singapore Tax Cheat Sheet

Defining Heads of Charge S10(1) heads of charge:

Deduction s14(1)General deduction formula:

a)TBPV b) Gains/profits from any employment d) Dividends, interests f) Rents, royalties g) Gains/profits of income nature not fr a)-f) #not an activity carried out by e person in ordinary course of biz->but has the intention to make a profit from it (Eg. Casual service) #NOT cover: capital gains & voluntary payments (present for sb else)

1)In e production of taxable income 2) Whole amt claimed 3) An income-producing motive ->thou there’s non-income producing advantage& no income is actually produced. 4) Liability to pay exp has crystallized 5) Person claiming->who incurred e exp 6) Pre-commencement (capital in nature: incorporation exp)& post cessation exp not deductible 7) Sufficient nexus btw exp & incomegenerating activity 8) source-by-source basis

Six badges of trade: 1) Subject matter of realization: nature of the asset; personal enjoyment; yielding periodic income; capital asset; acquired large quantities 2) Period of ownership: shorter (within 3 to 6 mths->more likely to be trading 3) Frequency of similar transaction: more frequent/occur in succession over a period of years-> isolated transaction is not preclude from being a trading transaction 4) Supplementary work in connection with e asset realized: increase salability/a more marketable condition (processing, modification, improvement, marketing effort like ad)->Trading 5) Circumstances for realization: unplanned realization, unconnected w normal biz like emergency,opportunity,forced sale->not trading 6) Motive: profit seeking motive, seller’s intention, a co is more likely to be trading as its existence is normally to make profit->document

Income Statement YA 20xx s10(1)(a)income TradeX profit(adjusted prof less CA for tradeX s10(1)(b)-employment income s10(1)(d)-dividend& interest income s10(1)(f)-rent& royalty income s10(1)(g)income STATUTORY INCOME Less: Trade loss Less: Approved donations ASSESSABLE INCOME Less: Personal reliefs Group relief Unabsorbed items carried back NCTR CHARGEABLE INCOME (×TR) GROSS TAX PAYABLE ON CI Less: Foreign tax credits (double tax) Less: Tax rebates-corporate(YA2011) -indiv(YA08/09/11) Less: Procreation rebates NET TAX PAYABLE

s14(1)(a)-interest expense: principal sum used to pduce taxable income->deductible s14(1)(d)-bad/doubtful debts: trade debt; claimant’s biz not ceased; claimant’s trading receipt (sales) -> deductible s14(1)(e)-employer contributions: fund approved local fund, eg CPF, or fund constituted overseas; employees engaged in production of employer’s income-> obligatory under CPF Act -> deductible #excess/voluntary contributions are NOT deductible s14(2)-remuneration paid to employees related to employers: restrictions-> antiavoidance measure->reasonableness test must pass s14(5)-(8) medical exp deduction: Restricted to 1% of total employee remuneration in e basis period #allowance paid to employees->exp incurred to remunerate staff engaged in activities relating to production of income of employer->deductible ->Contractual: agreed btw employer & employee; lump-sum per period; for a specific purpose-> employee not required to account for how he spent ->generally employer can get deductions in FULL

Capital Allowance&Withholding Tax 1)b/f & c/b CA: Biz continuity test + Shareholdings test (co. only) b/f & c/b trade losses & donations: Shareholding test (co only) 2) Payment withheld: s45: interest under s12(6); s45A: s12(6) & (7) non-int payment ->Paid by 15th of next mth Penalties for non-compliance ->

How renewal/replacement deduction & WTA work?

S10(1)(a) income

1. 2.

Claim

1st asset

Replacement asset

WTA

Full amt

Full amt=replacement+improvement

Renewal deduction

No tax benefit

Only replacement amt, no improvement (in absence of renewal deduction, exp can claim under WTA

Claim WTA is more beneficial Non S10(1)(a) income

3.

Renewal deduction

No tax benefit

Only replacement amt, no improvement

#Claim renewal deduction is very useful as in the absence of renewal deduction, not any type of tax benefit can obtain as it is non-trade income, Allow: taxable except subsistence/travelling/conveyance/entertainment allow->not under s15

S14(1)(c) repairs vs renewal:

Double Tax Relief

Rev repairs->rev exp; Improvements->CE #Cost of replacement item is deductible; ->not incl. any element of improvement Rev repair->subsidiary part; Renewal-> whole; Initial repair: rev repair/cap improvement condition: price paid; accounting treatment

1)FSI received in SGP if: -Remitted to/brought into SGP -Settle a debt incurred i.r.f. a trade/ biz carried on in SGP -Purchase movable property which is brought into SGP 2)Tax treaty relief: provisions prevail over domestic tax laws Unilateral Tax Credit Relief :nonExchange Realized Unrealized treaty country differences 3)S50 credit code SGP resident/no later than 2 yrs Capital Gain NT Gain NT Loss ND transaction Loss ND after end of relevant YA/tax at gross amt/source-by-source (from Revenue Gain T Gain T Loss D YA2012, credit pooling) transaction Loss D 4)S50C-foreign tax credit pooling: Condition: Subject to foreign tax; s14Q-Special s14B-further Headline tax in source country ≥15%; Subject to tax in SGP; nd Deduction given: none 2 deduction/add eligible for FTC under tax allowed under s14 deduction-> allowed treaty/UCTR (prohibit by s15) for same expense Lower of: aggr of actual foreign tax and aggr of SGP tax s14Q: exp: renovation/refurbishment 5)S13(7A) Exemption : works: CE on fixtures, fittings& resident/non-resident indiv installations->not involve structure resident indiv: no partnership change-> approval by BCA 6)S13(8) Exemption :Income s14B: exp: approved trade fairs/ covered Foreign dividends; Profits exhibitions/trade missions/to maintain of overseas branch of SGP resident overseas trade office co; Foreign professional, consultancy & other service income Company Income Tax 7)Conditions: Received in SGP Group relief conditions (only current year) on/after 1.6.2003; Tax suffered in 1) SGP-incorporated co foreign juri immediately received; 2) Members of the same group: ordinary Headline tax in foreign jurisdiction shareholding test + Residual profits & ≥15% in yr FSI is received in SGP assets test 8)DTR for foreign dividends: 3) Same accounting ending day Tax treaty; Tax treaty extends DTR to 4) Both make election for group relief UT≥25% shareholding; Waiver

Individual Income Tax 1)Capital receipts-> not taxable: inducement payment; restrictive covenant payment; compensation for loss of office; salary for notice of termination->taxable 2)Determine an indiv is resident/non-resident: Qualitative: normally reside in SGP in PY Quantitative: no need to be continuous > physical presence: ≥183 days; employment≥183 days Concessions: continuous 2-yr: straddling across 2 yrs ≥ 183days: resident for both yrs 3-yr: straddling across 3 yrs: resident for 3 yrs Date of deemed payment: earliest of-> contract agreement date; Invoice date; Accrual date; Cash/payment date

Does supply of goods involve their removal into or out of Singapore?

Is the removal of goods into or out of Singapore ?

Are the goods physically located in Singapor e?

Supply is made in Singapore Supply is made outside Singapore Supply is made in Singapore Supply is made outside Singapore

GST Deemed supply: 1) Biz goods disposed off for free, except: Biz gift not >$200, not a series of gifts to the same person; Industrial/commercial sample 2) Biz goods diverted for free to nonbiz uses #For 1&2 to apply, trade is entitled to claim input tax credit Exempt supply: (certain financial svce; sales&lease of resid ppty) -Supply made in SGP -Output tax is not chargeable -Input tax not recoverable Taxable supply: input tax recoverable(if meet condition) Zerorated (0%) supplies: exports of goods; international services Time of supply : earlier one Payment i.r.f. supply is received or Invoice i.r.f. supply is issued Claim of input GST -GST-registered -Relates to a biz input -Making of taxable supply -GST reporting period concerned n properly charged by the supplier -Relevant documentary evidence -Not blocked by Reg.26 & 27 Blocked input tax: sporting/recreational club fees medical and accident insurance premiums medical expenses employee’s “family benefits” games of chance motor cars

Deemed Source Rules

Special Deduction # Cap on qualifying expenditure ->$150000 CE over every relevant 3 -year period; # Temporary enhancement ->1-year w/p for certain biz i.r.o CE incurred during BP to YA2010 or YA2011 Capital Allowance 1)WDA p.a.=20%xCE incurred #Enhanced WDA p.a=20%x(300% of [total CE incurred or $400K, whichever is lower])

->combined cap:$800K over 2 years for YA2011 n YA2012; $1.2m over 3 years for YA2013-YA2015

2)WTA s19 allow.->IA:20% of CE incurred in the BP->AA:(Total exp.-IA claimed)/Tax life s19A(1)->AA:1/3 CE incurred in the BP s19A(2)->100% of CE incurred in the BP -> computers/prescribed auto equip #Enhanced s19A(2)=(300%of[total CE in BP or

#taxpayer has relevant interest n exp; ≥80% total floor area used by any one for approved trade

>combined cap:$800K over 2 years for $400k, whichever lower])

Tests Shareholdings Test shareholders of & their shareholdings in e co is substantially (≥50%) e same as at two relevant date #b/f CA: 31Dec of YA&1Jan of YA b/f TL & donations: 31Dec of calendar yr &1Jan of YA c/b CA: 1Jan of YA&31Dec of YA c/b Trade loss: 1Jan of calendar yr& 31Dec of YA Ordinary shareholding test (a) ≥75% of no of ordinary shares in one co are beneficially held, (in)directly by the other (b) ≥75% of no of ordinary shares in each of e 2 co are beneficially held, (in)directly, by a 3rd co GST Registration Retrospective test applies quarterly (any quarter) taxable supplies for the current quarter and the last 3 quarters > $1m UNLESS IRAS satisfied that next 4 quarters ≤ $1m) Prospective test applies on any date taxable supplies expected in the next 12 mths > $1m #Exclude sales of capital assets

Con’t 2)Temp enhancement to WTA CE on P&M fr BT to YA2010/11: st 2 yr write-off: 75% of CE in 1 YA; nd 25% of CE in 2 YA. 3) Balancing adjustment BA=TWDV-SP; BC=SP-TWDV 4)IBA (phased out-aft 23/2/2010) IA of 25% of CE incurred in BP to construct/purchase of IB/IS AA of 3% of CE, building/structure in use as IB/IS at end of BP 5)LIA: CE on construction/renov of building/structure; building/ structure on industrial land; promotes intensified use of land; prescribed industry; aft 23/3/2010; approved by EDB IA of 25% of CE incurred in BP AA of 5% provided at end of BP:

YA2011 n YA2012; $1.2m over 3 years for YA2013-YA2015 ->no enhanced allow if purchased for lease or disposed within 1 year of purchase For all sections: P&M in use at end of BP; Double Tax Relief All P&M Applicable; N.Aof S-plate 1)s50 credit code: lower actualcar FT suffered or ST payable on FSI (w SGP effective tax rate SETR) # FT credit pooling: aggr of actual FT or aggr of ST payable; for YA on all elected income,whichever lower

No Balance Adjust when disposed Approved Donations

#250% tax deduction->Fr.1/1/2009

Company Income Tax 1)Corp TR:20%YA05-07 ->18%YA08-09->17%fr YA10 2)Corp Tax Rebata:YA2011-> 20%of tax payable; or$10000,whichever is less ->SME cash grant:5% of total rev (BPYA11); or $5000 whichever is less st 3)NCTR:75% for 1 $10000; 50% for next $290000 Individual Income Tax

rd

1)Interest subsidy:3 pty-> employee->taxable#-> employee;3rdpty->employer-> employee: not taxable if no control/ influence over employer;no substantial shareholding; scheme open to all staff on same terms

2)Insurance premium: beneficiary->employee/dependants -> taxable benefit

3)Club membership fees: entrance fee->corp:not taxable; indiv:taxable; annual sub fee-> taxable on portion of pte use(for both corp and indiv)

to 31/12/2015

4)CPF contribution: excess->

Carry-Back

5)Home leave passage(for non SGP citizen or PRs): taxable

#total cap of $100k #Temp Enhancement(YA2009 or YA2010)->c/b for three preceding Ys/A->Start frearliestyr->total cap$200k

benefit=20%of cost#1 return

Withholding Tax

#17%(or lower treaty rate)->non final on gross payment #15%(interet,commissioni.c.w.l oans,rent)/10%(royalty&knowhow)->final on gross payment>NOT fr trade by NR in SGP; n not effectively connect to any PE of NR in SGP

GST 1)MC=VOS + GST; GST=7%xVOSVOI=CIF + CD;GST=7%xVOI 2)GST Registration: Test->total value of taxable supplies (excl sales of capital assets) for the current quarter and last/next three quarters>1m -> compulsory

taxable on employee

passage peremployee&spouse per year; 2 return passage per child

6)Hotel accommodation: $250 pmpa; $100 pmpc(8-20yr);$50 pmpc(3-7yr);$25 pmpc( 10%taxable emp income (bf housing benefit);AV/ rent paid by employer, whichever is lower. Dire>remuneration; AV/rent paid by employer, whichever is higher. 8)Car Benefit: petrol borne by employee=3/7 x[(car cost–Residual Value)/10]+0.45/km x private km; by employer= 3/7 x[(car cost-Residual Value)/10]+0.55/km x private km 9)ESO:SGX listed Company->Taxable benefit=(last done px on listing datepx paid by employees) x no.of shares; other co-> Taxable benefit= (MV of date of exer-px paid by employee) x no.of shares #NR Indiv->TR: flat 20% OR s13(6): SGP employment ≤60+ short-term(not 3 consecyrs)->exemption OR s40B: SGP employment ≤183 ->flat 15%; or resident basis, whichever e higher liability

PE in s2(1) ITA (non-treaty state) PE: place of: management/branch/office/ factory/ warehouse/workshop/farm or plantation/places of extrac of natural resources/building or work site or construction,installation,assembly projec t person who: carry on supervisory activity/ other person acting on one’s behalf in SGP

NR NOT regarded as trading in SGP: -mere purchasing function -stock warehoused in SGP w/o trading -a representative office confines its activities to promotional/liaison work