provide for non-taxability if no PE. Depending on each case. (refer to withholding tax)
Residence: Individuals – considered in taxability in individuals. Normally PCY, unless individuals also has S10(1)(a), which is PAY.
Companies – residency depends on place of central management and control, usually the place where the AGM is held. PAY basis for all sources of income.
Deductions:
S14(1) ITA General Deduction Formula: For é purpose of ascertaining é income of any person for any period from any source (source of income must exist) chargeable with tax under this Act, there shall deducted all outgoings & expense wholly (quantum/apportion) & exclusively (income producing motive) incurred (crystallisation of liability/accrued) during that period by that person in é production of é income (close nexus between exp & income generating activity) , source-by-source basis!
S15 Prohibitions
Capital expenditure vs revenue expenditure
-enduring benefit, once and for all, non-recurring, relate to fixed capital
Domestic or private expense;
Expense not wholly or exclusively incurred in é prod. of income; capital withdrawn/sum employed/intended for capital nature;
Capital employed in improvements(greater efficiency and structural change)
Sums recoverable under insurance or contract of indemnity (if for inventories, loss, D, subsequent compensation, T, end result is only the net loss is D, then for capital assets, loss, ND, compensation, NT, and compensation is the sales proceeds when calculating for BC/BA under CA);
Rents or repairs to premises not used in production of income;
Private car exp(reimbursement) ; but others: van, lorry, truck etc, deductible; income tax paid in SGP/foreign. Common deductibles: entertainment expenses for EE and customers; employee remuneration, i.e. provided in the employment contract; legal & professional fees: preparation for returns, advisory, trade related legal fees, must exclude capital related legal fees!
Specific Deduction under S14
S14(1)(a) Interest expense where principal is intended to produce taxable income, include other borrowing costs D. If pre-commencement,ND. Note: source-by-source. Borrowing costs are deductible if it is in lieu of interest or to reduce the interest costs.
S14(1)(c) Repairs and renewals. If revenue repairs, to restore asset in good & efficient condition D. If renewal (Replacement) D, Restriction: 1) No element of improvement, 2) initial item must not claim CA under S19/S19Aor rebuild of a structure of permanent nature. If R&R under S14(Q) is claimed, then subsequent repair and renewal is also deductible under S14(1)(c).
Initial repairs: repairs done to an asset immediately/shortly after purchase to remedy pre-existing defects usually ND. However, if asset b4 purchase is in commercially useable state repairs, D. If purchase price of asset is almost equivalent to actual price of asset which is defect-free repairs, D.
15
j) Lodging allowance: if it is allowance for hotel accommodation, fully taxable. If it is hotel lodging provided by employer, then Taxable at - per month: $250/adult and child >20 yr, $100 for 8<child<20, $50 for 3<child>7, $25 for child<3, further 20% of EE’s basic salary (exclude bonus, BIK etc.)
k) Quarter Provided: Not Allowance! To non-director: Taxable at lower of: 10% of gains from employment b4 housing benefit – rent paid by employee, and annual value. AV: market rent the property can reasonably fetch; if employer does not own the property, then the AV = annual market rent payable by employer. To director: if remuneration < AV/rent paid by employer taxable at AV/rent paid, if remuneration≥ AV/rent paid by employer taxable as non-director.
l) Employee stock options: Companies listed on SGX, Taxable = (last done price on listing date where the option shares are listed after exercise –exercise price paid)*no. of share acquired.
Other companies: Taxable = (MV on date of exercise – price paid) * no. of shares acquired
Accrue for tax in yr of exercise of options T
Capital gain thereafter from disposal of share NT
Deduction allowed for expenses out of his remuneration, 4 emplotmtTaxation of Non-Resident Individuals
Generally, tax at flat rate of 20% (effect from YA05)
S13(6) exemption – exemption of SGP employment income of NR if employment is less than 60 days in yr preceding the relevant YA.
S40B relief – tax SGP employment income at higher of 15% flat rate or on a SGP tax resident basis. Condition: employment is > 60 days but < 183 days in preceding yr. Eg work from 1 Dec 07-30 Mar 08 S13(6) in YA08, S40B in YA09
Withholding tax
S12(6), S12(7) payments from SR to NR is Deemed SSI: Payments must be borne by SR/PE in SGP(except biz carried outside sg through a PE outside sg), or deductible against SSI .S12(6): payment related to loan/indebtedness, or interest on loan used or brought to SGP. S12(7): Royalties, know-how, show-how, management fee, rent from movable property. Exception: OASIS.
Rate Final 15% Final 10% Normal 17%
Type S12(6)Interest; S12(7) Rent S12(7)Royalty; know-how Show-how, management:
Condition Recipient: Not from TBPV in SG and not connected to PE in SGP Recipient: Not from TBPV in SG and not connected to PE in SGP Treaty Yes, if treaty has lower rate, then it prevails Yes, if treaty has lower rate, then it prevails Usually does not provide. Refer to business profits article to see whether NR is liable to SGP WHT.
Impact No deduction allowed No deduction allowed Deduction allowed
Withholding tax mechanism
SR: Tax to be withheld & paid to IRAS by é 15th of é mth following é mth earliest of the dates: 1. Date of actual pament 2. Date when payment is due 3. Date of deemed payment in which income is paid to NR (after tax payment is then paid to NR) safeguard é collection of tax from NR due to their minimal presence in SGP
Relief from Double Taxation (DTR)
1. Foreign sourced (sourced in foreign country with a fixed place there---TBPV)
2. Income ( not capital sum)
3. Singapore tax resident
4. Received in SG? S10(25) ITA: FSI is received in SGP if it is 1)remitted/transmitted/brought into SGP or 2)used to settle a debt incurred i.r.o a trade/biz carried on in SGP or3) used to purchase movable property which is then brought into SGP, all regardless of whether é source of income overseas has ceased. Note: FSI must be received in SGP to be liable for SGP tax.
5. Does FSI received in SG fall under Exemption? (For company only) ii) For companies, S13 (8) – (11) Exemption 3 categories
a. foreign dividend, paid by a NR to SR.
b. Trading profits from a foreign branch or foreign professional & other svc income through a fixed place of operation
Conditions to fulfil, provided that
Income subject to foreign tax of a similar character(paid or to be paid)
Foreign jurisdiction’s headline(corporate) tax rate ≥15% in the yr which FSI is received in SG
3. If not exempted, we use the Credit method.
i) Look at availability of a tax treaty for the double taxation relief, however, treaty can’t impose tax liability if this is not already captured in the domestic tax laws. Should conflict arose btw domestic laws and treaty, the one that is in favour of T/P will override, and it is usually the treaty. ii) Credit method under UTCR, S50 credit code, UTCR applies to SR, even if there is no treaty
DTR in country of residence where FSI is first taxed at gross amount (i.e.b4 Foreign Tax) & then given tax credit for é FT suffered
Source-by-source rule, cannot be aggregated!
Tax credit limited to the lower of i) actual foreign tax suffered or ii) Singapore tax payable on FSI, which is SETR x (Gross FSI less deductible expenses) where SETR= Tax Payable b4 tax credit/ AI, and Gross FSI = Net FSI + any tax suffered in the foreign jurisdiction. iii) CANNOT carry forward/back DTR credits, so if T/P not in a T/P position, complete forfeiture of tax credits. iv) In the tax computation, treat FSI as “other income”, i.e. after CA offsetting against adjusted profit, then we add FSI and/or non-trade income. CA should be used to offset S10(1)(a) first followed by other source. (source-by-source).
FTC Pooling
i) subject to election( for dividend can choose exemptions or pooling) ii) Income tax paid in country of source(if exempted then not allowed) iii)headline tax rate ≥15% at the time foreign-sourced income received iv) there must be Singapore tax payable on foreign income.
v) entitled to claim FTC under sec 50 or 50A or 50B
Negative test
Ordinary SH Test Compulsory for Group Relief
Members of the same group- Condition:
(a) Both Transferor Company & Claimant Company must be Sg-incorporated
If co. is a FIC or connected by a FIC, co’s shareholding is disregarded.
(b) 75% ordinary share holding test, direct/indirect. Need maintain thru-out!
Either at least 75% of é total no of issued ordinary shares in 1 company are beneficially held, directly or indirectly, by é other, or at least 75% of é total no of issued ordinary shares in each of é 2 companies are beneficially held, directly or indirectly, by a 3rd SIC. Ordinary shares = rights to fixed dividends AND right to variable profit participation.
Transferor and claimant has same accounting YE
Both made election under S37(11), group relief is given on due claim!
Format for unabsorbed items Claimant Transferor
YA 2008 Adjusted Profit 100,000 10,000
Unabsorbed CA 2007 20,000 100,000
Assessable Income 80,000 0
Unabsorbed CA 2008 90,000
Group Relief (first) 80,000
Unabsorbed CA 2008 To carry back to YA 2007! (second) 10,000
Income Tax for individual:
1. Identify whether there is SG sourced Income?
a) S12(4) ITA: Source of employment income is where é duties of é employment are discharged or performed Regardless of incidental duty due to overseas job or not, as long as the employment is in SG.
b) If service provided overseas, identify whether duties of employment overseas is incidental to & part of a SG employment (SSI), thus taxable or constitute to a separate overseas/foreign employment (FSI) thus not taxable.
2. Identify whether person is SG Tax Resident? SR SSI and FSI in Sg but note FSI by individual exempted from tax under S13(7A), NR only SSI
Another reason: SR and NR different tax rate. Unlike company.
Statutory Tests of Residence
i)Qualitative test ~ individual is SR for YA if he normally resides in SGP
Consider his history of presence in SGP, extent of family ties & economic interest in SGP, nationality/immigration status
Temporary absences are reasonable & not inconsistent with a claim by such person to be resident in SGP ii)Quantitative test ~ Individual is SR for YA if he is physically present / exercise employment in SGP for at least 183 days in é yr preceding YA
2 Year concession on/after 1 Jan 2007, continuous stay straddling across at least 2 consecutive calendar yrs, SR for both YAs. For executive director: both qualitative and quantitative test. Non-executive director: only qualitative test.
3.Definition of employment income
S10(2)(a) ITA: gains or profits from any employment means any wages, salary, leave pay, fee, commission, bonus, gratuity, perquisite or allowance (other than a subsistence, travelling, conveyance or entertainment allowance which is proved to é satisfaction of é Comptroller to have been expended for purposes for which deduction is allowed) paid or granted to in respect of é employment whether in money or otherwise taxable must be a reward for duties/svs rendered in é course of employment, whether in é past, present or future, need not be paid/borne by é employer must be a personal gain
Nature of Receipts Capital vs. Income, taxable vs. non-taxable
Inducement payments: capital if (1)Compensation for loss of substantial personal rights/status, or (2) the payment is to induce the T/P to join the company, but T/P need not return the payment.
Restrictive covenant payments for employee’s promise not to join a competitor or to set up biz in competition with employer: capital, NT
Compensation for loss of office to compensate employee for é premature termination of é employee’s reasonable expectation of continued employment into é future: capital, NT. If compensation is only for svc rendered in the past (reward for past performance), then taxable.
Salary in lieu of notice of termination reward for past performance always taxable.
Leave pay: specified and paid in advance apportion evenly for tax
/Specified and paid in lump sum tax at payable date; Unspecified, payment in lieu of unconsumed leave/surrendered leave tax upon receipt
Director’s fees: Taxable upon voting and approval at AGM. For non-resident director, the rate is 20%!! Not employment income.
Bonus: Contractual bonus accrued in yr where relevant employment svc was rendered. Non-contractual bonus accrued in yr when bonuses are paid, since employee has no right to enforce it until paid.
Allowance: Regular cash payment: Generally taxable for employees unless it is in relation to expenses deductible under S15. Per diem/reimbursement in connection with work NT. Excess T.Perquisite (Benefits-in-kind) Instead of giving cash, com pays for staff. This will reduce employee tax liability as some BIK are only partially T
a) Insurance premium paid by employer:
EE/Family members = beneficiary T.(reimburse personal expenses)
ER = beneficiary NT
b) EE’s children’s school fees T
c) Dental and medical benefits reimbursement for immediate family members NT; medical allowances T
d) Gifts/voluntary payments: recurrent nature T; one-off NT; if total value < $200 NT, if total value > $200 full amt taxable
e) Club membership fees paid by employer: Corporate membership Entrance fees NT, subscription fee taxable on personal usage portion. Individual membership beneficially owned by employee, Entrance fees T in full, annual subscription fees T on portion relating to personal use.
f) Employer’s CPF contributions: Obligatory contribution NT, exempt,
Excess/voluntary contributions T
g) Home leave passage concession: Tax at 20% of cost for employees who are not SG citizens/PR, limited to one return passage for each EE and Spouse, and two return passages for each child per annual.
h) Interest-free or subsidised loans: ER gives director interest free loan, assume that the loan is not granted generally to all staff. T at average prime lending rate X amt of loan.
If ER pays interest to 3rd party full amt T.
i) Car benefit T on private use portion.ER provides EE with the car. i) Foreign income which qualifies for tax sparing credit ii) Does not apply to those qualified for exemption other than Dividend iii) if there is a foreign loss( no tax payable in Singapore)
Lower of: (SETR x gross up foreign income pooled) or( total foreign tax paid)
4. Credit method for dividends (assuming S13(8) – (11) don't apply). See the corporate taxation model for the dividend paying company:
i) 2-Tier System: see if treaty provides relief for both WHT(2nd lvl) and UT (1st lvl) (normally the S/H min. is 10% for UT relief), if yes, gross WHT first, and re-gross UT later. If treaty only provides WHT and not UT, S50(A)(3),(4) might extend to UT subject to 25% S/H level. Even if no treaty, S50(A) still allows relief for WHT, and might allow for UT subject to S/H test of 25%. ii) Full Imputation: Taxed at shareholder level only. No WHT tax issue since tax is already collected from corporation, net of refund to S/H. Net dividend received have incorporated the full imputation credit, gross dividend is net dividend received / SR’s corporate tax rate in the foreign jurisdiction if S/H is a coy, not SGP’s corporate rate. Upon remittance back to SGP, SR will suffer SGP corporate tax rate again, then S50A relief. iii) 1-Tier System: Taxed at company level only, only UT is relevant, shareholder exempted from WHT. See whether treaty provides relief for UT, or SR satisfies S50(A) S/H 25% test.
Tax sparing provision
Must be provided under a tax treaty – a form of indirect economic aid where it is allowed by é country of residence i.r.o. the tax deemed suffered in é country of source. Preserve the tax incentive given in FC. Overall tax paid under tax sparing = (SG rate – FC rate) x gross income; = 0 if SGP rate <FC rate, since SG tax paid is a full tax credit, and comp doesn't pay tax in FC.
Goods and Service Tax
A multi-stage tax; tax on each trader’s value added; biz act as collecting agent for é govt; intended burden is on final consumers.
Claiming of Input Tax by GST registered company ( paid then claim back)
1. Seller of the inputs is GST registered, payer does not produce exempt supply, and the input tax is used for purpose of biz. Input tax claim supported by valid tax invoice/import permit
2. blocked input tax: (cannot claim) Sporting/recreational club fees, medical & accident insurance premiums, medical expenses, family benefits, S-plated cars, but on vans, motor cycles, heavy vehicles are claimable.
Scope of GST: must be i) Taxable supply made in SGP, ii) Sales of supply must be made by a taxable person, iii) in furtherance of biz, iv) importation
i) Taxable supply made in SGP: Place of supply (compare start and end location)
If goods are physically located in SGP at é time of their appropriation / removal for é supply (i.e. domestic consumption/ export case) Supply of goods is made in SGP
For service, country where biz is mostly directed connected with providing of service, will be the country where the supply of service is made. If supplier of service belongs in SGP Supply of services is made in SGP
*** Scenario when supply is given to other for free? Must charge GST?
*** Deemed supply: Biz goods disposed of for free, except for if biz gift costing < $200 and not form part of a series of gifts made to same person, or if gift is in the form of non-commercial samples, i.e. sample not-for-sale in the market. Applies only if the trader claims input tax credit iro the goods.
However, if the input tax is blocked, e.g. purchase of motor cars, then no deeming of output tax even if company gives away the motor car as a gift. ii) Taxable person Compulsory GST registration
Retrospective test: Applies on 31/3, 30/6, 30/9 and 31/12; Total value of taxable supplies for é current & last 3 quarters > $1m unless IRAS is satisfied that é total value of taxable supplies for é next 4 quarters =< $1m
Prospective test: Applies on any date, total value of taxable supplies expected in é next 12 mths > $1m
For this purpose only, taxable supplies exclude sales of capital assets
Notify comptroller within 30 days since the day of registration liability.
Can also opt for voluntary GST registration: consider the pros (input GST claimable) & cons (compliance cost). GST registration is usually beneficial for exports or if most of your customers are GST registered. iii) In the ordinary course/furtherance of biz including sales of fixed assets(deemed supply) , provide employee benefits, all need to account for output GST.
Types of supply (only OOS no need to file for return, all the rest must report)
Out-of-scope supply: Not within the scope of GST above - small gifts, salaries & wages, private transaction, regulatory charges, not GST registered, overseas – overseas; sale of business as a going concern etc.
Exempt supply: supply made in SGP but specifically excluded, e.g. financial services or sale & lease of residential properties, life insurance.
*** If the lease of the residential property includes furniture, then rental of furniture is subject to GST.
Taxable zero-rated (0%) supplies: supply made in SGP but subject to 0% output tax: exports of goods or provision of international service which includes (a) transport of ppl/goods, (b) offshore property, (c) offshore goods, (d) services under a contract AND directly benefit a person who belongs outside SGP and is outside SGP when the services are performed.
Taxable standard-rated (7%) supplies (incl. sales of biz assets)
Importation of goods: GST 7% chargeable, just like custom duties.
Summary OOS EX T-ZR T-SR
Is output tax chargeable on supply? No No Yes but 0% Yes 7%
Is input tax on inputs used recoverable? Yes No Yes Yes
Time of supply
Filing date and payment date: one month after the end of the prescribed accounting period for every quarter. Refund of GST: within a period equals to the prescribed accounting period.
General rule: time of supply is the earlier of the date of issuance of invoice (any invoice that demands payment), and the date of payment. If got deposit and such deposit forms part of payment, i.e. non-refundable, then account for output GST on the date of receipt of deposits, separately from the full settlement of the payment.
Value of supply
GST = 7% x VOS. VOS includes taxes and duties e.g. service charge but excludes stamp duty. For related transactions/deemed supply, VOS is OMV. “the GST exclusive, net of discount” btw two unrelated party is actually
GST inclusive: GST is absorbed by the trader. GST = Selling P/107 x 7% eg. Non-refundable deposit