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It’s That Time of the Year:
Year-End Tax Considerations for Business Owners in Singapore

As the year comes to a close and the season of giving draws near, business owners tend to do a little “taking”. We take a look back at the financial year that was, take stock of our financial health, take pride in our achievements and take note of areas for improvement.

 All this “taking” especially holds true when it comes to taxes, and since none of us want penalties to rain on our holiday parades, let’s take a look at year-end tax considerations for business owners in Singapore. Who knows—the tax savings you may be able to make just might be the best gift your business receives this year.


Financial Year vs Year of Assessment

 As business owners, it’s up to us to determine the Financial Year or FY of our companies, meaning our Financial Year End (FYE) doesn’t have to be 31st December. It’s a best practice to make sure your FY is made up of a full 365 days, particularly if you have a new start-up (because there are tax exemptions for start-ups).

 Each Year of Assessment or YA, companies are generally taxed for the income they earn in the preceding FY. The IRAS refers to the 12-month period preceding the YA as the “basis period”. For example, if the FYE of your business is every 31st March, the basis period for YA 2018 would be 1st April 2016 to 31st March 2017.

 

Tax Deadlines to Keep in Mind

 Regardless of which calendar months make up our FY’s, there are certain immovable tax deadlines. Corporate taxes must be filed by 30th November if you’re filing hard copies, and 15th December if you’re using e-filing. IRAS has a flowchart to help you keep track of the deadlines which vary according to the FY of your business here.

 Forms to File

 The two IRAS forms you need to file are your Estimated Chargeable Income (ECI), which is due within three months after your FYE, and your Corporate Income Tax Returns (Form C-S or Form C), due on the dates above. On top of Form C, the returns you have to submit include your tax computation statement and your audited or unaudited accounts.

 You’ll also have to file your Annual Return or AR at ACRA within one month of your company’s Annual General Meeting (AGM).

Deductibles and Other Ways To Save

 Some business owners may not be aware of the many forms of tax relief they could be eligible for and take advantage of, which is where taxation advice of a reliable accounting services provider in Singapore becomes essential.

 Such a provider would be able to advise you on all the possible deductions you can make to lessen the total amount you’ll have to pay. These deductions include 

  • Accounting & auditing fees
  • Administrative & advertising expenses
  • Bad debts from trade debtors
  • Bank charges
  • Commissions
  • CPF contributions
  • Directors’ fees
  • Employee Equity-Based Remuneration (EEBR)-related expenses
  • Employee income tax paid by the employer
  • Employment Assistance Payment (EAP)
  • Insurance premiums
  • Intellectual property licences
  • Interest-related expenses
  • Legal fees for trade transactions
  • Medical expenses according to your medical benefits or insurance scheme
  • Medisave contributions
  • Motor vehicle expenses (for commercial vehicles)
  • Office repair and maintenance expenses
  • Phone bills
  • Postage
  • Property tax
  • Rental and reinstatement expenses
  • Research and development
  • Retrenchment payments while your business remains operational
  • Secretarial fees
  • Staff salaries, benefits, and training
  • Statutory and regulatory expenses
  • Stock obsolescence
  • Supplementary Retirement Scheme-related expenses
  • Taxation services fees
  • Trade and revenue-related exchange losses
  • Transportation expenses (for commercial use)
  • Travel
  • Utilities

Take extra care that you do not deduct business expenses that are actually non-deductibles such as:

  • Amortisations
  • Bad debts from non-trade debtors
  • Certificates of entitlement (COE) for motor vehicles
  • Club entrance fees
  • Depreciation
  • Dividend payments from preference shares
  • Donations
  • Fines
  • Fixed assets
  • Income tax (within or outside Singapore)
  • Incurred expenses before start of business
  • Legal fees for non-trade transactions
  • Medical expenses over the amount stipulated by your medical scheme
  • Motor vehicle expenses for S- and RU-plated vehicles
  • Penalties
  • Prepaid expenses not covered by the current basis period
  • Private or non-business-related expenses
  • Renovation or refurbishment
  • Retrenchment payments if your business has permanently closed down
  • Non-trade debt impairment losses
  • Transportation expenses that are non-business-related
  • Voluntary CPF contributions

In performing their year-end review, it’s possible for some business owners to discover that they’ve actually been overpaying taxes—either through miscalculation or IRAS not having made an automatic tax refund where applicable. Some reasons why you may not have  received this automatic refund include 

  • Advance payments you’ve made ahead of a tax assessment
  • An audit or investigation which your business may be undergoing
  • Claims approved after property sales
  • Dissolution of your company
  • Failure to reply to any assessment enquiries
  • General Interbank Recurring Order or GIRO deductions in your provisional instalment plan
  • Instructions from you to the IRAS to keep any tax credit you may have in your account
  • Insufficient information from you to the IRAS that will enable them to give you your refund
  • Non-filing of GST returns
  • Outstanding taxes or penalties, in which case IRAS uses your tax credit to offset them
  • Tax credit of less than SGD15, in which case IRAS saves it for any tax liability you may incur in the future
  • Withholding tax overpayment without any refund claims being filed

To check whether you have any credits or refunds due you, visit myTax Portal or look for them in the Statement of Account that came with your Income Tax Notice of Assessment.

 If your business is GST-registered, do take note of any refunds you might be able to claim for reasons such as

  • Being an importer covered by the Major Exporter Scheme (MES)
  • Cancellation of shipments
  • Declaring errors in value, importer’s name or of the Harmonised System code
  • Double declaration or payment
  • Exemption from GST
  • Personal shipments
  • Re-exporting shipments

You may also use myTax Portal to apply for GST refunds, unless the basis for the refund claim was declaring the wrong importer’s name—in which case, you may send your refund application to Singapore Customs.

 However quickly the year may seem to have gone by, an entire FY is still a long period of time to review and will take extra care and attention when it comes to taxes. Get the help you need before the year is up—get in touch with taxation experts who are also your fellow business owners at U Ventures for your year-end tax requirements, now.

 Sources:

https://www.guidemesingapore.com/business-guides/taxation-and-accounting/corporate-tax/singapore-corporate-tax-guide

https://www.guidemesingapore.com/business-guides/incorporation/introduction-to-incorporation/annual-filings-for-singapore-companies

https://community.intuit.com/articles/1431866-resolve-tax-overpayments-or-underpayments

https://www.customs.gov.sg/businesses/valuation-duties-taxes–fees/refund-of-duties-and-gst

https://www.iras.gov.sg/irashome/Quick-Links/Tax-Refunds/

https://www.iras.gov.sg/irashome/GST/GST-registered-businesses/Paying-GST/-Claiming-GST-refunds/

https://www.iras.gov.sg/irashome/Businesses/Companies/Working-out-Corporate-Income-Taxes/Taxable-and-Non-taxable-Income/

https://www.iras.gov.sg/irashome/Businesses/Companies/Working-out-Corporate-Income-Taxes/Business-Expenses/

https://www.iras.gov.sg/irashome/Businesses/Companies/Filing-Taxes–Form-C-S-Form-C-/Filing-Deadlines-for-Form-C-S/-C/

https://www.smeportal.sg/content/smeportal/en/bizguides/finance/2015/filing-taxes_g.html