AC2301 Principles of Taxation Notes

Defining Heads of Charge Deduction S14(1)(c) repairs vs renewal: Double Tax Relief
S10(1) hea ds of charge: s 14(1)General deduction formula: Rev repairs->rev exp; Improvements->CE 1)FSI received in SGP if:
a)TBPV 1)In e production of taxable income #Cost of replacement item is deductible; -Remitted to/brought into SGP
b) Gains/profits from any employment 2) Whole amt claimed ->not incl. any element of improvement -Settle a debt incurred i.r.f. a trade
d) Dividends, interests 3) An income-producing motive ->thou Rev repair->subsidiary part; Renewal-> biz carried on in SGP
f) Rents, royalties there’s non-income producing advantage& whole; Initial repair: rev repair/cap -Purchase movable property which
g) Gains/profits of income nature not fr a)-f) no income is actually produced. improvement condition: price paid; brought into SGP
#not an activity carried out by e person in 4) Liability to pay exp has crystallized accounting treatment 2)Tax treaty relief: provisions prev
ordinary course of biz->but has the intention to 5) Person claiming->who incurred e exp over domestic tax laws
make a profit from it (Eg. Casual service) 6) Pre-commencement (capital in nature: Exchange Realized Unrealized Unilateral Tax Credit Relief :non-
#NOT cover: capital gains & voluntary payments incorporation exp)& post cessation exp differences treaty country
(present for sb else) not deductible 3)S50 credit code
7) Sufficient nexus btw exp & income- Capital Gain NT Gain NT Loss ND SGP resident/no later than 2 yrs
Six badges of trade:
generating activity transaction Loss ND after end of relevant YA/tax at gro
1) Subject matter of realization: nature of the
8) source-by-source basis amt/source-by-source (from
asset; personal enjoyment; yielding periodic
Revenue Gain T Gain T Loss D YA2012, credit pooling)
income; capital asset; acquired large quantities transaction Loss D
s14(1)(a)-interest expense: principal sum 4)S50C-foreign tax credit pooling:
2) Period of ownership: shorter (within 3 to 6
Condition: Subject to foreign tax;
mths->more likely to be trading used to pduce taxable income->deductible s14Q-Special s14B-further Headline tax in source country
3) Frequency of similar transaction: more s14(1)(d)-bad/doubtful debts: trade debt; ≥15%; Subject to tax in SGP;
frequent/occur in succession over a period of claimant’s biz not ceased; claimant’s Deduction given: none 2 nd deduction/add eligible for FTC under tax
years-> isolated transaction is not preclude from allowed under s14 deduction-> allowed
trading receipt (sales) -> deductible treaty/UCTR
being a trading transaction (prohibit by s15) for same expense
s14(1)(e)-employer contributions: fund Lower of: aggr of actual foreign tax
4) Supplementary work in connection with e
approved local fund, eg CPF, or fund and aggr of SGP tax
asset realized: increase salability/a more s14Q: exp: renovation/refurbishment 5)S13(7A) Exemption :
marketable condition (processing, modification, constituted overseas; employees engaged works: CE on fixtures, fittings& resident/non-resident indiv
improvement, marketing effort like ad)->Trading in production of employer’s income-> installations->not involve structure resident indiv: no partnership
5) Circumstances for realization: unplanned obligatory under CPF Act -> deductible change-> approval by BCA 6)S13(8) Exemption :Income
realization, unconnected w normal biz like s14B: exp: approved trade fairs/
#excess/voluntary contributions are NOT covered Foreign dividends; Profits
emergency,opportunity,forced sale->not trading exhibitions/trade missions/to maintain
deductible of overseas branch of SGP residen
6) Motive: profit seeking motive, seller’s overseas trade office
s14(2)-remuneration paid to employees co; Foreign professional, consultan
intention, a co is more likely to be trading as its
related to employers: restrictions-> anti- & other service income
existence is normally to make profit->document Company Income Tax 7)Conditions: Received in SGP
avoidance measure->reasonableness test Group relief conditions (only current year)
on/after 1.6.2003; Tax suffered in
must pass 1) SGP-incorporated co
Income Statement foreign juri immediately received;
s14(5)-(8) medical exp deduction: 2) Members of the same group: ordinary
Headline tax in foreign jurisdiction
Restricted to 1% of total employee shareholding test + Residual profits &
YA 20xx ≥15% in yr FSI is received in SGP
assets test
s10(1)(a)income remuneration in e basis period 8)DTR for foreign dividends:
3) Same accounting ending day
TradeX profit(adjusted prof less CA for tradeX #allowance paid to employees->exp Tax treaty; Tax treaty extends DTR
4) Both make election for group relief
s10(1)(b)-employment income incurred to remunerate staff engaged in UT≥25% shareholding; Waiver
s10(1)(d)-dividend& interest income
activities relating to production of income Individual Income Tax
s10(1)(f)-rent& royalty income
s10(1)(g)income of employer->deductible 1)Capital receipts-> not taxable: GST
STATUTORY INCOME ->Contractual: agreed btw employer & inducement payment; restrictive Deemed supply:
Less: Trade loss employee; lump-sum per period; for a covenant payment; compensation for 1) Biz goods disposed off for free,
Less: Approved donations specific purpose-> employee not required loss of office; salary for notice of except: Biz gift not >$200, not a
ASSESSABLE INCOME termination->taxable 2)Determine series of gifts to the same person;
to account for how he spent ->generally
Less: Personal reliefs an indiv is resident/non-resident: Industrial/commercial sample
employer can get deductions in FULL Qualitative: normally reside in SGP in PY 2) Biz goods diverted for free to no
Group relief
Unabsorbed items carried back Capital Allowance&Withholding Tax Quantitative: no need to be continuous - biz uses
NCTR > physical presence: ≥183 days; #For 1&2 to apply, trade is entitled
1)b/f & c/b CA: Biz continuity test +
CHARGEABLE INCOME (×TR) employment≥183 days to claim input tax credit
Shareholdings test (co. only)
GROSS TAX PAYABLE ON CI Concessions: continuous Exempt supply: (certain financial
b/f & c/b trade losses & donations:
Less: Foreign tax credits (double tax) 2-yr: straddling across 2 yrs ≥ 183days: svce; sales&lease of resid ppty)
Shareholding test (co only)
Less: Tax rebates-corporate(YA2011) resident for both yrs -Supply made in SGP
2) Payment withheld: s45: interest under
3-yr: straddling across 3 yrs: resident for -Output tax is not chargeable
s12(6); s45A: s12(6) & (7) non-int payment
-indiv(YA08/09/11) 3 yrs -Input tax not recoverable
->Paid by 15th of next mth
Less: Procreation rebates Penalties for non-compliance -> Taxable supply: input tax
NET TAX PAYABLE Date of deemed payment: earliest of-> recoverable(if meet condition) Zer
contract agreement date; Invoice date; rated (0%) supplies: exports of
How renewal/replacement deduction & WTA work? Accrual date; Cash/payment date goods; international services
Time of supply : earlier one
Claim 1st Replacement asset Payment i.r.f. supply is received or
asset Invoice i.r.f. supply is issued
Claim of input GST
S10(1)(a) 1. WTA Full amt Full amt=replacement+improvement Supply is -GST-registered
income Is the made in -Relates to a biz input
removal of Singapore -Making of taxable supply
2. Renewal No tax Only replacement amt, no improvement (in
goods into
deduction benefit absence of renewal deduction, exp can claim -GST reporting period concerned n
or out of
under WTA Does supply Singapore Supply is properly charged by the supplier
of goods ? made -Relevant documentary evidence
involve outside
Claim WTA is more beneficial -Not blocked by Reg.26 & 27
their Singapore
removal Blocked input tax:
Non S10(1)(a) 3. Renewal No tax Only replacement amt, no improvement into or out
Supply is
sporting/recreational club fees
income deduction benefit of Are the medical and accident insurance
made in
Singapore? goods Singapore premiums
physically
located in medical expenses
#Claim renewal deduction is very useful as in the absence of renewal deduction, not any type Supply is employee’s “family benefits”
Singapor made
of tax benefit can obtain as it is non-trade income, e? games of chance
outside
Allow: taxable except subsistence/travelling/conveyance/entertainment allow->not under s15 Singapore motor cars

,Deemed Source Rules Special Deduction Con’t 2)Temp enhancement to WTA Company Income Tax
CE on P&M fr BT to YA2010/11: 1)Corp TR:20%YA05-07
# Ca p on qualifying expenditure 2 yr wri te-off: 75% of CE i n 1st YA; ->18%YA08-09->17%fr YA10
->$150000 CE over every rel evant 25% of CE i n 2nd YA. 2)Corp Ta x Rebata:YA2011->
3 -yea r period; 3) Balancing adjustment 20%of tax payable;
# Temporary enhancement ->1-year BA=TWDV-SP; BC=SP-TWDV or$10000,whichever is less ->SM
w/p for certa in biz i.r.o CE i ncurred 4)IBA (phased out-aft 23/2/2010) cash grant:5% of total rev (BP-
duri ng BP to YA2010 or YA2011 IA of 25% of CE incurred in BP to YA11); or $5000 whichever is les
construct/purchase of IB/IS 3)NCTR:75% for 1st $10000; 50%
Capital Allowance AA of 3% of CE, building/structure for next $290000
in use as IB/IS at end of BP
1)WDA p.a .=20%xCE incurred 5)LIA: CE on construction/renov of Individual Income Tax
#Enha nced WDA p.a=20%x(300% of bui lding/structure; building/ 1)Interest subsidy:3 rdpty->
s tructure on i ndustrial land; employee->taxable#->
[total CE incurred or $400K,
promotes i ntensified use of land; employee;3rdpty->employer->
whichever is lower]) employee: not taxable if no control/
pres cribed industry; a ft 23/3/2010;
->combined cap:$800K over 2 years for a pproved by EDB influence over employer;no
YA2011 n YA2012; $1.2m over 3 years for IA of 25% of CE incurred in BP substantial shareholding; scheme
YA2013-YA2015 open to all staff on same terms
AA of 5% provided at end of BP:
2)WTA #taxpayer has relevant interest n exp; 2)Insurance premium:
≥80% total floor area used by any one beneficiary->employee/dependants
s 19 a l low.->IA:20% of CE incurred in taxable benefit
for approved trade
the BP->AA:(Total exp.-IA No Balance Adjust when disposed 3)Club membership fees:
claimed)/Tax life entrance fee->corp:not taxable;
s 19A(1)->AA:1/3 CE incurred in the Approved Donations indiv:taxable; annual sub fee->
taxable on portion of pte use(for bo
BP corp and indiv)
#250% tax deduction->Fr.1/1/2009
s 19A(2)->100% of CE incurred in the 4)CPF contribution : excess->
to 31/12/2015
BP -> computers/prescri bed a uto taxable on employee
equip #Enha nced 5)Home leave passage(for non
Carry-Back
s 19A(2)=(300%of[total CE in BP or SGP citizen or PRs): taxable
$400k, whichever lower]) - #total cap of $100k benefit=20%of cost#1 return
>combined cap:$800K over 2 years for #Temp Enhancement(YA2009 or passage peremployee&spouse per
year; 2 return passage per child
YA2011 n YA2012; $1.2m over 3 years for YA2010)->c/b for three
YA2013-YA2015 6)Hotel accommodation : $250
->no enhanced allow if purchased for
preceding Ys/A->Start pmpa; $100 pmpc(8-20yr);$50
frearliestyr->total cap$200k pmpc(3-7yr);$25 pmpc(<3yr)+2% ba
lease or disposed within 1 year of
salary during period of stay
purchase
7)Housing benefit: non-dire->
Tests For all sections: P&M in use at end of BP; Withholding Tax
Double Tax Relief 10%taxable emp income (bf housing
All P&M
1)s50 Applicable;
credit N.Aof
code: lower S-plate
actualcar
FT benefit);AV/ rent paid by employer,
Shareholdings Test suffered or ST payable on FSI (w SGP #17%(or lower treaty rate)->non whichever is lower. Dire-
s ha reholders of & their shareholdings effective tax rate SETR) >remuneration; AV/rent paid by
final on gross payment employer, whichever is higher.
i n e co i s substantially (≥50%) e same # FT credit pooling: aggr of actual FT or
aggr of ST payable; for YA on all elected #15%(interet,commissioni.c.w.l 8)Car Benefit: petrol borne by
a s a t two relevant date
income,whichever lower oans,rent)/10%(royalty&know- employee=3/7 x[(car cost–Residual
#b/f CA: 31Dec of YA&1Ja n of YA
Value)/10]+0.45/km x private km; b
b/f TL & donations: 31Dec of ca l endar how)->final on gross payment- employer= 3/7 x[(car cost-Residual
yr &1Ja n of YA >NOT fr trade by NR in SGP; n Value)/10]+0.55/km x private km
c/b CA: 1Ja n of YA&31Dec of YA
not effectively connect to any 9)ESO:SGX listed Company->Taxabl
c/b Trade loss: 1Ja n of ca lendar yr& benefit=(last done px on listing date
31Dec of YA PE of NR in SGP px paid by employees) x no.of share
other co-> Taxable benefit= (MV of
Ordinary shareholding test GST date of exer-px paid by employee) x
(a ) ≥75% of no of ordinary s hares in no.of shares
one co a re beneficially held, (in)directly 1)MC=VOS + GST; GST=7%xVOSVOI=CIF #NR Indiv->TR: flat 20% OR s13(6
by the other + CD;GST=7%xVOI SGP employment ≤60+ short-term(n
(b) ≥75% of no of ordinary s hares i n 2)GST Registration: Test->total value of 3 consecyrs)->exemption OR s40B:
ea ch of e 2 co a re beneficially held, taxable supplies (excl sales of capital SGP employment ≤183 ->flat 15%; o
(i n)directly, by a 3rd co resident basis, whichever e higher
assets) for the current quarter and
liability
last/next three quarters>1m
GST Registration -> compulsory PE in s2(1) ITA (non-treaty state)
Retrospective test PE: place of: management/branch/office/
a pplies quarterly (any quarter) factory/ warehouse/workshop/farm or
ta xa ble supplies for the current quarter plantation/places of extrac of natural
a nd the l ast 3 quarters > $1m resources/building or work site or
construction,installation,assembly projec t
UNLESS IRAS s atisfied that next 4 person who: carry on supervisory activity
qua rters ≤ $1m) other person acting on one’s behalf in SGP
Prospective test NR NOT regarded as trading in SGP:
a pplies on any date -mere purchasing function
ta xa ble supplies expected in the next -stock warehoused in SGP w/o tradin
12 mths > $1m -a representative office confines its
#Exclude sales of capital assets activities to promotional/liaison wor

, Net Profit / Loss Source of Trade Income Special & Further & Enhanced Deductions: Productivity & Innovation Scheme (PIC)
Less: Non-Taxable Income/ Tax-exempt 1. Case Law - Contract Test: Where the trading contract is concluded. However, substance Special Deduction: S14Q Renovation and Refurbishment Combined Expenditure Cap = $1.2m for YA2013-2015, and YA2016-2018.
Less: Non-S10(1)(a) Income over form in that if all negotiated and agreed to in SG but mere formality of signing is outside 1. Capex on renovation/refurbishment of business premises (general electrical & lighting, For SMEs: 1.4m for YA2013-2015, and 1.8m for YA2016-2018
Add: Unrecorded Taxable Income SG, then contract is in effect concluded in SG. If trading activity concerned entails more than hot/cold water & gas system, kitchen & sanitary fittings, doors, gates and roller shutters, fixed Prescribed IT and Automation Equipment (PIC)
Add: Non-deductible expenses (e.g. Donation, Interest on loan to buy shares of SG R Coy) merely buying and reselling, contract test will not provide a conclusive finding. partitions, wall coverings, floorings, false ceilings and cornices, ornamental features or deco > 100% Base Allowance + 300% Enhanced Allowance (EA)
Add: Expenses on Non-S10(1)(a) Income 2. Case Law - Operations Test: Where the substantive requirements or obligations under the that is not fine art (mirrors, drawings, pictures, decorative columns), canopies or awnings, NO EA if Prescribed Asset purchased for purpose of leasing out/disposed within 1 yr of
Less: Unrecorded Deductible Expenses trading contract are performed or discharged. Test is of particular relevance where trading windows including grilles etc, fitting rooms in retail outlets), excludes structural changes, purchase
Less: Special deductions (S14Q: ÷ 3 , $300k cap) activity involves more than acts of buying and selling (eg performance of services). Where only designer/professional fees, antiques/ works of fine art. S19B Writing Down Allowances (WDA) (PIC)
Less: Further deductions (S14B) operations in state is preparatory/auxiliary character (eg purchase raw materials, storage of 2. Cap: $300,000 CE over every fixed relevant 3 year period. If never claim in YA where costs CE incurred by company/partnership on acquiring Intellectual Property Rights (Patented,
Less: Enhanced deductions (S14R) goods, advertising, collection/supply of info etc), there is no taxable trade source in that state. incurred, cannot claim for subsequent yrs. Claim in 1st year, cannot defer 2nd and 3rd year. Royalty) for purposes of trade, business or profession.
Add: BC (restricted to cap of IA and AA previously allowed) 3. PE: Person meets/exceeds “minimum level of presence”? Yes  Trading in SG (SSI). No  Further Deduction: S14B Approved trade fairs/exhibitions or trade missions or to maintain [(100% Base Allowance + 300% Enhanced Allowance) / 5 years] = WDA per annum, can’t defer.
= Adjusted Profit / Loss Trading with SG (FSI). Notion of PE is to define the min. level of presence. overseas trade office. 100% additional deduction. Industrial Building Allowances (IBA) - For Capex incurred before 23.2.2010
Less: Unabsorbed CA b/f S2(1) ITA: PE means a fixed place where a biz is wholly or partly carried on including place of Enhanced Deduction: S14R Qualifying Training Expenditure (In house + External) (PIC) Construction or purchase of an IB/IS for use in qualifying trade
Less: Capital Allowances (Includes BA) management, branch, office, factory, warehouse, workshop, farm or plantation, mine, oil well, > 100% Base Deduction + 300% Enhanced Allowance (EA) IA = 25% x CE; AA = 3% of CE, provided IB/IS is in use as an IB/IS at end of BP, can’t defer.
= Net Trade Income quarry or other place of extraction of natural resources, building or worksite or a construction, S15(1) Prohibitions Balancing adjustment (BA/BC): Relevant interest in IB/IS is sold (lessor) / Leasehold relevant
Add: S10(1)(b)-(g) Income installation or assembly project. Person shall be deemed to have PE in SG if that person (i) [a] private or domestic expenses interest comes to end (lessee) / IB/IS is demolished, destroyed or ceases to be used altogether
Less: S10(1)(b)-(g) Expenses (Exp>income, put income amt, last line put $2000 not deductible) carries on supervisory activities in connection with a building or work site or a construction, [b] expenses not wholly or exclusively incurred in the production of income Land Intensification Allowance (LIA)
Less: Capital Allowances (If Applicable) installation or assembly project; or (ii) has another person acting on that person’s behalf in SG [c] capital withdrawn or any sum employed or intended to be employed as capital & [d] any - LIA claim on qualifying CE (feasibility study on layout, design fees, preparing plans to obtain
= Statutory Income who – (A) has and habitually exercises an authority to conclude contracts; (B) maintains a capital employed in improvements  Capital expenditures (enduring benefit + sufficient approval, piling, construction & renovation/extension, demolition of existing, legal & other
Less: Unabsorbed TL b/f, current year Trade Loss – Against Trade Income / Non-trade Income stock of goods or merchandise for the purpose of delivery on behalf of that person; or (C) durability)  Claim CA professional fees, stamp duty) incurred for construction, renovation or extension of a
Less: Unabsorbed D b/f, Appr. Donation (Cash, approved IPC & get nothing back, max 6yrs c/f) habitually secures orders, wholly or almost wholly for that person or for such other [e] sums recoverable under insurance or any indemnity contract qualifying building or structure (on industrial/airport/port land, meets gross plot ratio,
= Assessable Income enterprises as are controlled by that person. IRAS Clarifications: NR will not be regarded as [f] rent of or repairs to premises not used for the purpose of producing the income minimum 10% increment in GPR, carrying out qualifying activities as its principal activity).
Less: Unabsorbed CA/TL/D transferred (Group Relief) trading in SG just because it has: [1] office in SG that only purchase goods [2] mere [g] income tax in SG or elsewhere - Capex incurred on/after 23.2.2010; need approval by EDB -> Approved must claim under LIA.
Less: Unabsorbed items c/b (CA/TL) warehousing of goods in SG [3] representative office in SG purely for promotional/liaison work [h] GST payable on inputs / chargeable on outputs - IA = 25% x CE; AA = 5% of CE provided that at the end of BP; Can’t defer, BA/BC N.A.
Less: Partial Exemption (75%*10k, 50%*290k, cap $152,500) 4. S12(1) Deemed-Source Provision – NR carries on trade/biz of which only part of the [k] Motor cars expenses (private cars and rented cars + S-plate and SZ-plate car expenses) > Taxpayer has relevant interest (owner/lessee) in the building/structure
= Chargeable Income operations is carried on in SG, gains/profits of trade/biz shall be deemed to be derived from Other Expenses > At least 80% of total floor area used by any one person carrying out qualifying activity
Tax @ 17% SG to the extent to which such gains/profits are not directly attributable to that part of D (revenue nature) ND (capital nature) (manufacturing/processing in specified industries: pharmaceutical, petro, semiconductors &
Less: Foreign tax credits (Relief from double taxation, Lower of ST and FT) operations carried on outside SG (to the extent only in SG). 1. Annual Subscriptions fees 1. Entrance/Joining Fees electronic products, aerospace, marine, machinery & systems, logistics etc.)
Less: Tax sparing relief 1. PE: Treaty. Treaty Art 5(6) – No PE if Independent Agent – Act in ordinary course of biz + 2. Legal/Professional fees (trade & 2. Legal/Professional fees (non-trade or - Although cannot claim LIA, co can assess breakdown of cost to determine whether cost can
Less: Corporate Tax Rebate (50%, cap at $20k) Legal and Economic Independence: revenue – closely connected with income capital – connection with any asset or right be claimed as plant by performing 3 plant test. If test passed, can claim WTA. Co can also
= NET TAX PAYPABLE 1. Extent of control by the principal over the manner in which the agent conducts the work on producing activity – accounts, audit, to do with enduring nature – legal form of determine if cost affect structure of building or not. If does not affect, can claim S14Q.
Unabsorbed (YE14) Approved Donation c/f the principal’s behalf? Independent Agent  Accountable for results of work only, not how income tax return, corp. secretarial svc, biz, change of biz name, brand name, S24 Election (Transfer of P/M or IB/IS between related parties)
Unabsorbed (YE15) Approved Donation c/f agent conducts the work. Possess skills and knowhow which the principal places reliance. trade-related mgmt/consultancy share capital, M&A, biz merger,  Transfer between related parties
Total Unabsorbed Approved Donation c/f 2. Agent has to bear entrepreneurial risk of the activities undertaken on behalf of principal? svcs/contract, valuation of stock, restructuring, raising permanent financing,  Asset used for producing taxable income before & after transfer
INCOME Independent Agent  Bears the risk and receives rewards associated. recovery of trade debts, renewal of acquisition, variation or disposal/transfer  Asset not previously leased by seller to buyer
Corporate Tax Residence in Singapore: Control & Management in SG (exercise of superior 3. Number of principal whom the agent acts for over the duration of his biz. This factor shows leases/license/trademark, terminating of assets or rights of an enduring nature,  Transfer is not tax-motivated / for bona fide commercial reasons.
directing authority i.e. BOD meetings held in SG = strategic meetings ≠ day to day operations) the extent of economic reliance the agent has on the principal. Dependent Agent  Acts or replacing onerous contracts, terminating or replacing capital assets, o S24 Elected: Seller no BC or BA because TWDV = deemed Sales Proceed (SP). Buyer cost =
S10 (1) Charging Provision: “Income Tax shall, subject to the provisions of this Act, be payable wholly or almost wholly for the enterprise only, this is indicative but not conclusive in itself. defending or preserving existing capital valuation of capital assets, recovery of deemed SP and continues to claim CA.
at the rate or rates specified hereinafter for each YA upon the income of any person (1) EXEMPTIONS assets or trade rights, disputes/legal non-trade debts, tax appeals, defending o No S24 Elected: Seller has BC/BA because TWDV ≠ SP. Buyer cost = SP and claim CA afresh.
accruing in or derived from SG (SSI – Performance of all work and legally entitled to receive 1. Exemption of POSB interest income suits relating to trading contracts) criminal litigation) o When will you elect S24? Long term same but whether you want immediate anot – Time
income) or (2) received in SG from outside SG (FSI) in respect of…” gains/profits 2. Exemption of interest income from deposit in bank in SG derived by NR individual or by NR 3. Renewal of leases & licenses 3. Penalties/Fines value of money. If TWDV < SP -> Seller motivated to elect S24, buyer making loss, don’t
from [a] Trade, Business, Profession, Vocation [b] Employment [d] Dividend (date of person (other than individual) who does not have PE in SG & does not carry on biz in SG 4. Theft (loss of R nature, thru 4. PMT for new leases & licenses really care about reduced CA or have a lot of CA.
declaration), Interest (due & payable) or discounts [e] pensions, charge or annuity (all is date 3. Exemption of interest income by individual from standard savings, current or FD a/c with negligence/dishonesty of employee & 5. PMT for liquidation of biz S14Q R&R vs S19/S19A plant CA: Mutually Exclusive | S14Q for non-plants | S19/19A is for
of receipt) [f] Rent (Immovable/Movable Tangible Property – due & payable), Royalty bank or finance coy in SG (DBS/OCBC/UOB) incidental to biz ops) 6. Transactions of a partnership plants | R&R costs do not qualify for CA unless form part of building qualifying for IBA/LIA.
(Intangible/Intellectual Property – due & payable), premiums & profits from use of property 4. Exemption of CPF withdrawals and income from investing CPF funds 5. Corporate Country Club Membership: 7. Theft (loss thru misappropriatn by person S14Q R&R vs S14(1)(c) Renewal: If qualify for both, can choose. S14(1)(c) can be claimed on
(not disposal/assignment of property) [g] Other income of an income nature (not capital gains 5. Dividends from SG R Coy | Eg. SG R Coy interest from Standard Chartered Bank is taxed Annual Fee / Staff Country Club who ctrl biz ops) cost previously granted S14Q  Diff costs relating to same thing.
+ receipts that are truly voluntary payments – give parents $ or coy give deceased family $) DEDUCTIONS Membership: Entrance & Annual Fee 8. Dep’n & loss on write-off (A/C losses) S14(1)(c): No improvements, instantaneous claim, no cap.
Exceptions: S14(1) General Deduction Formula 6. Trade insurance premium every year 9. Corporate Country Club Membership: S14Q: Improvements (must have improvement element), instantaneous claim, 300k cap.
S13(7A) – All FSI received in SG by R individual on/after 1.1.2004 tax exempt, except if “For the purpose of ascertaining the income of any person for any period from any source (income earning assets including capital Entrance Fee S19/19A Plant CA vs S14(1)(c) Renewal: If asset qualify for both, can choose but if S19/19A
received through partnership in SG chargeable with tax under this Act, there shall be deducted all outgoings and expenses wholly assets etc, life of/beneficiary employee) 10. Domestic/Private insurance premium already applied on it previously, cannot apply S14(1)(c). S14(1)(c) can claim all now and against
S13(7A) – All FSI received in SG by NR individual exempt from tax and exclusively incurred during that period by that person in the production of the income…” 7. Property tax (D for rental income) (life of owner of sole proprietor/non- rental income etc, CA can’t.
Concession – Exempt FSI received in SG for NR Coy not carrying on biz in SG 1. Chargeable with tax: Only exp incurred in the pdn of taxable income (except IRAS 9-1 8. Interest (Minimum 1 day in use) salaried partner) TAXATION OF NON-RESIDENTS
S13(8) to (11) ITA – FSI received in SG by R persons exempt: Relief from Double Taxation Topic Liberalised Tax Treatment: Allowable exp incurred to produce FSI not rcvd in SG can be c/f & CAPITAL ALLOWANCES ① S12(6) & S12(7) Deemed Source Rules (IF SELL – CAPITAL OR INCOME PMA TEST)
Profit Making Apparatus (PMA): Asset retained and used in the income generation process as deductible against FSI when FSI rcvd in SG in later yrs); Source by source basis of deduction Plant & Machinery: Apparatus with which a person carries on TBP, as opposed to premises S12(6): Interest, fees and commissions relating to loans; S12(7)(a): Royalty (use of or right to
a means to produce income 2. Exclusively: Income-producing motive regardless of end result from which the TBPV is carried on. To qualify as plant: use knowhow/usually register); (7)(b)(i): Know-how payments (sharing knowledge); (7)(b)(ii):
Revenue/Income: Circulating capital/fruit (sold to produce income)  T 3. Incurred: Liability to pay crystallised [1] Must not be stock-in-trade, i.e. inventory Show-how payments, technical assistance, service fees; (7)(c): Management Fee; (7)(d): Rent
Capital Gains: Fixed capital/tree (means to produce income)  NT 4: Wholly: Whole amt claimed must be in the production of income. Apportionment allowed. [2] “Business use” test: perform active function in biz from movable property
PMA Test: Income or Capital | BOT: S10(1)(a) or non-S10(1)(a) 5. Production of the income: Sufficient Nexus vs Wider Nexus (view biz as a whole set of [3] “Business premises” test: must not function solely as part of premises/building: S12(6) & (7) income deemed source in SG if
Receipts from cancellation of biz contracts: Asset is the contract. Loss of trading rights operations directed towards producing income / purpose to conduct biz on profitable basis  [a] Look at overall, not numbers: [1] taxpayer is SG R or PE (except payment is in respect of biz carried on outside SG through a
amounted to loss of PMA? How important was the contract? What impact on the biz, affect incurred in production of income). Expenses incurred before the source of relevant income - Exact operation role of the asset? Apparatus or house the biz? Dual role, depends on extent. PE outside SG or any interest in respect of immovable property outside SG – S12(6) only) or
the way you carry biz? Fundamental importance to trader that they lost PMA/cripple the biz? has commenced or after the sources has ceased  ND - Physical nature and characteristics of asset? Resemble plant or conventional building based [2] payment is deductible against SSI or
If just ordinary contract, just loss of future biz with this person, does not affect whole S14(1) Deductions Specifically Allowed on size, shape, material which it was constructed. [3] in the case of 12(6), the loan proceeds are brought into or used in SG
structure of PMA, income nature. Compensation quantified on what basis does not matter. (a) Interest – Principal sum must be used for purpose to produce taxable income - Intention concerning degree of permanence in which asset is to remain at particular location. ② S12(6A),(7A): Following types of S12(6) or (7) payments will not be deemed sourced in SG:
Receipts from imparting knowhow: Asset is the knowhow. 1. Impact & disposal of KH, (b) Rent payable of land/building occupied for purpose of acquiring e income. Apportion  [b] To determine whether asset constitutes part of premises/building: degree of permanence [1] Loan commission/fee, where service performed entirely outside SG
whether and to what extent, the value of the KH to the trader had diminished as a result of (c) S14(1)(c) Repairs & Renewals (lump sum 100% deduction) with which the item is attached to premises, degree to which a visually separate entity is [2] Loan guarantee fee
disposal? If lost a significant market share or open market (have plans to go into that area)  o Repairs: Replacement of a subsidiary part of asset to restore to original condition  D retained, incompleteness of premises without improvement (completeness test), and extent [3] Show-how payment, assistance or service performed entirely outside SG
loss of PMA/Capital. If trader continues to retain it in undiminished form for future use  - Revenue repairs: revenue expense | Capital Improvements: Capex  S14Q or S19A to which item is likely to be replaced in relatively short period of time. [4] Mgmt fee, svc performed entirely outside SG
Income. 2. If KH sells like a commodity and commercially exploit KH, it is extension of existing - Initial repairs: [1] Condition of asset purchased: Still commercially usable before repairs that [c] Plant like structures: Some premises may qualify as plant if perform active operation if all relevant conditions met:
trade. The frequency of such contracts entered to may be indicative. 3. The nature of the KH is just bring asset back to its original state, can operate w/o it  Revenue. Make lots of repairs functions eg dry docks. Purpose built: The fact it is purpose built does not cause it to lose its [1] provider must be NR, if provider not indiv, must not be incorp. in SG
disposed. Fundamental character with certain degree of permanence in value, or is it merely or replace/reconstruct/alter leading to enduring benefits that it is put to produce income  character as a building eg school. Setting: Settings of biz where plant or premise depends on [2] provider doesn’t carry on biz & does not have PE in SG or if have, perf of svc must not be
knowledge or information of a transient and changing character, akin to a trading asset? Capital. [2] Price paid compared to price payable if in a commercially usable condition: If price function of item and nature of biz. If asset is an installation system, piece meal approach thru or effectively connected with biz or PE in SG
Income from Trade, Business, Profession, Vocation (TBPV) – S10(1)(a) not substantially low (eg repair only $8k indicating price high and commercially usable)  (individual components that service diff purpose) vs entity approach (fully integrated whole). [3] recipient of svc is a SG R or PE in SG
6 Badges of Trade: Determine whether sale of asset is trading -> Yes -> T under S(10)(1)(a) Revenue. [3] Generally accepted accounting treatment (indicative factor only) Qualifying Cost: Capex incurred on P/M (purchase price & taxes, delivery, installation & other  NO WHT, no need see treaty (if any) as treaty will not make it worse.
Only S10(1)(a) deductions can be set off against non-S(10)(1)(a) income for the same YA; o Renewals: Replacement of the whole/ substantially the whole of the asset expenses related to installation, re-siting P&M, capital improvements to existing P&M, Withholding Tax – S45 & S45A
qualify for CA; transferred under group relief, carry back, carry forward - Renewal… employed [in acquiring the income] exchange losses directly linked to purchase contract (FOREX loss on loan to buy machine can’t, ③ General Rule – 17% Non-Final Tax (Applies to GOT PE GOT TAX as well) (Claim tax refund,
1. Subject Matter of Sale: Can asset that was sold be held for investment purposes or - Renewal of P&M must not be claimed under S19 or S19A CA only FOREX loss to buy machine), for motor vehicles – COE, registration fee, ARF, and any calculate like resident, D exp only etc)
personal enjoyment instead of for trading (e.g. shares, paintings & jewelry, raw materials & - Must not amount to cost of reconstructing or rebuilding of any other necessary cost to bring the P/M to location for use, exc interest & financing) 17% (or lower in treaty) Non-Final WHT on Gross Payment: Show-how and management fees
spare parts)? Purchased large qty (toilet roll case)? Normally held to produce income premise/buildings/structures/works of permanent nature (eg. toilet is not permanent) S19 Initial Allowance (IA): 20% of CE incurred in the BP, Can’t defer Exceptions
(produce rental income or traded in market)? Can’t really conclude here. - Cost of original item is capital expenditure. Cost of replacement item is deductible to the S19 Annual Allowance (AA): [1] 10% (or lower in treaty) Final WHT on Gross Payment: Royalties and Know-how payments
2. Period of Ownership: Short -> Likely to indicate trading extent it does not include any element attributable to improvement. 80% divided by no. of yrs of tax life per 6 th schedule, Can defer [2] 15% (or lower in treaty) Final WHT on Gross Payment: Interest, commission fee etc in
3. Frequency of Similar Transactions: High -> Indicate trading (Does not mean isolated (d) Bad/Doubtful Debts: Fulfil all then D: Trade debt, claimant’s biz not ceased, included as Asset must be in use at the end of basis period connection with loan/indebtedness, and Rent for movable property
transaction is not trading - Toilet Roll Case) trading receipt of claimant and debt irrecoverable, specific and can be reasonably estimated. S19A Annual Allowances (AA) – From YA2009 Conditions for Exceptions to Apply
4. Supplementary Work Done: If yes (manufacturing, processing, improvement, D  Recovered  Taxable. Vice versa. S19A(1): Assets qualify for 3 year write-off, must be in use last day of BP (yes if temporary [1] Income must not be derived by any TBPV (eg branch) carried on by the NR in SG AND
modification, marketing) to increase saleability -> Likely to be trading (If did so but no (e) Pension/Provident Funds (Employers Contribution e.g. CPF) stop, if permanent stop BA/BC applies), Can defer [2] Income must not be effectively connected with any SG PE of NR person
substantial modification/improvement/marketing done -> Any rational person will take o Approved local fund or fund constituted overseas S19A(2): Only certain assets (Computer or Prescribed Automation Equipment) qualify for 1- If any do not apply  17% Non-Final Tax
reasonable measure to maximize value of assets to obtain a higher selling price -> Should o Employees engaged in production of employer’s income year (100%) write-off, can defer but must defer together with PIC ③ Treaty – Definition Art 11(3)/12(2), deemed sourced in SG & subject to WHT Art
not be seen as evidence of trading motive & do not change the capital nature of assets) o Obligatory contribution (under constitution of fund or empl. contract). If give more  ND. S19A(10A-10C) – 100% CA for P&M no more than $5,000 per item (Cap $30,000 per YA) 11(5)/12(4), WHT rate Art 11(2)/12(1). NO PE, NO TAX Art 7(1). Choose better treatment.
5. Circumstances responsible for sale: Unplanned realization, unconnected with normal o Retrenchment payments: Contractual  D regardless of biz continuity. Ex-gratia If exceeded, CA may be claimed for remaining assets under S19 or S19A(1) in the same year. ④ Payer Need Not WHT if the S12(6)&(7) payment to the NR is:
course of trading e.g. exigencies, opportunities, forced sale -> Less likely to be trading (voluntary)  ND upon cessation of biz. In subsequent years, immediate write-off of the TWDV of these assets, capped at $30,000. [1] Subject to 0% WHT under tax treaty or [2] Exempt/NT under a tax incentive or concession
6. Motive: Short term profit seeking motive -> More likely to be trading. Inferred from Reimbursement: Exp retains original character (eg rental exp for employee still staff cost – D) S20 Balancing Adjustments – Balancing Allowance/Charge (BA/BC) or [3] Made to SG branch of NR coy (payment obligations arising on/after 21.02.14)
circumstances around. Expectation that value  or sell at profit ≠ Profit seeking motive. Allowances: Generally D in full (staff cost), employee not required to account for spending. P&M ceases to belong to trader / P&M permanently ceases to be used for trade / Trade is ⑤ Payment: By 15th of 2nd month (earlier of date of: actual payment, liability to pay as per
7. Other Indicators: Method of Finance – ST Loan -> More like trade, Internal Funds -> Less Exchange Differences: If capital transaction (realised or unrealised)  Gain NT, Loss ND. permanently discontinued. agreement/contract or invoice, dealt with on behalf of the NR), non-compliance: 5% penalty.
like trade. Period Income – No feasibility study on it -> More like trade. If revenue transaction (realised or unrealised-concession)  Gain T, Loss D. TWDV > SP (BA) , TWDV < SP (BC - BC is restricted to total CA(total IA and AA) claimed)