Income Tax Programme Level 1

(Topics 1 to 3)

Trainer:
Mr Andy Choo

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1 Arrangement and Administration

of Income Tax Act &
Definition of Terms

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Overview

▪ Interpreting the Act

▪ Arrangement of Sections of the Income Tax Act

▪ Administration of the Act

▪ Definition of Terms

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Interpreting the Act

Besides the Income Tax Act 1947, we can also use these other
materials as below:

• Interpretation Act 1965 allows reference to materials not

forming part of the written law to ascertain its meaning.
(example, explanatory statement to a bill, Minister’s speech)

• Case Laws established from Courts’ decisions.

• IRAS e-Tax guides.

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 Interpretation Act 1965
• Sets out the definitions of certain terms and expressions
used in written law and provides the rules for certain
general matters.

• Section 9A was inserted into the Interpretation Act so

that Courts can also refer to materials not forming part of
the written law.

Meaning of statutory provision for the

following purposes –
a) To confirm the meaning of a provision in its ordinary
meaning considering the context and the purpose
underlying the written law; or

b) To ascertain the meaning of a provision when it is

ambiguous or obscure or when the ordinary meaning leads
to a result that is manifestly absurd or unreasonable.

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Case Laws

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Case Laws
▪ Case laws of other
countries
E.g. ABC vs DEF

Singapore

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IRAS e-Tax Guides

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Interpreting the Act

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Interpreting the Act

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Arrangement of the Sections of the Income Tax Act

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Arrangement of the Sections of the Income Tax Act

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Administration of Income Tax Act
Powers of Comptroller of Income Tax includes:

▪ Require taxpayers to file tax returns [Section 62]

▪ Enter premises to inspect taxpayers’ records

[Section 65]

▪ Issue Notice of Assessment [Section 72] and collect

the tax charged [Section 85]

▪ Require taxpayers to keep records [Section 67]

▪ Prevent a taxpayer who does not pay up his taxes

from leaving Singapore [Section 86]

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Basis of Assessment
Income Tax is being assessed on a preceding
year basis.

Year of Assessment (YA) refers to the tax year

in which your income is calculated and charged.
• For example, YA 2024 refers to 01 Jan
2024 to 31 Dec 2024.

Basis period refers to the period of income

relevant to the YA.
• E.g. the basis period for YA 2024 is 1 Jan
2023 to 31 Dec 2023

In assessing the gains or profits from trade,

business, profession or vocation, the basis
period would be the accounting period ending
on any date in the preceding year.
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Statutory Income for the Year of Assessment

Statutory Income for the Year of Assessment

YA 2024 YA 2024 : Basis Period
• Income for the accounting Trade
• 01 Oct 2022 to
Trade year ended 30 Sept 2023 30 Sept 2023

• Income for the year ended Employment

• 01 Jan 2023 to
Employment 31 Dec 2023 31 Dec 2023

• Income for the year ended • 01 Jan 2023 to

Rent Rent
31 Dec 2023 31 Dec 2023

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Basis of Assessment (Question)

Mr William, a British, was employed by Zoom Zoom Singapore Pte Ltd

from 1 Apr 2022 to 31 Mar 2023.

What would be the relevant Years of Assessment and the basis period?

Answer:
1st Year of Assessment _______ Basis Period _________________

2nd Year of Assessment _______ Basis Period ________________

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Basis of Assessment (Quiz 1.3)

For Trade with accounting period ending on 30 Sep 2023, the basis period
to assess the trade income for YA 2024 is from ____ to _____

Please circle your answer

❑ 1 Jan 2023 to 31 Dec 2023

❑ 1 Jan 2022 to 31 Dec 2022

❑ 1 Oct 2022 to 30 Sep 2023

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Statutory /Assessable /Chargeable Income

Applicable only
to Tax
Residents
Different rate
for Resident
and Non
Resident
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Basis of Assessment (Quiz 1.3)

Chargeable Income is Assessable Income less Personal Relief and

Rebates.

Please circle your answer

❑ Yes

❑ No

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Persons

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Residence status

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Residence status

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Test of residence

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Test of residence

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 Resident (an individual)

Reside in Singapore and

absences from S’pore
must be temporary and
reasonable

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Resident (an individual)

Reside in Singapore and

absences from S’pore
must be temporary and
reasonable

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Administrative concessions

Importance of residence >

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3-year administrative concession

75 days

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2-year admin concession

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Resident Status (Question)

Mr William, a British, was employed by Zoom Zoom Singapore Pte Ltd

from 1 Apr 2022 to 31 Mar 2023.

What would be his resident status the relevant Years of Assessment?

Answer:
Year of Assessment 2023 Basis Period: 1.4.2022 – 31.12.2022

Resident Status: __________________________

Resident

Year of Assessment 2024 Basis Period: 1.1.2023 – 31.3.2023

Resident Status: __________________________ Resident

2 year Administrative concession applies

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Resident Status (Question)

Ms Kate, wife of Mr William, followed her husband to Singapore since 15

Mar 2021. She started working from 1 Jan 2023 and had to cease her
employment on 31 Mar 2023 to return to her home country.

What would be her resident status for Year of Assessment 2024?

Answer:

Year of Assessment 2024 Basis Period: 1.1.2023 – 31.3.2023

Non- Resident
Resident Status: __________________________

2 year Administrative concession not applicable as Ms Kate

did not work in Singapore for a continuous period straddling
2 calendar years.
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Resident Status (Quiz 1.3)

John, a Singapore Citizen, was seconded to Hong Kong for the whole of
the year 2023. John can still be assessed as Singapore tax resident for
Year of Assessment 2024.

Please circle the correct answer

❑ True. He meets the qualitative test as he is a Singapore Citizen and

his absence is temporary

❑ False. He has to be assessed as non-tax resident as physical

presence in Singapore is less than 183 days

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Resident Status (Quiz 1.3)

A foreign employee started work on 1 Nov 2023. What are the possible
cessation date(s) for him to be assessed as tax resident for the Year of
Assessment 2024?

Please circle the correct answer

❑ 31 Mar 2024

❑ 30 Nov 2024

❑ 31 Mar 2025

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Importance of residence status

Resident Non-Resident

Employment income from Taxable Exempt [Section 13(6)]

short-term employment of 60 This exemption does not apply
days or less to non-resident directors and
non-resident public
entertainers [Section 13(7)],
and non-resident
professionals.
Income arising from sources Exempt with effect from Exempt.
outside Singapore and 1.1.2004 if the tax exemption Previously under Section
received in Singapore is beneficial to the resident 13(5). With effect from 2004,
[Section 13(7A)(b)] exempted under Section
13(7A)(a).
NB: Foreign-sourced income
received in Singapore through
partnerships remains taxable.
Personal reliefs and tax Applicable [Section 39 & 42A]. Not applicable
rebates

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 Importance of residence status
Resident Non-Resident
Tax rate Progressive rates Taxed at a flat rate of 22% up to YA 2023 [Section 43].
apply to residents
From YA2024, the income tax rate for non-resident
[Section 42]
individuals will be raised from 22% to 24%.

Except for

(a) Non-resident individuals who qualify for the

concessionary rate under Section 40B where the
employment income is taxed at 15%, or at resident
rates after the deduction of reliefs and allowances,
whichever is the higher.

(b) Non-resident individuals whose gross income is

accrued in or derived from Singapore on or after
3.5.2002 from any profession or vocation are subject to
tax at 15% [Section 43(4)].
Double Taxation Agreements Applicable
concluded by Singapore with
Not applicable
other countries

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Importance of residence status

• Other income:
YA 2017 to YA2023
- Flat rate of 22%

YA 2024 onwards
- Flat rate of 24%
YA2024

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Tax Rates for Resident Individual

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Summary of Residence Status

Two tests to determine resident status:

a.Qualitative test (based on quality of stay)

b.Quantitative test (based on duration of stay/employment)

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Sample of Notice of Assessment

Is this Notice of Assessment meant for a Resident or Non Quick Poll 1

Resident individual?
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Questions?

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 2 Scope of Charge
and
General Deduction
Formula

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Outline

▪ Scope of Charge

▪ General Deduction Formula

▪ Deductions

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Income Chargeable to Tax

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What is income

▪ Tax is charged on income set out under Section 10

Section
▪ Income is not defined in the Act
▪ Sections 10(1)(a) to 10(1)(g) – income is taxable only if
it falls within one of these headings, else not taxable
10
S10(1)(a) S10(1)(b) S10(1)(d) S10(1)(e) S10(1)(f) S10(1)(g)
Gains/ Gains/ profits Dividends, Pension, Rents, Other
profits from from any interest or charge or royalties, gains/
trade, employment discounts annuity premiums profits of
business, and any income
profession other profits nature
or arising from
vocation property Catch
Badges all sub-
S10(1)(c) was deleted section
of trade
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Capital vs Revenue Receipt

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Capital vs Revenue Receipt

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When is income derived?

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Where is income derived from

Foreign-sourced income received in S’pore by a resident

individual is not taxable if remitted on or after 1 Jan 2004
(exclude income received through partnership)

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Where is income derived from

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Where is income derived from

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Importance of Determining the
Source of Income

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General Deduction Formula

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Section 14 – Deductions Allowed

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Section 14(1) – Deductions Allowed

Contributions
made by
employers

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Section 15 - Prohibitions
Deductions not allowed - Section15 (1)

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Section 15 - Prohibitions
Deductions not allowed - Section15 (1)

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Deductions

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Deductions

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Deductions

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Deductions

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Deductions

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Deductions

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Deductions

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Reimbursement (Quiz)

Any reimbursement made by employer to employee is not taxable in the

hand of the employee.

Please circle the correct answer

❑ True, there is no benefits because employee incurs costs on behalf of

his employer, and employer pays back the actual amount incurred.

❑ False, all payments made by employer to employee is taxable.

❑ False, reimbursement of private expenses is taxable.

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 Questions ?

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Breakout room discussion

Discuss and attempt

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Are these expenses deductible?

Description Deductible? Reasons?

Cost of travelling from home to

work
Income tax paid

Expenditure incurred in obtaining

an employment

Interest paid on loan to

purchase property that is not
rented out
Expenditure on entertaining
clients
Entrance fees paid to Institute of
Singapore Chartered
Accountants
Subscription fees paid to Institute
of Singapore Chartered
Accountants
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Breakout room discussion 1

(10 mins)

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Are these expenses deductible? (Breakout Room)

Description Deductible? Reasons?

Cost of travelling from home to No Not incurred in the course of

work duties
Income tax paid No Prohibited under S15(1)(g)

Expenditure incurred in No Capital expenditure

obtaining an employment
Interest paid on loan to No Property is not income
purchase property that is not producing
rented out
Expenditure on entertaining Yes Wholly and exclusively incurred
clients in the production of income
Entrance fees paid to Institute No Capital expenditure
of Singapore Chartered
Accountants
Subscription fees paid to Yes Need to retain professional
Institute of Singapore Chartered qualification to derive income
Accountants
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Self-Practice Question 1.1

Mr Alan Joseph, a German nation, was seconded to the Singapore branch office by the parent company for 2
years from 1 Dec 2022. His wife and 2 children relocated with him, and they arrived in Singapore on 28 Nov
2022.

As a regional manager, his job scope also includes managing operations in the Asia Pacific region, and he
travels extensively for business. In year 2023, he spent 240 days overseas for business purposes. Mrs
Joseph accompanied him on some of the overseas trips and was away for 140 days in year 2023.

a) What would be Mr Joseph's tax resident status for the respective Years of Assessment 2023 and 2024?
Explain your answer.

b) His wife is on dependant pass in Singapore and is employed as a part-time teacher at the German
European School Singapore with effect from 1 Oct 2023. Prior to this employment, she was a full-time
housewife.

What would be Mrs Joseph's tax resident status for the Year of Assessment 2024? Explain your answer.

c) Mrs Joseph remitted her dividend income and sales proceeds from her investments in Germany to
Singapore bank account in Jun 2023.

Would her income be subject to tax in Singapore? Please explain your answer.

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 Breakout room discussion 2
(10mins)

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Self-Practice Answer 1.1

a) YA 2023
Although Mr Joseph was physically present in Singapore for less than 183 days in the year
2022, he would be treated as a tax resident for YA 2023 under the 2-year administrative
concession on the understanding that he has exercised employment in Singapore for a
continuous period of at least 183 days over two consecutive calendar years.

YA 2024
Mr Joseph would be considered as a tax resident of Singapore for YA 2024 as he has exercised
employment in Singapore for at least 183 days during the year 2023. This is notwithstanding that
his physical presence for the year 2023 was less 183 days as the time spent overseas in the
year 2023 would be considered incidental to his Singapore employment.

b) Although Mrs Joseph's employment period was only 92 days from Oct to Dec 2023, she was
physically present in Singapore for 225 (365 - 140) days in the year 2023. In this respect, she
would be treated as a tax resident in Singapore for YA 2023 based on her physical presence in
Singapore.

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Self-Practice Question 1.1

c) Overseas Income received on or after 1 Jan 2004 by a resident individual in Singapore is

generally not taxable. As such, the foreign remittance made by Mrs Joseph should not be
subject to tax in Singapore.

Under Section 13(7A), foreign-sourced income is not taxable in Singapore if the Comptroller
is satisfied that the tax exemption would be beneficial to the individual.

If Mrs Joseph feels that the tax exemption is not beneficial to her as the overseas income will
be subject to higher tax rates in Germany, she may choose to have the remittance to be
subject to tax in Singapore as a tax resident.

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Self-Practice Question 1.2

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 Breakout room discussion 3
(10mins)

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Self-Practice Answer 1.2

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 Self-Practice Question 1.3
Mr Arifin Widodo is an Indonesian. He was employed as a sales manager in Singapore and was issued with a 2-
year employment pass for the period 1 May 2022 to 30 Apr 2024. He decided to resign and leave the company
on 15 Jul 2023 to do a postgraduate degree in United States. During his time in Singapore, he bought an
apartment in Novena.

a) For the purpose of making the down payment for his apartment, Mr Widodo remitted $200,000 from his bank
account in Indonesia to his Singapore bank account in year 2023.

Is the amount remitted to Singapore taxable in Singapore? Explain your answer.

b) What are the residency tests for Singapore Income Tax purposes?

c) What will be Mr Widodo's tax resident status for the relevant Years of Assessment when he left Singapore on
15 Jul 2023? Explain your answers.

d) Due to unforeseen circumstances, Mr Widodo had to resign earlier on 31 May 2023. What will be his tax
resident status for the relevant Years of Assessment? Explain your answers.

e) Subsequent to his departure from Singapore, he rented his apartment for S$6,000 per month from 1 Jun
2023. At the end of the year 2023, he remitted 80% of the gross rental income to his US bank account while the
other 20% remained in his Singapore bank account.

(i) Would the rental income be subject to tax in Singapore since he has already paid property tax on the
property?
(ii) What is the gross rental income that will be subject to tax in Singapore? Explain your answers. 77
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Breakout room discussion 4

(15mins)

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Self-Practice Answer 1.3

(a) Not taxable. With effect from 1 Jan 2004, foreign source income remitted into
Singapore by a resident individual will no longer be taxable.

(b) The 2 tests for residency are:

Qualitative
The individual resides in Singapore and his absences from Singapore are
temporary and reasonable, and not inconsistent with a claim to be resident.

Quantitative
Either the individual is physically present in Singapore for at least 183 days; OR
the individual exercises and employment in Singapore for at least 183 days in
the year preceding the year of assessment.

(c) He will be treated as a resident for YA 2023 and 2024 since he had exercised
employment in Singapore for at least 183 days in each Year of assessment.

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Self-Practice Answer 1.3

(d) He will be treated as a resident for YA 2023 and 2024 under the 2-year administrative
concession since he had exercised employment in Singapore for a continuous period of 183
days or more over two consecutive calendar years.

(e) (i) Yes, the rental income received from the letting of property in Singapore is subject to
Income Tax [S10(1)(f)], while the property is also subject to property tax.

(ii) 100% of his rental income (S$42,000) will be taxed in Singapore regardless of whether the
same has been remitted out of Singapore. Rental income derived from a property situated in
Singapore will be considered as Singapore sourced income.

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 3
Taxation of Employment Income
[Section 10(1)(b)] and Related
Exemptions and Deductions

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Overview

▪ Employment income
▪ Tax treatment of various payments
▪ Tax treatment of benefits-in-kind
▪ Gains from share plans
▪ Special categories of employees

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Meaning of “Employment”

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Importance of distinction

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Importance of distinction

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Employment Income

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 Employment Income

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Paid or granted in respect of employment

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 Source of Employment Income

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When are gains from employment taxable?

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 Exempt Employment Income

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Exempt Employment Income

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Leave Pay

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Bonus

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Bonus Quick Poll 2

A non-contractual bonus for the year 2022 was

declared payable in Feb 2023. Which Year of
Assessment should this non-contractual bonus be
assessed in?

a) YA 2022
b) YA 2023
c) YA 2024
NCB is taxed
Answer: ____________ based on the year
it was paid.

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Director’s fees

▪ Generally, director's fees are sourced in the

country where the company is resident
▪ Fees derived from board meetings held in
S’pore are taxable
▪ If company has no presence in S’pore, fees are
not taxable
Nature When the director is entitled to the
payment
Approved in arrears (i.e. approved Date the fees are voted and
after the directors have rendered approved at the Annual General
the services) Meeting
Approved in advance (i.e. As and when he renders his
approved before services are services
rendered)

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Director’s fees Quick Poll 3

Director’s Fee approved in arrears

The company voted and approved director's fee of $20,000

on 30 Jun 2023 to be paid to Mr Peter for his services
rendered for the accounting year ended 31 Dec 2022.
Director’s Fee will be treated as income for which Year of
Assessment?
a) YA 2022
Even though the services Mr
b) YA 2023
Peter rendered was for year
c) YA 2024 2022, the director's fee will be
taxed in YA 2024 based on
the basis year where the
Answer: _____________ director fee was voted and
approved at the Annual
General Meeting.

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Director’s fees Quick Poll 4

Director’s Fee approved in advance

An AGM held by the company on 9 Dec 2022 resolved that

the amount of director's fees of up to $100,000 was voted
and approved for the accounting year ending 31 Dec 2023.

Director’s Fee will be treated as income for which Year of

Assessment?
a)YA 2022 The amount of director's fees voted
and approved on 9 Dec 2022 was
b)YA2023 approved in advance. The directors
c)YA2024 were not entitled to the director's fees
on 9 Dec 2022. This is because they
have yet to perform requisite services
for the accounting year ending 31
Answer: _____________ Dec 2023.

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Director’s fees (Quiz 3.3)

Director's Fees for the year 2023 was approved in the Annual
General Meeting on Jan 2022. Which Year of Assessment
should this Director's Fees be assessed in?

Please circle the correct answer

❑ YA2022
❑ YA2023
❑ YA2024

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Gratuity

▪ Gratuity paid for services rendered are taxable

▪ Retiring gratuity from approved pension or
provident fund (other than CPF or designated
funds) are exempt up to the extent relating to
the period of employment of that individual with
the employer before 1 Jan 93
▪ Death gratuities are exempted from tax

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Honorarium

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Reimbursement vs Allowance

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Allowances - examples

Payment Tax Treatment

Housing allowance ▪ Taxable
▪ Expenses spent on renting a house
by the employee are private in
nature, hence it is not deductible

Travelling and ▪ Taxable

entertainment
▪ Expenses incurred for business
allowance
may be deductible

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Air passage

From YA2018, Home

leave passages
Nature Tax
provided to employee
treatment
and family are taxable
Provided for overseas Not
in full business trip taxable

Provided for taking Not

up employment and taxable
upon termination of
employment

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Accommodation and related benefits

▪ Quarters provided
▪ Furniture and fittings (F&F)
▪ Services
▪ Hotel provided

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Quarters and F&F provided

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Value of Accommodation (Question)

Mr Harry was provided with fully furnished accommodation (i.e. a

residential apartment) with an AV of $30,000 from 1 Jan to 31 Dec. The
total rent (inclusive of rent for furniture and fittings) paid by the
employer in the year was $50,000. The total rent paid by the employee
in the year was $6,000.

i. Calculate the taxable value for accommodation as well as furniture

and fittings for YA2024

Total Rent (Inclusive of Rent $50,000

for Furniture and Fittings) Paid
by Employer

Less: Rent Paid by Employee $6,000

Taxable Value of = $44,000

Accommodation Benefit (i.e. $50,000 - $6,000)

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Value of Accommodation (Question)

Mr Henry was provided with fully furnished accommodation (i.e. a

residential apartment) with an AV of $30,000 from 1 Jan to 31 Dec.
The premises is owned by the employer. The total rent paid by the
employee in the year was $6,000.

ii. Calculate the taxable value for accommodation as well as furniture

and fittings for 2024
AV of Fully Furnished Residential Apartment $30,000

Value of Furniture and Fittings As the apartment is fully furnished, value of

furniture and fittings is $15,000 ($30,000 x
50%)

Total Value of Fully Furnished = $45,000 ($30,000 + $15,000)

Accommodation

Less: Rent Paid by Employee $6,000

Taxable Value of Accommodation Benefit = $39,000 (i.e. $45,000 - $6,000)

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 Housing allowances (Question)

Mr Harry was given housing allowance of $60,000 and the total rent
paid by the employee in the year was $6,000.

What is the taxable value of the housing allowances?

Full amount of housing allowance $60,000 is taxable. Rent paid

by employee is private in nature.

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Services and hotel provided

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 Refer to e-Learning or Course
Other Benefits Notes for list of administrative
concession

1) Car benefit
▪ Car that is provided for private purposes is
taxable. Refer to e-Learning Topic 3.3 slide
19 or the course notes.

2) Interest subsidy on staff loan

▪ Loans provided by employers (either interest-free or
at a rate below market rate) – not taxable provided
that:
- employees must not have substantial control or
influence over company; and
- the scheme is available to all employees.
▪ Commercial loans obtained from financial
institutions - taxable
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Other Benefits

3) Insurance premiums
Nature Tax Treatment
a) Personal insurance policy where Taxable
employee is policyholder
b) Group medical insurance policy Not taxable
(benefit is available to all staff)
c) Group insurance policy (e.g. group Not taxable if
term life, group personal accident) employer* does not
where employee is entitled to payout claim deduction –
contractually wef YA 2013
d) Travel insurance for business Not taxable

*Excludes investment holding companies, tax exempt body, representative office or

service companies that elect for the “cost plus mark-up” basis of tax assessment

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Other Benefits

4) Medical & dental benefits

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Other Benefits

5) Tax borne by employer

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Allowance : Quiz 3.3

Are monthly medical and dental allowances provided to employees

taxable?

Please circle correct answers

❑ Yes, allowances provided regardless of actual expenditure is

taxable
❑ No, medical and dental allowance available to all employees are
not taxable

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CPF Contributions

Employee’s share to CPF

▪ If employer pays the
employee’s share of
the contribution, the
contribution is taxable.
▪ Employee is entitled to
relief on the
contribution

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CPF Contributions

Contributions made by employer in respect of ordinary or

additional wages that are obligatory under CPF Act are not
taxable.
Ordinary Wages (OW)
Wages due or granted wholly and exclusively in respect of an
employee's employment in that month and wages payable
before the due date for payment of CPF contributions for that
month. An example of OW is the monthly salary.

Additional Wages (AW)

Wages which are not granted wholly and exclusively for the
month or wages made at intervals of more than a month.
Examples of AW are annual bonus and leave pay.

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CPF Contributions

Year Ordinary Wage Monthly Overall Income

Cap Cap
Jan 2016 to Aug 2023 $6,000 $102,000^^
Sep 2023 to Dec 2023 $6,300

^^From 1 Jan 2016, the overall income cap is $102,000 (equivalent to 17

months x $6,000). Notwithstanding the increase to the CPF monthly salary
ceiling from Sep 2023 whereby the CPF monthly salary ceiling increased from
$6,000 to $8,000, the overall income cap will be remained at $102,000.

Additional Wage ceiling is the difference between the Overall Income Cap
and total Ordinary Wages subject to CPF. Example:

YA2024 Employee A Employee B

Total OW $100,000 $60,000
Total AW $50,000 $50,000
Total OW subject to CPF $73,200 $60,000
($6,000 x 8 mths)+($6,300 x 4 mths)
AW ceiling $28,800 $42,000
($102,000 – $73,200) ($102,000 - $60,000)

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CPF Contributions

Employer’s share of CPF contributions

Nature Tax treatment
Obligatory contribution Not taxable

Voluntary contribution, i.e. not compulsory Taxable

contribution

Contribution to employee’s Medisave Up to $2,730 in a year is not

Account made in lieu of hospitalisation or taxable (for contribution made
outpatient medical benefits that the in 2018 and in each subsequent
employer is obliged to provide by contract year)
Obligatory
of employmentcontributions to CPF are not taxable.

CPF Cash Top-up by employer on behalf of Taxable

employee to his Minimum Sum

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Other payments

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Gains from share plans – source

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Share option plans – some terms

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Share option plans – some terms

4
2

1 5 6 7

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Gains from share plans - timing

Vesting period Exercise Date Moratorium lifted

Grant Date Vesting Date Moratorium period Date of sale

(cannot sell the shares)

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Share option plans (Question)

Answer: __________________

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Gains from share plans – Deemed exercise

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Gains from share plans – Deemed exercise

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Gains from share plans – Tracking Option

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Gains from share plans Quick Poll 5

A foreign employee will be leaving Singapore permanently on

31 Oct 2023. He has unvested share options granted in respect
of his Singapore employment. Employer does not qualify for
tracking option. Which statement is correct?

a. There is no taxable benefit since employee is leaving Singapore

b. Employer only needs to report the share gains when employee exercise the
options
c. Deemed exercise is applicable. The taxable gain is computed based on the
open market price of the shares as at 31 Oct 2023

d. Deemed exercise is applicable. The taxable gain is computed based on the

open market price of the shares as at 30 Sept 2023
Deemed exercise is applicable.
30 Sept 2023 (1 month before 31 Oct
Answer: __________ 2023)
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Discuss and attempt

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Case Study

Tranche Taxable?

A
B
C
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Case Study

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Case Study

Open Market Value (OMV) as at:

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Case Study

The stock options will be taxable when the moratorium is lifted on 1 November
2022.

Taxable gains in YA2023

= ($5 - $2) x 10,000 shares = $30,000

Note: Gains derived from the sale of shares on 15 November 2022 are not taxable as
it is capital in nature (there is no capital gains tax in Singapore).

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 Employees sent overseas for training

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Persons under Double Taxation Agreements

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 Questions?

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Breakout room discussion

Discuss and attempt

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Self-Practice Question 2.1

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Self-Practice Question 2.1

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 Breakout room discussion 1
(15mins)

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Self-Practice Answer 2.1

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Self-Practice Answer 2.1

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Self-Practice Question 2.2

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 Breakout room discussion 2
(5mins)

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Self-Practice Answer 2.2

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Self-Practice Question 2.3
Ms Janice Mayra is an Australian. She has been exercising employment in Singapore as a marketing director
of a marketing agency under an employment pass since 1 Apr 2023.

Below are details relating to her employment for year 2023:

Basic salary from 1 Apr 2023 to 31 Dec 2023 $120,000

Performance Bonus (non-contractual) for year 2023 – declared payable on 5 Jan 2024 $50,000

Employer’s contribution to overseas non-mandatory pension fund $8,000

Reimbursement of dental expenses under staff benefit scheme (available to all employees) $2,000

Air passage benefit (home leave) $5,000

Reimbursement of air ticket to United States to visit her sister $2,900

Reimbursement of mobile phone expenses incurred for work purposes $1,000

iPad won at company Dinner & Dance lucky draw $1,088

Accommodation provided at a fully furnished service apartment (not within hotel premises) from 1 Apr 2023 to 31 Dec 2023

Annual rent (including the rent for furniture and fittings) = $60,000
Housing rental deducted from her salary - $1,500 per month

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Self-Practice Question 2.3

a) Please compute her taxable employment income for Year of

Assessment 2024, showing your basis.

b) State whether any payments/benefits are not taxable and

explain your answer.

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 Breakout room discussion 3
(15 mins)

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Self-Practice Answer 2.3

a) Please compute her taxable employment income for Year of

Assessment 2024, showing your basis.

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 Self-Practice Answer 2.3

b) State whether any payments/benefits are not taxable and

explain your answer.

Non-Taxable or exempt under Reason

administrative concession
Reimbursement of dental expenses under Not taxable under the administrative concession since
staff benefit scheme (available to all staff) the dental benefits are available to all employees.
Reimbursement of mobile phone expenses Reimbursement of expenses incurred in the course of
incurred for work purposes work for official usage is not taxable.
iPad won at company Dinner & Dance lucky Not taxable under the administrative concession.
draw
The benefits should be available to all staff in order to
achieve the objective of fostering good relationship
among the staff and it is difficult to assign a specific
value to each employee.

The performance Bonus (non-contractual) for year 2023 is paid at the discretion of the employer. As such, Ms
Mayra will only be entitled to the bonus until its declared and paid. Hence, the bonus declared payable on 5
Jan 2024 will be assessed in Year of Assessment 2025 when its being paid to her.

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Examination Structure

The examination is a 2-hour paper, consisting of 3 main questions for the full course, with
sub-questions in most cases requiring answers in the format of multiple choice, short
answers and calculations. The total mark is 100 and all questions are compulsory.

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152
Examination Structure

Topics Questions Time allocated

Total: 100 marks 2 hours

• Overview of Singapore Tax Regime Non examinable -

• Taxation and Deduction Principles and Q1 – 35 marks 42 mins
Concepts
- Multiple choice questions and short
questions
• Taxation of Individuals covering Employment Q2 – 35 marks 42 mins
Income and Passive Income
- Case study and tax computation
• Taxation of Individuals – Trade, Business Q3 – 30 marks 36 mins
and Profession
- Case study and tax computation

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Agenda
Topic 4 - Taxation of Other Income - Section 10(1)(d) to Section 10(1)(g) and
Related Exemptions and Deductions
➢ Tax Exemption
➢ Dividend, Interest, Discounts, Pension, Charge, Annuity, Trust
➢ Royalties, Rent from Movable Properties and Fees
➢ Rents, Premiums and Any Other Profits arising from Property

Topic 5 - Deductions under Section 37

➢ Qualifying donations
➢ Different donation schemes

Topic 6 - Personal Reliefs and Tax Rebate

➢ Conditions for claiming various types of personal reliefs and tax rebates

Topic 7 - Computation of Income Tax Liability of an Individual

➢ Case studies questions
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Income Tax Programme Level 1

Relevant ITA sections

Home - Singapore Statutes Online (agc.gov.sg)

Tip : Do print a copy

Section 10 - charging section for your reference
Section 12 - deeming section during exam

Section 13 - exemption of income

Section 14 - allowable deductions
Section 15 - prohibition of expenses
Section 37 - donation
Section 39 - Personal Relief
Section 42A – Parenthood Tax Rebate
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Charge of Income
S10(1): Income tax shall, subject to the provisions of this Act, be payable at the rate
or rates specified hereinafter for each year of assessment upon the income of any
person accruing in or derived from Singapore or received in Singapore from outside
Singapore in respect of —

(a) gains or profits from any trade, business, profession or vocation,

(b) gains or profits from any employment;
(c) [Deleted by Act 29 of 65]
(d) dividends, interest or discounts;
(e) any pension, charge or annuity;
(f) rents, royalties, premiums and any other profits arising from property; and
(g) any gains or profits of an income nature not falling within any of the preceding
paragraphs

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 For income to be taxable, it must

Falls within Accrued in or

S10(1)(a) to Derived from Taxable
(g) ITA Singapore

What about income received in Singapore from

outside Singapore?

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Tax exemption of Overseas Remittance

 Wef YA 2005, all foreign-sourced income remitted

into Singapore are exempted for resident individuals,
except for income received through a partnership in
Singapore.
 Subject to the “beneficial tax exemption” condition
(i.e. tax exemption would be beneficial to the
individual).

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 Passive & Active Income
Passive Income Active Income
Investment income S10(1)(d) - dividends, interest or S10(1)(a) – Assessed as trade
(including interest, discounts income if derived by an individual
dividend, royalty and carrying on the trade or business
rental income) S10(1)(f) – rent, royalty of trading in financial instruments,
movable or immovable properties
Deduction of expenses More restrictive - Expenses incurred in the course
- Initial expenses not deductible of business allowable, provided
- Excess deductible expenses they are not prohibited under S15
not allowable against other - Excess deductible expenses
income & not available for allowable against other income &
deduction against future are generally available for
income deduction against future income
(e.g. deductibility of trade losses
against other income, carry
forward of unutilized trade losses)

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Tax Exemption on Singapore-sourced

Investment Income

S13(1)(ze) S13(1)(zf) S13(1)(zd) S13(1)(zj)

• Interest from debt • Amount payable from •Interest income from • Income from
securities Islamic debt all deposits with structured products
• Discount income from securities approved banks and offered by financial
debt securities finance companies in institutions in
• Annuities Singapore
Singapore
• All payments from life
insurance policies
• Distributions form
unit trust
• Borrowing fees, loan
rebate fees, price
differential and
compensatory
payments arising
from securities
lending and
repurchase
agreements

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Income Tax Programme Level 1

S10(1)(d)
Dividend
Interest
Discounts

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Dividend

➢ From 1.1.2008, all resident companies are moved to

one-tier tax system
➢ Tax paid by a company is a final tax
➢ All dividends paid by resident companies are
without tax deduction
➢ Therefore, dividends paid by company resident in
Singapore is exempted from tax from YA 2009 –
S13(1)(za)
➢ The one-tier system does not apply to co-
operatives, e.g. NTUC Fairprice Co-operative.

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 Interest
Source of Interest:
1. Taxable if derived within Singapore [S13(1) provides for exemption on
specific interest income, e.g. interest from deposits of moneys with
approved banks & finance companies in Singapore]
2. S12(6) deems interest to be derived from Singapore if it is connected
with any loan or indebtedness where:
a) Interest is borne directly or indirectly by:
– a person resident in Singapore, or
– a permanent establishment in Singapore,
– except business carried on outside Singapore through a permanent
establishment outside Singapore or any immovable property situated
outside Singapore;
b) Interest is deductible against income accruing in or derived from
Singapore; or
c) The funds provided by loans are brought into or used in Singapore.
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Interest
Date of accrual
➢ When a person receives it or when he is in a position to
obtain it if he wants it

Date of payment [section 45(8)(b)]

➢ For tax withholding purposes, deemed to have been
paid if the interest is re-invested, accumulated,
capitalized, carried to any reserve or credited to any
account however designated or otherwise dealt with
on behalf of the non-resident recipient

➢ Need not be actual payment

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Income Tax Programme Level 1
Case Studies

Question 1 : Interest & dividend

State if the following amount is taxable with the relevant ITA section. If it is
taxable, state the amount and when the income is accrued to the individual.
James received the following incomes in 2023:
a) Gross dividend of $100 from a Singapore company on 30.6.2023.

b) His fixed deposit in HSBC matured on 31.12.2023 and he withdrew the

money with interest on 15.1.2024.

c) On 1.8.2022, he invested $10,000 in a lending-based crowdfunding

arrangement through ABC Crowdfund Pte Ltd, a MAS licensed marketplace
lending platform. ABC Crowdfund Pte Ltd agreed to pay him 5% interest at
the end of 6 months. For clarity, ABC Crowdfund Pte Ltd does not offer any
debt securities.

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Discounts from debt securities

1. Debt securities are:

➢ bonds, notes, commercial papers, treasury bills and
certificates of deposits – definition in S43H(4)
➢ documents that represent a loan
➢ tradable securities
➢ issued by government or company

2. Tax exemption on discount from:

➢ all debt securities

• income derived on or after 17.2.2006 - s13(1)(zi)

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 Income Tax Programme Level 1
Case Studies

Question 2 : Discount

Mr Lim bought 6-month treasury bill (“T-bill”) with a face value of

$10,000 in Sep 2022. He only paid $9,700. Come Feb 2023, he
received $10,000 upon the maturity of the T-bill.
Is the discount of $300 taxable?

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Income Tax Programme Level 1

S 10(1)(e)

Pension
Charge
Annuity

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 Pensions
➢ Assessable under S10(1)(e)
➢ Exemptions are granted for the following pensions:
❖ Government pensions – S13(1)(x)
❖ CPF / approved pension/provident fund designated by the
Minister – S13(1)(j)
❖ Approved Pension Schemes – exemption granted to quantum
accrued up to 31 Dec 1992 – S13(1)(jb)
❖ Wound or disabilities pension – S13(1)(k)
❖ Widow and Orphans Pensions - S13(1)(l)
❖ Sums received in commutation of pensions [S13(1)(h)]
- exemption only for the portion attributable to employment
up to 31/12/1992.

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Charge – payments under court order

1) Payments for maintenance of ex-spouse (i.e. alimony)

➢ Usually payable under a deed of separation or court
order
➢ Exempt from YA2012 – S13(1)(zo)

2) Payments for maintenance of children

➢ not deemed to be children’s income [s.10(13)(a)]

3) Payments for maintenance of parents

➢ not deemed to be parent’s income [s.10(13)(b)]

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Income Tax Programme Level 1
Case Studies

Question 3 : Alimony

Under a court order, Mr Lee has to pay $1,000 per

month to his ex-wife with effect from Mar 2023.
This includes $200 each for the maintenance of his 2
children. What is the taxable amount on the spouse
and the children?

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Charge – Trust Income

Trust:
➢ an arrangement to transfer property to trustees who are
subject to a duty to hold and deal with it for the benefit of
beneficiaries

➢ Creation of Trusts:
• private trusts created by way of trust deeds/
settlement
• trusts created under the will of a deceased
• intestate estates (in the case where deceased died
without a will)

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 Charge – Trust Income
➢ Beneficiary will be taxed on his entitlement to the
distributions of income
➢ The distributions are deemed to have retained the nature
of the underlying trust income for the purpose of
claiming the concessions, exemptions and foreign tax
credits for beneficiary who is a tax resident in Singapore
- section 13Q
➢ For example, if the income distributed to the
beneficiaries is dividend, it will be exempt under
s13(1)(za)

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Income Tax Programme Level 1

Case Studies

Question 4 : Trust Income

Mr Woo is a tax resident in Singapore. He received trust
income from the estate of his deceased father in 2023.
His share of allocation of the trust income is as follows:
Basis Interest 1-tier Dividend Net Rent
1/4 $195 $3,000 $25,900

Additional information:
a) Interest is from the deposits with OCBC.
b) Rent is from the property at 4 Skyline Rd.
Compute the amount of trust income taxable in Mr Woo’s
name.

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 Annuity

➢ It is an insurance plan usually bought for

retirement. It provides a guaranteed regular
income to the policyholders for life or for a
specified period

➢ Assessable under Section 10(1)(e)

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Annuity
➢ Exemption granted wef 1.1.2004 [s.13(1)(ze)(iii)]
➢ Exceptions (i.e. annuity is taxable):
1. Income is derived by the individual through
partnership or is derived from the carrying on of a
trade, business or profession [s.13(1)(ze)]
2. Any annuity purchased by the employer of an
individual in lieu of any pension or other benefit
payable during his employment or upon his
retirement - full amount is taxable as it is a reward for
employment. - [s.13(1)(ze)(iii)(A)]
3. Any annuity purchased under the SRS - subject to
provision under S10G - [s.13(1)(ze)(iii)(B)]
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Income Tax Programme Level 1
Case Studies

Question 5 : Annuity

(a) Ms Tan purchased an annuity on 2.1.2012. The consideration

is $120,000. The payout of $15,000 per annum starts from 2023
for 10 years. Is the payout from annuity taxable?

(b) What if the annuity is purchased by her employer in lieu of

pension scheme while she is employed?

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S10(1)(f)

• Royalties
• Rents
• Premiums and any other profits arising
from property

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 Royalties

➢ Consideration for the use or right to use information

concerning industrial, commercial or scientific experience
➢ Common types of royalties and fees
• Patent royalties
• Copyright royalties
• Trademarks
• Fees paid for technical assistance or services

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Royalties received outside Singapore

S12(7) deems royalties as derived in Singapore if

• borne directly or indirectly by a person resident in

Singapore

• borne directly or indirectly by a permanent establishment

(PE) in Singapore except in respect of any business carried
on outside Singapore through a PE outside Singapore; or

• deductible against any income accruing in or derived from

Singapore.

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 Royalty – Tax concession

Objective:
➢ For copyright royalties – S10(14):
• to encourage creative talents such as authors,
composers and choreographer

Concession:
➢ Amount of taxable royalties deemed to be lower of
• net amount after allowable deductions or
• 10% of the gross amount of royalties

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Royalty – Tax concession

Except - Section 10(15)

― excludes royalties in respect of any work published in
any newspaper or periodical (e.g. magazines, journal,
etc.)

Full
amount is
subject to
tax
Periodical

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Income Tax Programme Level 1
Case Studies

Question 6: Royalty

Mr William is a music teacher of a secondary school. He had

composed a song for a National Day event and received gross
royalty payment of $5,000 in Jul 2023 for the right to use the
song. To compose this song, he had also bought a new piano for
$4,800. How much of the royalty is taxable?

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Rent
➢ Deposit
• not taxable (subject to be refunded to the tenant after
expiry or earlier termination of the tenancy agreement)
• unless deposit is withheld to defray expenses due to
damage caused by the tenant or to compensate default
rent

➢ Gross rent income includes:

• rental of premises
• rental of furniture & fittings; and
• maintenance, utilities, etc

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 Rent
➢ Rent is assessable on the date it is due and payable and not
the date of actual receipt.

➢ E.g. you start to rent the apartment on 15 Jun 2023, you

would have collected the Jun rent when you signed the
agreement.

➢ The July rent is due on 15 Jul. Thus, for this year, 7 months
(15 Jun to 15 Dec) of rent are due to you and you need to
report the income. Note you should not compute 6.5 month
of gross rent based on the period 15 Jun to 31 Dec.

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Sample of Tenancy Agreement

Extracted from https://www.cea.gov.sg/docs/default-source/Professionals/Agreements-Checklists/tenancy-

agreement-template-for-lease-of-private-residential-properties-2020.pdf

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 Newly rented out Property Property is sold / owner
occupied
First rented out Expenses (exclude capital Ceased to be rented out
expenses) are deductible

Deductible expenses
Expenses ➢ During rental period : Property tax, interest, fire insurance, Expenses
management fee, repairs, replacement. *commission, legal
not not
fee, stamp duty, advertising expenses, etc.
deductible - Reason : incurred for producing the rental income and deductible
➢ During the vacancy period
- Reason : S14ZF (see next slide)
* Tax change wef YA 2022 [applicable to income charged under s10(1)(f)]:
S14ZE(4)(a) : Expenditure incurred to obtain, grant, renew or extend a lease means any commission, legal fees, stamp duty,
advertising expenses and such other expenditure as may be prescribed by rules made under section 7. These expenses are
deductible even for first time rental.

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35

# Tax change wef YA 2022 [applicable to income charged under s10(1)(f)]:

S14ZF(3) : Condition : person has made reasonable efforts to procure tenant while it Is
vacant.
Deduction allowable during vacancy period
• Repair, insurance, maintenance or upkeep of the immovable property [S14ZF(2)(a)]
• Property tax [S14ZF(2)(b)]
• Interest [S14(1)(a)]

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36
 Deemed Expense Deduction for Residential
Properties for Individuals

Changes from YA 2016

➢ An individual may claim an amount of deemed expenses against his
passive rental income [assessable under s.10(1)(f)] derived in any YA from
the letting of a residential property in Singapore.
➢ Deemed expenses = 15% of the gross rental income
➢ In addition, an individual can make a claim for deduction on actual
interest expenses incurred on mortgage loans taken to finance the
purchase of the tenanted property, if any.
➢ If an individual has more than one tenanted residential property, he must
claim his rental expenses using either one option (actual or deemed) and
the same option must be applied consistently across all his tenanted
residential properties for that YA

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Income Tax Programme Level 1

Case Studies

Question 7: Rental
Mr Tan owns an apartment at East Coast Road. As he was seconded overseas,
he rented it out in 2023 for a term of 24 months.

The following terms and conditions are stated in the tenancy agreement:
a) Monthly rent of $6,000 is due and payable on 1st of each month starting
from 1 Jun 2023 of which:
- $3,000 is for the premises
- $2,000 is for the furniture and fittings
- $1,000 is for the maintenance and utilities
b) Upon signing of the tenancy, tenant shall pay a deposit of $12,000 to Mr Tan
(equivalent of two month’s rent).

He collected $18,000 from the tenant on 1 Jun 2023 when the tenancy
agreement was signed.
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Income Tax Programme Level 1
Case Studies

Question 7 (Continue) :
Expenses incurred by Mr Tan in the year 2023:
Property Tax (paid in Jan 2023 for the year of 2023) $7,200
Mortgage interest for the year 2023 12,000
Fee paid to property management company to handle all matters relating 3,600
to his property while he is overseas.
Renovation work – hacked down a wall between 5,000
kitchen and store room
Mortgage loan protection insurance for 2023 850
Fire insurance for 2023 1,200
Advertising for tenant 500
Commission to secure tenant 3,000
Storage fee for his belonging in a warehouse during his secondment 5,000
This is the first time he rented out a property. Please advise him on the taxable net rental income. Prepare tax
computation based on
(a) actual expenses claimed and
(b) deemed expenses deduction 39
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Income Tax Programme Level 1

S10(1)(g)

- any gains or profits of an income nature not

falling within any of the preceding paragraphs
- “Catch all” section
- Example: SRS withdrawal

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 SRS – General information

➢ Implemented on 1 Apr 2001

➢ Complements CPF contributions – Voluntary contributions to

encourage Singaporean to save more for their old age

➢ Tax Benefits:
• Contributions made to SRS accounts are eligible for tax relief
• Only 50% of the withdrawals from SRS are taxable if the SRS
members make withdrawal at retirement age

➢ S10G(1) states that SRS withdrawals is deemed to be income

under S10(1)(g)
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Penalty-free early withdrawal

Penalty-Free Withdrawal:
a) on or after prescribed retirement age
b) one lump sum withdrawn by foreigner who has maintained
account for at least 10 years
c) upon death
d) on medical ground
e) bankruptcy
For (a) & (b), 50% of the withdrawals from SRS are taxable.
For (c) and (d), see subsequent slides for more details of changes to
tax treatment wef YA 2016.
For (e), 100% of the withdrawals from SRS are taxable

Other scenario - tax 100% of withdrawal + 5% penalty 42

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 SRS Withdrawal – Death/Terminal illness

➢ From YA 2016, up to $400,000 of an amount of a deemed

withdrawal upon an SRS member’s demise or a full withdrawal
made on the grounds of terminal illness, would not be subject to
tax.

✓ No penalty-free withdrawal has been made - Full tax exemption of

$400,000. (see subsequent slides)
✓ Penalty-free withdrawal has been made - taxable amount adjusted
based on the prior withdrawals made. (see subsequent slides)

➢ 50% of any remaining amount of such a deemed withdrawal or full

withdrawal would then be subject to tax.

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Income Tax Programme Level 1

Case Studies

Question 8 : Supplementary Retirement Scheme (SRS)

Mr Johnson is a foreigner. He is working in Singapore and started to

make SRS contributions in 2015. He decided to go back to his home
town and ceased his Singapore employment in Oct 2023.

At the same time, he also applied to withdraw all the past

contributions from his SRS account on 1 Dec 2023. Discuss the
taxability of the withdrawal and any other cost he may need to
incur.

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Income Tax Programme Level 1
Case Studies

Question :

9. Gains of Income Nature

Is the following amount taxable in the hands of the recipient?
Why?

a) Mrs Fong received cash of $5,000 from a lucky draw organized

by the Singapore Red Cross Society.

b) Mrs Heng is a housewife. She introduced a friend to buy a

property from her neighbour. In appreciation, her neighbour
gave her $2,000.

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Income Tax Programme Level 1

Topic 5
•Tax Deduction under S37 -
Donation

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 Summary on Donation
• Cash – S37(3)(c)
• Artefact or work of art to approved museums – S37(3)(b)
• Sculpture for public display outdoor – S37(3)(b)
• Share and unit trust – S37(3)(e)
• Land and Building – S37(3)(f)

Amount deductible : 2.5 times of donation

The 250% tax deduction rate is applicable to qualifying donations made during the period up
to 31 Dec 2026.

For info : The administrative concession on donation with benefits-in-return has been
reviewed and the definition of ‘having no commercial value’ has been revised. In addition,
the concession is only applicable to a specific list of benefits and subject to specific
conditions.
Ref : e-Tax Guide “Tax Treatment on Donations with Benefits (Donations made on and after
19 March 2021)” published on 19 March 2021.

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Income Tax Programme Level 1

Case Studies

10. Question - Donation :

Is the following donations made in Jun 2023 allowable? State
your reasons?

a) Mr Lee donated a painting worth $2,000 to an approved

museum in 2022. The museum gave him a pen that cost $100.
It carried the fundraising message and was engraved with his
name.

b) i) Mr Alex donated $500 to an approved charity. In

appreciation, the charity gave him an admission ticket to
Universal Studios worth $50.
ii) What if a ‘not-for-sale’ message is indicated on the ticket?
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 Re-cap
Topic 4 S10(1)(d) to (g)
Exempt income Section
Dividends paid by company resident in Singapore (under S13(1)(za)
one-tier system)
Interest received by resident individual from approved S13(1)(zd)
banks and licensed finance companies in Singapore
Discount from all debt securities S13(1)(zi)
Payments for maintenance of ex-spouse S13(1)(zo)
Payments for maintenance of children S10(13)(a)
Payments for maintenance of parents S10(13)(b)
Annuity except those purchase by employer/ under SRS S13(1)(ze)(iii)

NB : Trust income retain the nature of the underlying income e.g. dividend, interest and rental.
Thus, the tax treatment of the relevant income applies.

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Re-cap
Topic 4 S10(1)(d) to (g)
Taxable income Section
Pension except for those in slide 21 S10(1)(e)
Royalty S10(1)(f)
- Tax concession to encourage creativity : lower of net income or 10% of S10(14)
gross income
- Exception: work published in newspaper/periodical S10(15)
Rent S10(1)(f)
- Compute gross rent
- Allowable expenses (to apportion during tenancy/vacancy period)
- Disallowed expenses (private/capital)
- Net rent (to apportion based on share of property)
SRS withdrawal S10(G)
a) 50% - on or after prescribed retirement age or one lump sum withdrawn by S10(1)(g)
foreigner who has maintained account >10 years
b) 100% - bankruptcy
c) 50% - death/medical (NB : $400k exemption if no penalty-free withdrawal
made. Else, see slide 59)
(a) to (c) - penalty-free withdrawal
d) 100% plus 5% penalty for other scenario

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 Re-cap
Topic 5 Donation under S37
Deductible donation
Recipient
- Approved IPC / qualifying grant-making philanthropic organisations ("Grant-makers")

Type of qualifying donation

• Cash – S37(3)(c)
• Artefact or work of art to approved museums – S37(3)(b)
• Sculpture for public display outdoor – S37(3)(b)
• Share and unit trust – S37(3)(e)
• Land and Building – S37(3)(f)

Amount deductible
2.5 times of donation (NB : pure donation with incidental benefits is allowable in full)
Incidental : given as part and parcel of fundraising event and are not intended for resale.
Non-deductible donation
• Computer – S37(3)(K)
• Donation for foreign charitable purpose
• Donation with benefit-in-return (commercial value) – to deduct the amount of benefit and
allow the balance as donation

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Income Tax Programme Level 1

Topic 6
•Personal Reliefs – S39
•Tax Rebate – S42A

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 Tax Computation
Employment income xxxxxx
Other income (dividend, interest, rental, etc.) xxxxxx
Statutory Income xxxxxx
Less: Donation (xxx)
Assessable Income Xxxxxx
Less: Personal Reliefs (xxx)
(EIR, SR, QCR/WMCR, CPF, etc) (cap at $80k from
YA2018)
Chargeable Income xxxxxx

Tax on first $xxxxxx xxxx

Tax on balance $xxxx@xx% xxxx
Less: Tax rebate (If any) A
(For YA 2024, tax rebate is 50% on tax payable 50% x A and cap at
and cap at $200) $200.00
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Tax Payable xxxx

General information on reliefs

• Allowable only to tax residents

• Strictly on due claim
• Claims are based on meeting conditions in the preceding
year
• Qualifying conditions and amount claimed may differ from
year-to-year
• Some reliefs are allowed automatically based on
information from other government agencies (e.g. NSman
relief, CPF cash top-up relief)

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 Common features of reliefs

• A dependant can only be a subject of claim for one type of

relief except Grandparent Caregiver Relief

• Some reliefs have normal and handicapped status. For

Handicapped status, the relief amount is higher

• Some reliefs have income threshold condition: e.g. Spouse

Relief, Child Relief, Parent Relief…Income include:
– Taxable income
– Tax-exempt income
– Foreign-sourced income
– Exclude CPF payout

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Common concepts on reliefs

• Handicapped status relief – no income threshold, no age limit

• If not staying together, claimant must incur at least $2000

for maintaining the dependant

• For similar types of relief, claimant only eligible for one

type, e.g. NSman Relief, NSman Parent Relief

• Dependant parents include spouse’s parent, grandparent

or great-grandparent

• Total Relief is capped at $80,000 (wef YA2018)

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 Types of reliefs

Reliefs automatically allowed Reliefs allowed on due claim

• Earned Income relief • Spouse/Handicapped Spouse relief
• NSman/Wife & parent of NSman • Qualifying Child/Working Mother’s
relief Child Relief
• CPF relief • Grandparent caregiver relief
• CPF cash top-up relief • Foreign Domestic Worker Levy
• SRS contributions relief relief (will lapse from YA 2025)
• Parent/Handicapped Parent relief
• Handicapped brother/sister relief
• Course fee relief (will lapse from YA
2026)
• CPF relief (if employer not
participating in Auto-inclusion
scheme)
• Life insurance relief

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Spouse Relief

Conditions of claim Amount of Relief

(A) • had a spouse living with or maintained $2,000
by individual; and
• Spouse’s income not > $4,000

(B) • made payments in accordance with an $2,000 or the actual

order of court or a deed of separation payment made under
to a wife from whom he was separated the court order or deed
by such order or deed of separation,
whichever is the lesser

• (A) + (B) Shall not exceed $2,000

• Legally divorced, even if made payment NIL

under order or deed
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 Handicapped spouse relief

Conditions of claim Amount of Relief from YA

2015
(A) • had a spouse living with or maintained by $5,500
individual;
• spouse was incapacitated by reason of physical or
mental infirmity
• spouse is not a dependant of claim for parent
relief or handicapped sibling relief by another
person
• no income condition attached
(B) • made payments in accordance with an order of $5,500 or the actual payment
court or a deed of separation to a wife from made under the court order
whom he was separated by such order or deed or deed of separation,
(N.B. Income threshold is not applicable to whichever is the lesser
handicapped dependant)

• (A) + (B) Shall not exceed $5,500

• Legally divorced, even if made payment under NIL

order or deed
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Income Tax Programme Level 1

Case Studies

Please prepare your answers based on YA 2024

Question 1
1. Spouse/handicapped spouse relief
Mr Lee maintains his current wife and his ex-wife. Both of them
are not working and his ex-wife is handicapped. He paid his ex-
wife alimony of $7,500 a year. No one else is claiming in respect
of the ex-spouse. What is the relief allowable to him for YA 2024?

a) If the alimony was paid under a deed of separation;

b) If the alimony was paid under a court order of divorce.

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 Qualifying / Handicapped Child Relief

➢ Conditions of claim:
• Child is not married
• Legitimate child, step-child or legally adopted child
(definition in 5th Schedule)
• Age <16 years old, if ≥ 16 years old must be study full-
time
• Income must not exceed $4,000
• Relief can be apportioned between husband and wife
➢ Amount
• QCR: $4,000 for each qualifying child
• HCR: $7,500 for each qualifying child

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Working Mother Child Relief

— Allowable to married woman, divorcee or widow (NB :

only 1 claimant for WMCR iro same child)

— Conditions:
• Same as QCR
• Child is Singapore citizen as at 31 Dec of preceding
year
NB: If child dies, he must be a citizen of Singapore on
date of death in order for WMCR to be allowed to the
mother.

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 Amount of WMCR
Child Order Up to YA 2024 - From YA 2025
Percentage of earned [For Singaporean child
income # born or adopted on or
after 1 Jan 2024]
1st child 15% $8,000
2nd child 20% $10,000
3rd and subsequent child 25% $12,000
Maximum claim • $50,000 per child • Capped at 100% of her
• in terms of total cap earned income
for WMCR and QCR/
HCR • capped at 100% of her
earned income
• in terms of
cumulative WMCR
# Trade, Employment and Pension income (see topic 6, para 3.1.1)

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Steps to determine if child relief is allowable

(a) Check the qualifying status i.e. whether the child falls within the definition of child in ITA

(b) Rank the children (include the deceased/stillborn child) based on the DOB, date of legal adoption or date of
marriage of natural parents (illegitimate child).
(c) For WMCR, determine the citizenship of the children and ensure only 1 claimant.
(d) Allow the relief according to the order of eligible children.

For details, see notes for topic 6, para 4.2

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 Ranking of Children (stillborn child)

• Applicable for claim made for YA 2022 and subsequent YA

and where the married woman, divorcee or widow claiming
the deduction is the natural mother of the stillborn child.
• A stillborn child refers to a child that
(i) issues from the child’s mother after twenty-second week of
pregnancy and
(ii) does not show any sign of life at any time after being
completely expelled or extracted from the mother.

This definition of a “stillborn child” is provided under the new

paragraph 7(aa) of the Fifth Schedule.
NB : a stillborn child is not eligible for child relief.
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Quiz - WMCR Calculation

Mrs Wong’s employment income was $200,000 in 2023. She has

4 children below 16 years old. She and her husband wish to
claim for child relief as follows:

1st child – Mrs Wong claims QCR & WMCR

2nd child – Mrs Wong claims HCR & WMCR
3rd child – Mr Wong claims QCR & Mrs Wong claims WMCR
4th child – Mr and Mrs Wong claim QCR of $2,000 each and Mrs
Wong claim WMCR

Calculate the child relief applicable to Mr and Mrs Wong for the
YA 2024.

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 Parent Relief

• Own or spouse’s parents, grandparents or great grandparents

• Conditions :
▪ Living in Singapore
▪ Income ≤ $4,000 (include taxable, tax-exempt income, foreign-
sourced, remittance, exclude CPF payouts)
▪ Income threshold is not applicable to handicapped dependant
▪ At least 55 years old unless handicapped
▪ No one else make a claim for spouse / handicapped spouse
relief in respect of the same dependant
▪ If not staying in same household, must incur at least $2,000 in
preceding year to support dependent
▪ From YA2015, relief may be shared with other claimants
provided no one else is claiming for other reliefs on the same
dependant (except Grandparent Caregiver)

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Relief for Parents

Parent From YA 2015

Staying together Normal $9,000
Handicapped $14,000
Not staying together Normal $5,500
Handicapped $10,000
Relief can be
apportioned
➢ Amount allowable depends on whether:
• claimant stays with dependant in same household
• dependant is physically or mentally handicapped
• Relief can be apportioned from YA 2015
— max: 2 parents

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Income Tax Programme Level 1
Case Studies

Question 2 : Parent relief

Mr Yip’s parents from China came to Singapore on 1 Feb
2023. They were staying with him in Yishun until 25 Jun
2023. His father has some business income from China
amounting to $4,800 for the year 2023. He did not remit the
income to Singapore. His mother is a housewife. What is the
amount of tax relief can Mr Yip claim in respect of his
parents?

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Relief for handicapped siblings

➢ Own/spouse’s brother or sister

➢ Conditions to be met:
• Physically or mentally handicapped
• Living in Singapore
• No income threshold
• No one else make a claim for spouse or child relief in
respect of the same dependant
• If not staying in same household, must incurred at least
$2,000 in preceding year to support dependant
➢ Amount : $5,500 (can be apportioned)

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Income Tax Programme Level 1
Case Studies

Question 3 : Handicapped Sibling relief

There are 4 children: A, B C and D in Tan’s family. C & D are supporting the
other 2 siblings:

A is blind. She is a street performer performing at Orchard Road. She

collects an average of $300 per month. She is living on her own and her
siblings each incurred $200 per month to support her.

B is deaf. She is married and is a housewife. B and her husband are staying
with C & D. Her husband claimed for handicapped spouse relief.

Both C and D wish to claim handicapped sibling relief. Please explain to

them whether they are eligible for the relief.
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CPF relief

Contribution to CPF / Provident funds by employees

Conditions:
➢ Compulsory CPF / provident funds
➢ Cap on ordinary wages (OW) and additional wages (AW)

• OW : based on the lower of $6,000* or the actual

amount p.m.

• AW : based on the lower of the actual amount or

[$6,000 x 17 months (i.e. $102,000) – OW subject
to CPF]

➢ CPF contribution rate based on age

*$6,300 wef Sep 2023 to Dec 2023 and will increase to $8,000 in 4 phases (i.e. affects YA 2024)

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 CPF CASH TOP-UP RELIEF
Relief is given for topping-up

▪ Own self:
▪ Special Account (SA) if he/she is below age 55; or
▪ Retirement Account (RA) if he/she is aged 55 and above
▪ Family members’ SA or RA:
▪ Parents or Parents-in-law
▪ Grandparents or Grandparents-in-law
▪ Spouse
▪ Siblings

With effect from YA 2023:

▪ For CPF cash top-ups made by all individuals on or after 1 Jan 2022, the tax relief for cash top-up is
expanded to include cash top-ups made to self and family members’ Medisave accounts (MA).

Amount of Tax Relief

YA For self For family members Maximum relief
allowable
Up to YA 2022 $7,000 $7,000 $14,000
From YA 2023 $8,000 $8,000 $16,000

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CPF Cash Top - Up Relief

➢ Conditions of claim:
• Only cash top-up is eligible for the deduction

• If top up for spouse’s or sibling’s account, their

income must not exceed $4,000 in the year
preceding the year of top-up

• Income threshold is not applicable for parent,

grandparent, handicapped spouse and
handicapped sibling

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 SRS Relief
Conditions for claim:
• Relief will be given if SRS account was not suspended in the year
preceding YA

• Contribution is not withdrawn from SRS account

• Amount of relief - up to SRS contribution cap

Singaporean/SPR Foreigner
From YA 2017 $15,300 $35,700
(15% x $6,000 x 17 ) (35% x $6,000 x 17)

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Relief for Course Fees

For courses that are longer than one year, and full payment was
made upfront, course fee can be divided equally and allowed
for each year throughout the duration of the course.

Example
Course fee of $18,000 for a 3-year course was fully paid in 2021.

Course fee relief of $5,500 (i.e. $18,000/3, capped at $5,500)

can be allowed for each of the YA 2022 to 2024, but not beyond
the duration of the course.

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Income Tax Programme Level 1
Case Studies

Question 4 : Relief for Course fee/CPF/ CPF top-up

Jenny, a Singaporean, had found a job as an accountant. Her income and
expenses for the year 2023 were as follows:

Salary (Apr to Dec 2023) $108,000 (monthly : $12,000)

Bonus $60,000 (paid in Dec 2023)
Transport & Allowance $1,200/mth
ACCA course fees $12,000
The course fee was paid in advance for a 2-year course starting from 1 Jul 23.
In addition, she topped up $10,000 in cash to her mother’s CPF retirement
account in the year.

Calculate the amount of relief that she can claim.

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Relief for Grandparent Caregiver (GCR)

➢ Conditions that caregiver must meet:

• Living in Singapore
• Not carrying on of any trade, business, profession, vocation
or employment [From YA 2024, GCR allowable so long as caregiver
does not have annual trade, business, profession, vocation and/or
employment income > $4,000]
• No one else is claiming GCR for same person

➢ Conditions that the child must meet:

• Singapore citizen, and
• was 12 years old or below
• from YA2020, no age limit if the child is handicapped

➢ Amount of relief : $3,000

➢ Claimable by married women, widow or divorcee who has
earned income in the preceding year

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 Relief for Foreign Domestic Worker Levy (FDWL)

➢ Claimable by:
(a) married woman, or

(b) woman who is separated from husband, divorced or

widowed, who
• has any unmarried child living with her in the
same household in Singapore in respect of whom
she may be allowed child relief.

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Relief for Foreign Domestic Worker Levy

Amount:
• Twice the amount of levy of one foreign domestic worker
allowable against Earned Income (Earned income is income from
employment, pension, trade, business, profession or vocation, less
allowable expenses)

From Y/A 2021

a) With concession
Qualify for concessionary rate if a family had child 16 years old and
below or elderly person who is at least 67 years old or handicapped

Amount: $1,440 (i.e. $60 x 12 x 2 )

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 Relief for Foreign Domestic Worker Levy

Without concession
For first foreign domestic worker:
7,200 [i.e. ($300 x 12) x 2); or

For second foreign domestic worker:

$10,800 [i.e. ($450 x12) x 2]

As the taxpayer can only claim for one domestic worker, she can claim
for the higher relief.

Does not matter whether husband or wife pays for the levy.

FDWL relief will lapse after YA 2024.

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Income Tax Programme Level 1

Case Studies

Question 5: Grandparent Caregiver Relief (GCR) /Relief for Foreign

Domestic Worker Levy (FDWL)
Mr & Mrs Li are both working. Their 2 children, aged 2 and 4 years old, are Singapore
citizen. Both children are taken care by their paternal grandparents living in Toa Payoh.
The grandfather receives $300 per month from renting out a room in his flat. The
grandmother works at McDonald on weekends when she is not looking after the
children. She is paid $3,000 in total for 2023. In addition, Mr Li hired an Indonesia
domestic worker in 2023. The domestic worker’s salary is $500 per month and he also
has to pay for the Levy.

a) Can Mr Li claim the domestic worker’s salary as an expense since he cannot claim
for the FDWL?
b) What is the amount of FDWL relief can Mrs Li claim?
c) What is the amount of GCR can Mrs Li claim?
i) if the grandparents are also looking after children of Mr Li’s sister?
ii) if only the grandfather/ grandmother is looking after the children?
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 Parenthood Tax Rebate (PTR)

Conditions:
• tax resident who is married, divorced or widowed
• have qualifying (Singapore citizen) child born/adopted child
as follows:
Ranking of Child Date of birth of child

1st On or after 1 Jan 2008

2nd, 3rd and 4th On or after 1 Jan 2004

5th and subsequent child On or after 1 Jan 2008

Determining child order :

A stillborn* child is counted in determining the order of children.

* Applicable for PTR claim made for YA 2022 and subsequent YA and where the natural mother of the stillborn child is a member of the same
household of the child in respect of whom PTR is being claimed.
A stillborn child refers to a child that (i) issues from the child’s mother after twenty-second week of pregnancy and (ii) does not show any
sign of life at any time after being completely expelled or extracted from the mother. This definition of a “stillborn child” is provided
under the new section 42A(12C).
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Parenthood Tax Rebate (PTR)

Amount of PTR depends on the order of eligible child :

Child Order Amount of PTR
1st child $5,000
2nd child $10,000
3rd child $20,000
4th child $20,000
5th child & beyond $20,000 for each child

PTR can be shared between husband and wife based on

agreed proportion.

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Income Tax Programme Level 1
Case Studies

Question 6: Child relief and Parenthood Tax Rebate (PTR)

Florence is a Singaporean. She married an Australian whilst she was studying in Melbourne
in Apr 2022. She gave birth to a baby boy in Jun 2023 and returned to Singapore in Sep
2023. Her husband is still in Australia.
She received rental income of $36,000 from renting out her Singapore property in 2023.
The property was transferred to her name in 2022 when her father passed away.
She also registered her baby as a Singaporean in Dec 2023.

a) State the type of relief that she can claim in respect of her child.
b) Since her child is born in Jun 2023, state the type of child relief and amount that she is
entitled to claim and whether she needs to apportion the relief.
c) Reason that she cannot be granted other type of child relief
d) Whether she is entitled to PTR?
e) Whether she can share her PTR if her husband subsequently comes to work in
Singapore?

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Day 2

Topic 7 : Case Study / Tax

Computation

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 Topic 7 - Computation of Income Tax Liability of an Individual

• Case studies & Revision Kit questions

• Refer to Canvas for case study questions

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Question 1

Mr Keith Chew, aged 39, received the following income in year 2023:

$ $
Employment : SLE Asia Pte Ltd
Salary 150,000
Bonus 5,000 155,000

Dividends : Singapore 4,000

Hong Kong (remitted) 500

Interest : SG P2P Lending 550

Other income: Doremi Music School 350

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 Other Information
(1) Mr Chew opened an account with SG P2P Lending, a Singapore based peer-to-peer lending
platform and put in $10,000 on 1 Jul 2022, expecting an interest of 5.5% for 1 year. He
received the principal amount and interest on 1 Aug 2023.

(2) Mr Chew plays the drums in his leisure and has music qualifications awarded by RSL UK.
During the year, he was asked by Doremi Music School to stand in for 2 lessons as the
instructor was on medical leave. He received fees of $350 for the lessons.

(3) His wife is working part-time from Jul 2023. The monthly salary is $700. She does not have
any other income.

(4) Mr Chew’s father is 90 years old and was staying with his sister in Kuala Lumpur. He has
remitted a total of $4,000 in the year 2023 to support his father. He is the only person
claiming relief in respect of his father.

(5) During the year 2023, Mr Chew made compulsory contribution to CPF of $15,640.

(6) During the year 2023, Mr Chew attended a course on financial auditing which is related to
his job. The course fee was $3,800. He used $1,000 from his Skillsfuture Credit to offset part
of the course fees.
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Question 1

You are required to:

(a) compute Mr Chew’s income tax liability for the Year of Assessment 2024.

(b) state your reasons for not taxing any income or not allowing any
relief/deduction in your computation.

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 Question 2
Mr Alex, aged 51, is an Australian. He came to Singapore on a Dependant Pass in Dec 2022. He
continued to work remotely for his Australian employer which has no branch or related entity in
Singapore from Dec 2022 to Apr 2023. He then joined a company resident in Singapore from May 2023.
He submitted his Income Tax Return for the Year of Assessment 2024 showing the following
information:
Mr Alex’s Income for the year ended 31 Dec 2023

$ $
Employment: 1) In Australia (Jan – Apr 2023)
Salary 49,000

2) In Singapore (May – Dec 2023)

Salary 140,000
Bonus 40,000
Entertainment allowance 6,000 186,000 235,000

Rental: Net rent from property in Australia 20,000

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Other Information
1. Entertainment allowance
His records showed that only $4,000 is expended for business purposes.

2. Net rental income from Australia

He remitted the amount to Singapore on 30 Dec 2023.

3. Family
Every month, he sent $3,000 to his wife in Australia. His wife is a part-time childcare teacher. Her
income for the year 2023 was A$3,000 (S$3,900).
He has 2 children. The elder boy has just graduated from the University of Melbourne in Aug 2023 but
he has yet to find a job. The younger one is studying in the high school.

4. Parents-in-law
He is currently staying with his parents-in-law at Yishun Road. In 2023, his father-in-law is working as a
part-time security guard with a monthly income of $900. His mother-in-law is a housewife. Both of
them are above 55 years old and no one else is claiming relief in respect of them.

5. Donation
During the year 2023, he made a donation of $500 to the Singapore Red Cross, an approved institute
of public character (IPC).

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 Question 2

You are required to:

(a) compute Mr Alex’s income tax liability for the Year of Assessment 2024; and

(b) State your reasons for not taxing any income or not allowing any relief in your
computation.

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Question 3
Mdm Sandra Lee, aged 45, is a widow. She submitted her Income Tax Return for the Year of
Assessment 2024 showing the following information:
$ $
Income
Employment :
1) General Manager of Brown Pte Ltd
Salary 160,000
Bonus (Contractual) 56,000
Holiday reimbursement 4,500
Medical reimbursement 300 220,800

2) Global (S) Pte Ltd

Director’s fee 3,000

Dividend : Singapore 410

Interest : POSB (Savings Account) 2,850

UOB Ltd 1,800 4,650

Rental: Condo at Bukit Timah Road 36,000

(Gross income from Jan to Dec 2023) 94
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 Other Information
(1) Employment
Brown Pte Ltd provided her with a fully furnished apartment in the year 2023.
She has to pay a rent of $600 per month. The rental paid by the company is
$6,000 per month. The annual value of the house is $10,000.

(2) Interest
An interest of $400 in respect of a fixed deposit with UOB Ltd matured on 23
Dec 2023. It was not withdrawn until 5 Jan 2024.

(3) Rental
Mdm Lee did not keep the receipts of the rental expenses so she wanted to
claim deemed expenses. She incurred $10,000 mortgage interest in 2023 in
respect of the loan taken to purchase the property.

(4) Children
Mdm Lee has two children who are Singapore citizens. The first child is
pursuing his studies at the Nanyang Technological University whilst the
youngest child is a student at Pei Chun Primary School in 2023.

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Other Information

(5) Sibling
Mdm Lee has a brother, who is blind and has no income of his own. He is looked
after by her parents in Johore Bahru. Mdm Lee remits $600 per month to her
parents for his maintenance. She is the only person claiming relief in respect of
him.

(6) Central Provident Fund (CPF)

During the year 2023, Mdm Lee contributed $20,400 to the CPF. All is compulsory.

(7) Foreign domestic helper

Mdm Lee employed a helper to look after her children since Dec 2021. She paid
her $700 every month. She also has to pay the foreign maid levy of $60 per month
in 2023.

(8) Parenthood Tax Rebate (PTR)

Mdm Lee has a balance of $500 in the PTR account.

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 Question 3

You are required to:

(a) compute Mdm Lee’s income tax liability for the Year of Assessment 2024; and

(b) state your reasons for not taxing any income or not allowing any relief in your
computation.

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2024© Copyright Tax Academy of Singapore. All rights reserved.
 Taxation of Individuals –
Trade, Business and Profession

Topics

• Who is a Self-Employed person

• Taxation of Sole-Proprietorship
• Deductibility of Expenses
• Non-Deductibility of Expenses
• Fixed Expense Deduction Ratio
• CPF Medisave Contribution
• Capital Allowances
• Treatment of Unabsorbed Trade Losses, Capital Allowances and Approved
Donations
• Carry-Back Relief System
• Assessable Income of Self-Employed person
• Examples of Self-Employed Person (other than Sole-Proprietorship)
• Filing of Returns and Accounts
• Record Keeping Requirements 2

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 Who is a Self-Employed person?

Who is a Self-Employed Person

▪ Self-Employed Person
o Is an individual who carries on a trade, business, profession or
vocation.
o Includes sole-proprietor and individual partner of partnership
o Derives income from buying or selling of goods or providing
professional or personal services

▪ Sole-Proprietor is a person
o Who owns and operates a business registered with the
Accounting and Corporate Regulatory Authority (“ACRA”)

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Who is a Self-Employed Person

▪ Self-employed persons can be categorised as being in the following

activities:

Trade or Person who owns a manufacturing, construction,

Business wholesale, service, or retail business.

Profession Doctor, lawyer, accountant or architect who is in

practice.

Vocation Commission agent, freelancer, baby-sitter, taxi-

driver, Youtuber, delivery rider or tuition teacher.

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Who is a Self-Employed Person

▪ Features to note for:

Self-Employed Employee
Contract for service Contract of service
Owner of the business (work for Work under the control of your
yourself) and are in the position to employer
realise a business profit or loss

A self-employed may be a sole-

proprietor or a partner in a
partnership

2024 © Copyright Tax Academy of Singapore. All rights reserved. 6

Who is a Self-Employed Person

▪ Features to note for:

Self-Employed Employee
Responsible for the costs of Employer supplies most of the tools
repair, insurance and and equipment required. The
maintenance to the tools, employer is also responsible for
equipment and machinery. repair, maintenance and insurance
costs.
Make significant investments in
the tools and equipment required Employer retains the right of use
to do the work, and therefore over the tools and equipment.
retain a right over the use of the
assets.

2024 © Copyright Tax Academy of Singapore. All rights reserved. 7

Who is a Self-Employed Person

▪ Features to note for:

Self-Employed Employee
Paid a fee on a per-job basis. Paid a regular wage (e.g monthly wage)
Have the right to negotiate with and may receive a commission payment
the payer the exact amount you in addition to the regular wage.
would be paid for.

Do not receive any protection or Entitled to benefits from employer, e.g

benefits from the payer. employer's contribution to CPF, medical
and vacation leave, medical
Have to purchase own medical reimbursement, group accident and
and insurance coverage. health insurance, etc.

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 Taxation of Sole-Proprietorship

Taxation of Sole-Proprietorship

▪ Income of Sole-Proprietorship (“SPship”)

o Assessed in the name of sole-proprietor
o Trade income is assessed in the year of assessment
(“YA”) following the end of the SPship accounting period

o Examples
Accounting period Basis Income taxed in
1 Jan 2023 to 31 Dec 2023 Calendar-year YA 2024
1 Apr 2022 to 31 Mar 2023 Accounting-year YA 2024

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 Taxation of Sole-Proprietorship

▪ Income of Sole-Proprietorship (“SPship”)

▪ From YA2005,

o Non-trade income of the SPship can be assessed on an

accounting-year basis if the sole-proprietor prepares his
business accounts on an accounting-year basis
[S35(4)(c)].

o Approved donations made in the name of SPship can also

be allowed on an accounting-year basis [S37(10A)(c)].

o However, the other sources of income not derived from the

Spship will continue to be taxed on a calendar year basis.

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Taxation of Sole-Proprietorship

▪ Tax Treatment

Self-Employed Employee
Gains or profits assessable as Gains or profits assessable as
‘Trade Income’ - S10(1)(a) of ‘Employment Income’ - S10(1)(b) of the
the ITA ITA

Can claim business expenses Can claim employment expenses if

incurred against the trade • incurred in carrying out official duties
income (subject to deductibility • not reimbursed by employer
rules) • not private or capital expense

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 Taxation of Sole-Proprietorship

▪ Tax Treatment

Self-Employed Employee
Can claim capital allowance on No capital allowance
assets used in Trade, Business or
Profession

Trade losses can be offset against Not applicable

other income (e.g. employment,
rental)

Trade losses can be carried back or

carried forward

2024 © Copyright Tax Academy of Singapore. All rights reserved. 13

Deductibility of Expenses

14
 Deductibility of Expenses

▪ S14 of the ITA outlines what deductions to be allowed to

determine the person’s income for any period.

▪ S15 of the ITA outlines the prohibitions of expense claims.

▪ Applies to business expense claims of the self-employed

person.

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Deductibility of Expenses

S14 deductions - expenses wholly and exclusively incurred during that period by that
person in the production of the income

General Rules for Claiming Allowable Business Expenses

o Expenses must be incurred. An expense is 'incurred' when the legal liability to pay
has arisen, regardless of the date of actual payment of the money.

o “in the production of the income” - Expenses must be incurred for earning the
income, e.g. expenses that are personal and private in nature are not allowable as
they do not relate to the business.

o Expenses that are capital in nature (e.g. purchase of fixed assets such as plant and
machinery) are not allowable business expenses. However, depreciation of fixed
assets may be claimed as capital allowances.

o Expenses should be supported by proper and complete source documents that

should be kept for at least five years to substantiate your claims.

o Expenses are not prohibited from deduction under the ITA.

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 Deductibility of Expenses

▪ Examples of allowable expenses [S14]

o Salary of employees
o Rental paid for business premises
o Business related entertainment
o Business related travelling expenses (local or overseas)
o Hire purchase interest on equipment used for business
o Advertising, printing, stationery and office supply costs
o Upkeep of business premises and equipment
o Trade debts which become bad and irrecoverable during the
accounting year

2024 © Copyright Tax Academy of Singapore. All rights reserved. 17

Deductibility of Expenses

▪ Provisions for deductions of specific expenditures not ordinarily deductible

under S14
▪ Applicable to sole-proprietorship and partnership businesses:
o Pre-commencement expenses (S14R)
o Approved trade fairs, exhibitions or trade missions (S14B)
o Expenditure on research and development (S14C)
o Enhanced deduction for qualifying expenditure on research and
development (S14D)
o Further deduction for expenditure on research and development project
(S14E) [lapsed after 31 Mar 2020]
o Renovation or refurbishment expenditure (S14N)
o Deduction for expenditure for services or secondment to institutions of a
public character (S14Z)

2024 © Copyright Tax Academy of Singapore. All rights reserved. 18

Deductibility of Expenses – Work from home
expenses

▪ If the self-employed person conduct business activities at home,

he/she can claim for the expenses incurred for the business
purpose if he/she can apportion the expenses into private and
business usage on a reasonable basis.

▪ Cost of travelling to and from your home is considered private

expenses, however, if the place of residence is now also the
business premises, the transport expenses incurred from home or
back to home for business purposes would also be tax deductible.

2024 © Copyright Tax Academy of Singapore. All rights reserved. 19

Deductibility of Expenses – Pre-commencement

expenses

▪ S14R of ITA – Deduction for expenses incurred before first dollar of

income from trade, business, profession or vocation.

▪ Allows tax deduction on revenue expenses incurred 1 year prior to the

deemed date of commencement of business. E.g. a business may claim
allowable revenue expenses in an accounting year ending 2022 (YA 2023)
if the first dollar of business receipt is earned during accounting year
ending in 2023 (YA 2024).

Revenue Expenses Incurred From YA 2012

1 year before the first day of the basis Tax-deductible. The revenue expenses
period in which the business earns its are treated as incurred on the deemed
first dollar of business receipt i.e. date of commencement of business
deemed date of commencement of
business
During the basis period in which the Tax-deductible
business earns its first dollar of business
receipt

2024 © Copyright Tax Academy of Singapore. All rights reserved. 20

Deductibility of Expenses – Pre-commencement
expenses – Section 14R

Example 1:
Date of business registration 01 Sep 2020
Financial year end 31 Dec 20xx
Date first incurred revenue 15 Nov 2020
expenses
Date earned first dollar of 01 Sep 2021
business receipt
Deemed date of 01 Jan 2021
commencement of business*

▪ Based on the example above, revenue expenses incurred from 01 Jan 2021
to 31 Dec 2021 is tax deductible in YA 2022.
▪ Due to S14R, revenue expenses incurred from 01 Jan 2020 to 31 Dec 2020
is also tax deductible in YA 2022. These expenses are treated to be incurred
on 01 Jan 2021 (deemed date of commencement of business*).
* deemed date of commencement of business - is the first day of the accounting year in which the first
dollar of business receipt is earned
2024 © Copyright Tax Academy of Singapore. All rights reserved. 21

Deductibility of Expenses – Expenditure on R&R

Renovation & Refurbishment Expenses (S14N)

▪ S14N deduction for expenditure incurred on or after 16 Feb 2008 on R&R
works carried out to business premises.
▪ R&R expenses allowed on three equal deductions over three consecutive
YAs (i.e. 1/3 deduction per YA).
▪ If the trade, business or profession ceases permanently in any of the basis
periods of the 3 YAs, the section 14N deduction also ceases with effect from
that YA.
▪ Examples of R&R costs that do not affect the structure of the business
premises and hence are qualifying R&R under S14N, include:
o General electrical installation and wiring to supply electricity
o General lighting
o Kitchen fittings (sinks, pipes etc.)
o Fixed partitions (glass or otherwise)
o Floorings (marble, tiles, laminated wood, parquet etc.)
o False ceilings and cornices
2024 © Copyright Tax Academy of Singapore. All rights reserved. 22
Deductibility of Expenses – Expenditure on R&R

Renovation & Refurbishment Expenses (S14N)

▪ The following claims do not qualify for S14N deduction:

o Any designer services or professional services;
o Any antique;
o Any type of fine art including painting, drawing, print, calligraphy,
mosaic, sculpture, pottery or art installation; or
o Any works carried out to a place of residence provided to or to
be provided to employees.

▪ With effect from YA 2025, the qualifying expenses will be expanded

to include designer or professional fees.

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Deductibility of Expenses – Expenditure on R&R

Renovation & Refurbishment Expenses

▪ With effect from YA 2013, the amount of R&R costs that qualify for
S14N deduction is subject to the expenditure cap of $300,000 for
every relevant 3-year period, starting from:
o Basis period for the YA in which R&R costs are first incurred and;
o A deduction is claimed.

▪ Same expenditure cap of $300,000 applies to individual sole-

proprietor regardless of number of sole-proprietorships he owns.

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Deductibility of Expenses – Expenditure on R&R

▪ Budget 2020:
o For YA 2021, a taxpayer will have an option to claim the section
14N deduction in one YA (accelerated claim) instead of over three
consecutive YAs.

o The cap of $300,000 for every relevant period of 3 consecutive YAs

will still apply.

o If exercised, this option is irrevocable.

▪ Budget 2021:
o To continue providing support to businesses, the option to claim
R&R deduction in one YA will be extended to qualifying expenditure
incurred on R&R for the YA 2022, with the same parameters as YA
2021.

2024 © Copyright Tax Academy of Singapore. All rights reserved. 25

Deductibility of Expenses – Expenditure on R&R

▪ Budget 2024:
o With effect from YA 2025, the relevant 3-year period being from YA 2025
to YA 2027 will be fixed. All businesses will be transitioned to this
arrangement, and taxpayers will be allowed an option to claim R&R
deductions in one YA, subject to the prevailing cap.

o Example:
Fixed 3-year periods Expenditure cap
YA 2025 to YA 2027 $300,000
YA 2028 to YA 2030 $300,000
YA 2031 to YA 2033; and so on $300,000

o Similarly, the option if exercised, is irrevocable.

2024 © Copyright Tax Academy of Singapore. All rights reserved. 26

Deductibility of Expenses – Expenditure on R&R

Example 1: Illustration of allowable R&R costs over relevant 3-year period

YA 2021 2022 2023

Qualifying R&R $150,000 NIL NIL
costs incurred
Qualifying R&R $150,000 NIL NIL
costs (capped)
S14N $50,000 $50,000 $50,000
deductions ($150,000/3
years)

Taxpayer can claim S14N deduction of $50,000 ($150,000/3) against his

income for each of the YAs 2021, 2022 and 2023. S14N deduction of
$80,000 ($240,000 / 3 years)
against his income for each of the YAs 2019, 2020 and 2021

2024 © Copyright Tax Academy of Singapore. All rights reserved. 27

Deductibility of Expenses – Expenditure on R&R

Example 2: Illustration of allowable R&R costs for business which ceased

on 31 Dec 2021

YA 2021 2022 2023

Qualifying R&R $150,000 NIL NIL
costs incurred
Qualifying R&R $150,000 NIL NIL
costs (capped)
S14N $50,000 $50,000 NIL
deductions ($150,000/3
years)

Taxpayer can claim S14N deduction of $50,000 ($150,000/3) against his income for
each of the YAs 2021 and 2022. As business ceased on 31/12/2021 (no income
from 1 Jan 2022), the balance of $50,000 will not be allowed in YA 2023. income for
each of the YAs 2019, 2020 and 2021
2024 © Copyright Tax Academy of Singapore. All rights reserved. 28
 Deductibility of Expenses – Expenditure on R&R

Example 3: Illustration of allowable R&R costs with capping applied

(assume no election for accelerated claims in YA 2021 and YA 2022)
YA 2021 2022 2023

Qualifying R&R $150,000 $60,000 $110,000

costs incurred

Qualifying R&R $150,000 $60,000 $90,000 (capped at

costs (capped) $300,000)

Allowable $50,000 $70,000 $100,000

deductions ($150,000/3 [$50,000+$20,000] [$50,000+$20,000+
under S14N years) (60,000/3 years) $30,000]
(90,000/3 years)
In YA 2023, the qualifying R&R expenditure allowed is capped at $90,000 ($300,000 -
$150,000 - $60,000)
2024 © Copyright Tax Academy of Singapore. All rights reserved. 29

Deductibility of Expenses – Expenditure on R&R

Renovation & Refurbishment Expenses

▪ For premises used for both business and other

purpose (e.g. home office)

o Only costs specifically identifiable to the area used

for business purposes can qualify for S14N
deduction.

o No apportionment of R&R costs is allowed.

2024 © Copyright Tax Academy of Singapore. All rights reserved. 30

 Non-Deductibility of Expenses

31

Non-Deductibility of Expenses

• S15 of ITA outlines the prohibitions of expense claims.

• Expenses are not tax deductible if they fall into any of the
following categories:

• Capital in nature
• Personal and private in nature

2024 © Copyright Tax Academy of Singapore. All rights reserved. 32

 Non-Deductibility of Expenses

Examples of Disallowable Business Expenses:

• Donations to charities & gifts to non-customers
• Capital costs
• Private expenses of self-employed person
• Fines for breach of law
• Self-employed person’s salary, bonus, CPF & medisave contributions
• All expenses in respect of private vehicles (even if it is incurred in the
course of business)*
• Entertainment incurred by family members & friends
• Remuneration paid to related parties in excess of commercial value of their
services
*Wef YA2019, private-hire car drivers can claim tax deduction on car-related expenses against
their driving income

2024 © Copyright Tax Academy of Singapore. All rights reserved. 33

Fixed Expense Deduction Ratio

(FEDR)

34
 Fixed Expense Deduction Ratio (FEDR)

Introduction to Fixed Expense Deduction Ratio - S14ZA

▪ First introduced in YA 2019 for PHC/Taxi drivers.

▪ To simplify tax filing and ease the burden of record keeping.

▪ Qualifying taxpayers can elect to deduct a deemed amount of

expense based on a prescribed percentage of the gross income
earned.

▪ Taxpayer having both PHC (private-hire car) and taxi driver income
in the same year:
- will need to exercise the same option for all his driving income.
- cannot claim the 60% prescribed deemed expenses against his PHC
driving income and actual deductible business expenses against his taxi
driving income, or vice versa.

2024 © Copyright Tax Academy of Singapore. All rights reserved. 35

Fixed Expense Deduction Ratio (FEDR)

FEDR – PHC/Taxi Drivers

▪ The prescribed deemed expense ratio for all self-employed PHC

and taxi drivers – 60% of the gross driving income.

▪ The amount is deemed to be the sum of all deductible business

expenses incurred (including car rental, repairs, maintenance, fuel,
parking fees, service fees paid to booking service operators) in
earning the driving income.

▪ PHC/Taxi drivers may choose to claim the actual amount of

deductible business expenses incurred if their amount of actual
expenses is more than the deemed expenses.

2024 © Copyright Tax Academy of Singapore. All rights reserved. 36

 Fixed Expense Deduction Ratio (FEDR)

FEDR – PHC/Taxi Drivers

▪ Under S14ZA(7), if PHC/Taxi drivers choose to claim the actual

amount of deductible business expenses incurred instead of the
deemed expense ratio, any amount of expenses incurred in that
basis period and deductible against his driving income that is in
excess of such driving income cannot be deducted against any of
his other income for that YA.

▪ The excess expenses can be carried forward or carried back under

Section 37 or 37D but can only be deducted against his driving
income derived in the basis period for a subsequent or preceding
YA, as the case may be.

▪ No capital allowance will be allowed to PHC drivers in respect of

the PHC acquired by them.

2024 © Copyright Tax Academy of Singapore. All rights reserved. 37

Fixed Expense Deduction Ratio (FEDR)

Prior to YA 2019 Wef YA 2019

Taxi Drivers Claim actual expenses Options to claim
Deductible Expenses:
PHC Drivers Expenses incurred directly or in the o Actual expenses
form of reimbursement on using
private hire cars or private cars (E, or
Q or S-plate cars) such as repair,
maintenance, parking fees, petrol o 60% Fixed
costs are disallowable. Expense
Deduction Ratio
These expenses are not deductible for Taxi / PHC
even if the private cars were used for Drivers
business purposes.

2024 © Copyright Tax Academy of Singapore. All rights reserved. 38

 Fixed Expense Deduction Ratio (FEDR)

FEDR – Qualifying Commission Agents (S14ZB)

▪ In YA 2020, the FEDR scheme was extended to self-employed qualifying

commission agents, who can claim 25% of the gross commission income
earned as prescribed deemed expenses.

▪ Qualifying commission agents refer to general commission agents, real

estate agents, insurance agents, Multi-level Marketing (“MLM”) agents and
remisiers who meet the following conditions:

❖ A Singapore tax resident in the YA

❖ Carrying on a trade, business, profession or vocation and incurred
deductible business expenses on the commission income earned.
❖ Received commission income not exceeding $50,000 annually (Total
commission income received from all commission sources)

2024 © Copyright Tax Academy of Singapore. All rights reserved. 39

Fixed Expense Deduction Ratio (FEDR)

FEDR – Qualifying Commission Agents

▪ The amount of business expense is deemed to be the sum of all

deductible business expenses incurred (including expenses on
entertainment, transport, gifts and telecommunications) in earning the
commission income.

▪ If commission income is more than one sources in the same year:

- Cannot claim the 25% prescribed deemed expenses against
one commission income source and actual deductible business
expenses against other commission income source.
- Have to exercise same option for all commission income
sources.

▪ Commission agents may choose to claim the actual amount of

deductible business expenses incurred if their amount of actual
expenses is more than the deemed expenses.

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 Fixed Expense Deduction Ratio (FEDR)

Prior to YA 2020 Wef YA 2020

Commission Claim actual tax deductible Options to claim Deductible
Agents (gross expenses Expenses:
income o Actual expenses
<=$50,000)
or

o 25% Fixed Expense

Deduction Ratio for
Qualifying Commission
Agents

2024 © Copyright Tax Academy of Singapore. All rights reserved. 41

Fixed Expense Deduction Ratio (FEDR)

Example 1:
Amanda derived gross commission income of $28,000 and $30,000 as
an insurance agent and real estate agent respectively in YA2024, can
she apply the FEDR for her expenses claim?

Answer 2
No. Her total gross commission income has exceeded the $50,000 annual
threshold and is not a qualifying agent under the FEDR initiative.

Example 2:
Byron derived $10,000 commission as a MLM agent in YA2024 and did
not incur any expenses, can he claim expenses under the FEDR
initiative?
Answer 2
No, the expenses is nil since he did not incur any expenses.

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 Fixed Expense Deduction Ratio (FEDR)

◼ FEDR – Qualifying Delivery Workers (S14ZH)

▪ From YA 2024, the FEDR scheme is extended to self-employed
qualifying delivery workers, who can choose to claim tax deductions
on business expenses based on prescribed deemed expenses.

▪ A delivery worker must fulfill ALL of the qualifying conditions:

▪ Must be a self-employed individual;
▪ Only uses the prescribed delivery mode(s) to perform the delivery
services;
▪ Total annual gross income from delivery services does not
exceed $50,000.

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Fixed Expense Deduction Ratio (FEDR)

◼ FEDR – Qualifying Delivery Workers

▪ The prescribed FEDR that delivery workers can claim depends on the
delivery mode(s) used:

Prescribed delivery modes FEDR on annual gross income

from delivery services
On foot, by public transportation, or 20%
by non-power-assisted bicycles
By motorized personal mobility 35%
devices (PMDs), power-assisted
bicycles (PABs) or motorcycles
By vans 60%

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 Fixed Expense Deduction Ratio (FEDR)

◼ FEDR – Qualifying Delivery Workers

▪ Delivery workers who use multiple delivery modes in the same year and would like to
claim FEDR should apply the respective FEDRs to the corresponding income earned
under each delivery mode.

▪ Delivery workers using other delivery modes such as cars*,lorries or trucks should claim
tax deductions based on the actual allowable business expenses incurred in earning the
income.

▪ If the annual gross income from delivery service is more than $50,000, a delivery worker
cannot claim deduction based on FEDR. Instead, tax deductions based on actual
amount of allowable business expenses incurred should be claimed.

▪ The FEDR must be applied consistently to either all delivery modes used or none at all.

* Private car expenses are not deductible, delivery workers can continue to claim other business
expenses not related to private car expenses.

2024 © Copyright Tax Academy of Singapore. All rights reserved. 45

Fixed Expense Deduction Ratio (FEDR)

Prior to YA 2024 Wef YA 2024

Delivery Claim actual tax deductible Options to claim Deductible
workers (gross expenses Expenses:
income o Actual expenses
<=$50,000)
or

o Fixed Expense
Deduction Ratio* for
Qualifying Delivery
Workers

* FEDR depends on the delivery mode(s) used.

2024 © Copyright Tax Academy of Singapore. All rights reserved. 46

 Fixed Expense Deduction Ratio (FEDR)

◼ FEDR – Qualifying Delivery Workers

Example 1:
Charles Daniel Ethan

Annual gross $40,000 $10,000 $50,000

income from (using motorcycle) (on foot) (using lorry)
delivery
services $60,000
(using van)

Total income = $70,000

FEDR $14,000 Daniel does not qualify for Ethan does not qualify for
(i.e. 35% x FEDR as his total annual gross FEDR as the delivery mode
$40,000) income from delivery services that he uses (i.e. lorry) is not a
is more than $50,000. prescribed delivery mode.

However, he can claim the However, he can claim the

actual allowable business actual allowable business
expenses incurred. expenses incurred.

2024 © Copyright Tax Academy of Singapore. All rights reserved. 47

Fixed Expense Deduction Ratio (FEDR)

◼ FEDR – Qualifying Delivery Workers

Example 2: Claiming of FEDRs for multiple delivery modes
Felix worked as a self-employed delivery worker and earned $5,000 in the first
half of the year using his bicycle to perform the delivery services. In the second
half of the year, he used a motorised PMD to perform the delivery services and
earned $20,000. The FEDR/ deemed business expenses that Felix can claim and
the adjusted profit that he will declare in his Income Tax Return are:

Bicycle Motorised PMD Total

Gross income from $5,000 $20,000 $25,000

delivery services
Less: FEDR $1,000 $7,000 $8,000
(i.e. 20% x (i.e. 35% x $20,000)
$5,000)
Adjusted Profit/ Net Trade $4,000 $13,000 $17,000
Income

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 Fixed Expense Deduction Ratio (FEDR)

◼ FEDR – Qualifying Delivery Workers

Example 3: Claiming FEDRs for multiple groups of delivery modes, including
delivery mode that does not have FEDR

Amanda earned $20,000 and $30,000 from delivering parcels using her
motorised personal mobility devices (PMDs) and car respectively in 2023. She
would like to claim 35% FEDR solely on her motorised PMDs, and actual
allowable business expenses on her car. Can she apply the FEDR for her
expenses claim?
Answer
No. Although Amanda’s total income from delivery services did not exceed
$50,000 and her motorised PMDs fall within the list of prescribed delivery
modes, she is not allowed to claim FEDR solely on the income earned using her
motorised PMDs. This is because the car that she uses for her delivery services
does not fall within the list of prescribed delivery mode.
Instead, she can claim tax deductions based on the actual allowable business
expenses incurred by her on income earned from both delivery modes.
2024 © Copyright Tax Academy of Singapore. All rights reserved. 49

CPF Medisave Contributions

50
CPF Contributions/Medisave

▪ Under CPF regulations, all self-employed persons have to make

Medisve contribution if they meet the following 2 conditions:

- either Singapore citizens or Singapore Permanent

Residents; and
- deriving net trade income of more than $6,000 a year.

▪ Amount of Medisave contributions a SEP has to make is

dependent on amount of net trade income and age.

▪ Net trade income = Gross Trade Income - Allowable business

expenses - Capital allowances - Trade losses

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CPF Contributions/Medisave

▪ The maximum contribution required is subject to yearly gross income ceiling as

prescribed under CPF Regulations.
▪ Medisave Contribution Rates of SEPs from year 2016 onwards < reference - CPF
Board’s website>

Age as at 1 January
Net Trade
Income
Below 35 35 to below 45 to below 50 Years and
Years 45 Years 50 Years above
Above $6,000 4.00% 4.5% 5.00% 5.25%
to $12,000
Above 4.00% to 8% 4.5% to 5.00% to 5.25% to
$12,000 to 9.00% 10.00% 10.50%
$18,000
Above 8.00% (Max 9.00% (Max 10% (Max 10.5% (Max
$18,000 $5,760) $6,480) $7,200) $7,560)

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CPF Contributions/Medisave

▪ Allowable as personal relief S39(2)(h) of ITA.

▪ Amount allowable is capped at the lowest of:

▪ 37% of individual’s net trade income assessed;
▪ CPF relief cap of $37,740#; and
▪ Actual amount contributed in the preceding year
#37% x $6,000 x 17 months
[$6,000 is monthly ordinary wage ceiling set for an employee’s compulsory
contributions to CPF]

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CPF Contributions/Medisave

▪ Any voluntary CPF/Medisave contributions by SEP will be

allowed as relief:
o If the combined compulsory CPF/Medisave contributions of an
individual as an employee and as a SEP are less than
$37,740:
o the voluntary and compulsory CPF contributions for the net trade
income are allowable subject to a cap of 37% of net trade
income.

o If the combined compulsory CPF/Medisave contributions of an

individual as an employee and as a SEP are equal or more
than $37,740, voluntary contributions are not allowable.

2024 © Copyright Tax Academy of Singapore. All rights reserved. 54

CPF Contributions/Medisave

Example 1:
John is 30 years old, self-employed and concurrently employed as sales executive. His
employment income, net trade income and CPF contributions for 2023 are as follows:
▪ Employment income = $40,000
▪ Net trade income (NTI) = $20,000
▪ Compulsory CPF contributions made by John’s employer = $6,800 [$40,000 x 17%]
▪ Compulsory CPF contributions made by John as an employee = $8,000 [$40,000 x
20%]
▪ Medisave contributions on NTI = $1,600 [$20,000 x 8%]
▪ Voluntary CPF contributions on NTI = $21,340 [$37,740-$6,800-$8,000-$1,600]
▪ Allowable CPF relief for John as a self-employed person is capped at $7,400 i.e.
the lowest of:
▪ $37,740
▪ $7,400 [$20,000 x 37%]
▪ $22,940 [Actual contribution]
▪ Total CPF relief allowable for YA 2024 = $15,400 [$8,000+$1,600+$5,800
(i.e.$7,400-$1,600)]

2024 © Copyright Tax Academy of Singapore. All rights reserved. 55

Capital Allowances

56
56
 Capital Allowances
▪ Capital allowances are deductions claimable for the wear and
tear of qualifying fixed assets.

▪ They are generally granted in place of depreciation, which is

not a deductible expense.

▪ The self-employed person can claim for capital allowances

when the expense is incurred. An expense is incurred when
the legal liability to pay arises.

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Capital Allowances
▪ Qualifying fixed assets refers to ‘plants and machinery’ used in
the trade, business or profession.

▪ 'Plant and machinery' generally refers to a fixed asset that has

the following characteristics:
• Is not a trading stock of your business;
• Functions as an apparatus used for carrying out the business or
trade activities; and
• Is not part of the setting or part of the premises where your
business is conducted.

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 Capital Allowances
▪ Capital Allowance will be granted:
o on due claim basis
o to a person carrying on a trade, business or profession.
o on capital expenditure incurred on provision of ‘plant or
machinery’ for purpose of that trade, business or profession
[S19(8) exception: items for R&D in Singapore during YA 2009 to
YA 2025]

▪ No specific legal ownership requirement

▪ Types of CA claims under ITA:

o S19 – normal allowances
o S19A – accelerated allowances

59
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Capital Allowances

What are the qualifying expenditure?

▪ All cost incurred in acquiring the assets
▪ Includes:
– COE & registration fees of vehicles
– delivery costs
– setting up/installation costs
– alterations to an existing building incidental to installation - S22
– removing or reinstalling costs

▪ Excludes financing costs

▪ Deemed to be incurred on commencement of business

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 Capital Allowances

Under S19 of Income Tax Act

Initial Allowance (“IA”) = 20% of cost
Annual Allowance (“AA”) = 80% of cost / Number of years of
working life as prescribed in Sixth Schedule
▪ Applies to all qualifying assets
▪ Working life can be found in 6th Schedule of ITA
▪ Must be in use at end of basis period (for AA)
▪ Must be used for purposes of a trade, business or profession
▪ On due claim

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Capital Allowances

Under S19 of Income Tax Act

▪ May be deferred, usually for the following reasons:
– Possibility of shareholding change or change in trade;
– Better utilisation of foreign tax credits; or
– Maximise partial exemption & corporate income tax rebate.
▪ From YA 2023 :
– Option to claim:
➢ 6 or 12 years for prescribed working life of less than 16 years
➢ 6, 12 or 16 years for prescribed working life of 16 years

– Make irrevocable election when cost first incurred

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 Capital Allowances - Computation

Example 1:

Cost of air-conditioner acquired in FY 2023 = $20,000

No. of years of working life (Sixth Schedule) = 8 years

YA 2024
▪ IA = 20% x $20,000 = $4,000
▪ AA = 80% x $20,000/8 = $2,000

YA 2025 to YA 2031 (7 years)

▪ AA = $2,000 per YA

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Capital Allowances - Computation

Example 2:

Sole-proprietorship’s financial year end is 30 Sep. It purchased a

machinery costing $100,000 on 25 Aug 2023, which was delivered
& put to use on 30 Nov 2023.
No. of years of working life (Sixth Schedule) = 6 years
YA 2024
▪ IA = 20% of $100,000 = $20,000
▪ AA = $0 (Asset not in use at end of basis period)

YA 2025 to YA 2030 (6 years)

▪ AA = 80% x $100,000/6 = $13,333 per YA

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 Capital Allowances - Computation

Example 3:

Facts as in Example 2 except that Sole-proprietorship A decides

not to claim any IA in YA 2024.
YA 2024

▪ IA = $0 (Not claimed)
▪ AA = $0 (Asset not in use)
YA 2025 to YA 2030 (6 years)

▪ AA = $100,000/6 = $16,667 per YA

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Capital Allowances
▪ S19A accelerated CA is granted in lieu of S19
▪ 2 types:
– 3-year write off (S19(A)(1)) - applicable to all qualifying assets
– 1-year write off [S19(A)(2) – only applicable to computers or prescribed automation
equipment] or [S19(A)(10A) – only applicable to small assets]

▪ Conditions:
– Expenses must be incurred during basis period
– No requirement for asset to be in use at end of basis period
– Claim must be made at the time of lodgment of return unless otherwise allowed by
Comptroller
– May be deferred (w.e.f. YA 2009)
For costs incurred in basis period for YAs 2021, 2022 & 2024
- The option to write off over 2 years (S19A)(1E) is irrevocable
1st YA (e.g. YA 2021) = 75%
nd
2 YA (i.e. YA 2022) = 25%
- There is no deferment if option exercised
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 Capital Allowances

S19A (10A) – for small assets

▪ For assets costing no more than $5,000 each from YA 2013
onwards
▪ Subject to max claim per YA of $30,000
▪ For costs exceeding $30,000
– continue to be claimed under sections 19/19A(1)
– subsequent YA
▪ continue to claim sections 19/19A(1) CA; or
▪ claim immediate write-off, subject to same $30,000 cap per
YA.

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Capital Allowances - Computation

Example 4:
For YA 2023,
Bought standing fans ($130 x 250 units) = $32,500
(Total cost > $30,000)
S19A(10A) S19A(1) TWDV
Standing $130 x 230 = $29,900 $130 x 20 / 3 = $867 $1,733
Fans
($32,500 - $29,900 - $867)
For YA 2024,
Bought additional items of 5 laptops costing $3,000 each
YA 2023
Total CA = $29,900 + $867 = $30,767
YA 2024
TWDV of 20 fans ($1,733) & 5 laptops ($15,000), business may :
a) continue to claim CA under S19A(1) for the 20 fans; or
b) claim immediate write off under S19A(10A) since the TWDV of the fans plus total cost of 5
new assets (laptops) does not exceed $30,000. 26

68
 Capital Allowances - Computation
Example 5:
Workstation ($4,200 x 8 units) $33,600
Chairs ($660 x 8 units) $5,280
S19A(10A) S19A(1) TWDV
Workstation $4,200 x 6 = $25,200 $4,200 x 2 / 3 = $2,800 $5,600
($33,600 - $25,200 - $2,800)
Chairs $660 x 7 = $4,620 $660 / 3 = $220 $440
($5,280 - $4,620 - $220)
Total $29,820 $3,020 $6,040
Year 1
Total CA for Year 1 = $29,820 + $3,020 = $32,840
Year 2
WDV of 2 Workstations ($5,600) & 1 Chair ( $440), business may :
a) continue to claim CA under S19A(1); or
b) claim immediate write off under S19A(10A) if no new assets or total cost of new assets
plus WDV do not exceed $30,000. 26

69

Capital Allowances for motor cars

▪ No claim for private cars.

▪ For cars acquired in or after basis period for YA 2014 and
registered outside Singapore and used exclusively outside
Singapore, full cost may be granted. Cost cap of $35,000 for
such cars applied prior to YA 2014.
▪ CA may be granted on taxi, private hire car, car for
instructional purpose and chauffeured private hire car
(acquired in basis period for YA 2021 onwards) if conditions
are satisfied.
▪ Refer to sections 19(3)-19(5), 19(5B) & 14ZC(8) for details.

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 Capital Allowances
Summary of Different Methods of Claiming Capital Allowances
How to Calculate Qualifying Assets Initial Allowance (IA)/ Annual Allowance (AA)
Over working life of asset •Applies to all qualifying assets IA = 20% of cost
[S19]
•Refer to Sixth Schedule of the ITA for working life AA = (80% of cost)/ No. of years of working life

•From YA 2023, option to claim:

• 6 or 12 years for prescribed working

life of less than 16 years

• 6, 12 or 16 years for prescribed

working life of 16 years

3-year write-off •Applies to all qualifying assets AA = 1/3 of cost

[S19A(1)]
2-year write-off •Applies to all qualifying assets acquired during the YA 2021 or YA 2022 or YA 2024
[S19A(1E)] basis periods relating to YAs 2021, 2022 and 2024 AA = 75% of cost

YA 2022 or YA 2023 or YA 2025

AA = 25% of cost
1-year write-off (for specific assets) •Computers AA = 100% of cost
[S19A(2)] •Prescribed automation equipment listed in Income
Tax (Automation Equipment) Rules 2004; and
Amendment Rules 2010 (effective from 15 Dec
2010)
1-year write-off (only for low-value assets) •Cost of each low-value asset not more than AA = 100% of cost
[S19A(10A)] $5,000

•Total claim for 1-year write-off of all such assets

capped at $30,000 per YA
71
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Balancing adjustments

▪ To be computed when plant or machinery:

– ceases to belong to the person whether on a sale or otherwise
– permanently ceases to be used for trade, business, or profession

▪ Balancing allowance (“BA”)

– Tax Written Down Value (“TWDV”)* > Sales Price
– Used to offset against trade income

▪ Balancing charge (“BC”)

– TWDV < Sale Price
– Restricted to CA claimed
– Deemed to be income chargeable to tax under Section10(4)

* TWDV is the original cost of the machinery or plant plus any subsequent capital expenditure incurred on it less the capital
allowances already given.

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 Balancing adjustments - Computation
Example 6:
In the basis period for YA 2022, a sole proprietor acquired a machinery costing $600. He has
claimed capital allowances of 3-year write off under section 19A(1) in respect of the
machinery.
a) The machinery was sold in the basis period for YA 2024 for $190.
TWDV of the machinery = $600 - $400 (CA of $200 claimed in YA 2022 and YA 2023)
= $200
Balancing allowance = $10 ($200 - $190)
He can claim balancing allowance of $10.

b) The machinery was sold in the basis period for YA 2024 for $240.
TWDV of the machinery = $600 - $400
= $200
Balancing charge = $40 ($240 - $200)
The balancing charge of $40 will be brought to tax in YA 2024.

73

Balancing adjustments - Computation

Example 7:

$
Cost of asset purchased during FY 2022 (YA 2023) 90,000
Less: CA claimed for YA 2023 (30,000)
TWDV c/f 60,000
Less: CA claimed for YA 2024 (30,000)
TWDV c/f 30,000
Proceeds on sale during FY 2024 (YA 2025) (100,000)
(70,000)

BC (restricted to CA previously claimed) i.e. $30,000 (YA 2023) (60,000)

and $30,000 (YA 2024)

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 Treatment of Unabsorbed
Trade Losses, Capital
Allowances and Approved
Donations

75

Treatment of Unabsorbed Trade Losses, Capital

Allowances and Approved Donations

Trade Losses and Capital Allowances

▪ Trade losses and CA can be used to offset against other income such as
employment, interest, rental income, and income from other businesses in
the same year.

Trade Losses
▪ Unabsorbed trade losses in any YA can be carried forward and deducted
against income in the subsequent YA

Capital Allowances
▪ Unabsorbed CA can be carried forward and deducted against income in the
subsequent YA, if the person continues to carry on the same trade,
business or profession for which the allowances arose. [same business test]

▪ If the trade, business or profession ceases, the unabsorbed CA cannot be

carried forward.

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 Treatment of Unabsorbed Trade Losses, Capital
Allowances and Approved Donations

Approved Donations
▪ Unabsorbed approved donations arise when allowable donation made for
the YA are more than the income for that YA.

▪ Unabsorbed approved donations can be carried forward (no same business

test) and deducted against future profits for subsequent years of
assessment, for up to a maximum of 5 YAs.

The order of offset against income is in the following order:

▪ Capital Allowances (if any)
▪ Trade Losses (if any)
▪ Approved Donations (if any)

Subject to conditions stated previously, the unabsorbed CA and trade

losses can be carried forward indefinitely but unabsorbed donation can
only be carried forward for up to 5 YAs.

2024 © Copyright Tax Academy of Singapore. All rights reserved. 77

Treatment of Unabsorbed Trade Losses &

Capital Allowances

Exception for Business of Hiring Out Motor Cars or Providing

Driving Instruction or Chauffeur Services (S10F)

▪ The tax treatments in the preceding slide do not apply to business of

hiring out motor cars, business of providing driving instruction using
motor cars or business of providing chauffeur services using motor
cars.

▪ Any unabsorbed trade losses and unabsorbed CA arising from the

business in a YA:
- is not allowed as deduction against any other income in that
YA,
- is not available for carry back to the preceding YA,
- is not available to carry forward to the subsequent YA.

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 Carry-Back Relief (CBR)
System

79

Carry-Back Relief (CBR) System

▪ Governed under S37D of the ITA

▪ One year carry-back of the current year unabsorbed CA and trade

losses (qualifying deductions – QD) of up to $100,000.

▪ Any person who has QD is eligible for the carry-back relief, the QD
is to be deducted in the following order:
▪ Current year unabsorbed CA (if any)
▪ Current year unabsorbed trade losses (if any)

▪ Person includes individuals who are sole-proprietors and partners

of partnerships.

▪ Objective is to provide timely relief for small businesses to cope

with cash-flow problems, especially in cyclical downturn.

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 Carry-Back Relief (CBR) System

▪ Unabsorbed CA are available for carry-back only if the same

business test is satisfied (similar to the requirement for carry
forward of unabsorbed CA)
o Person must carry on the same trade, business or
profession in the basis period for the current YA and the
immediate preceding YA.

▪ Carry-back of unabsorbed trade losses for current YA for offset

against AI of immediate preceding YA is not subject to business
continuity test.

▪ Any unabsorbed CA and/or trade losses not carried back are

allowed to be carried forward for offset against AI of subsequent
YA (subject to same business test for unabsorbed CA).

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Carry-Back Relief (CBR) System

▪ If there are other income in addition to trade income, the

unabsorbed CA and trade losses will be deducted against the
other sources of income in the order as follows:

o Income from same trade;

o Income from other trade (proportionately if there is more than
one other trade, business, profession or vocation);
o Income from all other sources (proportionately if there is more
than one other sources).

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 Carry-Back Relief (CBR) System

Example 1:

Mr Lee has one source of trade income from his sole-proprietorship for YA 2024.
He has elected to carry back his unabsorbed trade loss and unabsorbed CA to
YA 2023. Details of his income are:

Mr Lee
YA 2023
Trade Income $200,000
CA $5,000

YA 2024
Trade Loss -$250,000
Unabsorbed CA $20,000

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Carry-Back Relief (CBR) System

Mr Lee’s Assessment for YA 2024

$ $
Trade Loss (250,000)
CA (20,000)
(270,000)
Less: Capital Allowance carry 20,000*
back to YA 2023
Less: Trade Loss carry back to YA 80,000*
2023
Unabsorbed trade loss 170,000
Less: Unabsorbed trade loss c/f 170,000
Assessable Income 0
* Total amount of qualifying deductions that he can carry back is capped at
$100,000
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 Carry-Back Relief (CBR) System

Mr Lee’s Assessment for YA 2023

Mr Lee’s Assessment for YA 2023 Before Carry- After Carry-
back is back is
allowed allowed
$ $

Trade income 200,000 200,000

Less: Current year CA (5,000) (5,000)

Assessable income 195,000 195,000

Less: Qualifying Deductions carry-back from YA NA 100,000

2024
Assessable income after loss carry-back is NA 95,000
allowed

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Carry-Back Relief (CBR) System

How can an sole-proprietor elect for CBR

When to make the election :
o No later than 30 days from the date of service of the notice of assessment
for the current YA on him
o The election, once made, is irrevocable.
How to make the election:
o Submit to IRAS the prescribed CBR election form and the following
documents:

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Carry-Back Relief (CBR) System

Election for CBR made after filing the income tax return.

An individual may elect for the CBR after filing his income tax return for
the relevant current YA (but no later than 30 days from the date of
service of the notice of assessment for the current YA on him).

He only needs to submit the completed and signed prescribed election

form.

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Carry-Back Relief (CBR) System

Specific features applicable to Sole-Proprietors

▪ Personal reliefs computed based on earned income or AI are to
be adjusted accordingly after CBR is allowed.
▪ Reliefs that are affected comprise the following:
o Earned income relief [S39(1)]
o Working mother child relief [S39(2)(e) & Fifth Schedule]
o CPF relief of sole-proprietors [S39(2)(h)]

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 Carry-Back Relief (CBR) System

Time Limit to Raise Additional Assessment

If CIT discovers that the amount of QDs carried back and deducted
against AI of any immediate preceding YA was excessive, an
assessment on the amount that should be taxed will be raised within 5
years after the end of that YA.

Example:
Ms Candy has carried back her trade loss of $80,000 for YA 2024 to be
deducted against her assessable income for YA 2023. The trade loss is
subsequently reduced to $57,000. CIT may:
o revise the assessment for YA 2024 (to reduce the amount of trade
loss to $57,000); and
o raise an additional assessment for YA 2023 (in respect of $23,000
over allowed) by 31 Dec 2028.

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Assessable Income of
Self-Employed Persons

90
 Assessable Income of SEP

Assessable income (“AI”) of a SEP

▪ includes individual’s income from all sources

▪ after deducting capital allowances, trade losses and approved

donations.

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Examples of
Self-Employed Person

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 Examples of Self-Employed Persons

Social Media Influencers

▪ Examples of taxable income

o Advertisement income (placing of advertising banners)
o Activities provided on social media platforms such as Instagram,
Twitter, Facebook or YouTube.
o Sponsorship
If the product or service is given to the influencers on an ad-hoc basis for
one-off consumption or testing and the value of each product or service
does not exceed $100, then they may not need to declare such items
received as income.
The $100 threshold does not apply to non-monetary benefits received by
bloggers/social media influencers if it is a recurring supply provided over a
period of time.

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Examples of Self-Employed Persons

Social Media Influencers

▪ Examples of Deductible Expenses

o Salary of employees
o Rental paid for business premises
o Online advertising / Cost of maintaining a website
o Payment to freelance writers for writing their scripts
o Payment of food incurred for doing food review
o Business related entertainment
o Business related travelling expenses (local or overseas)

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 Examples of Self-Employed Persons

Social Media Influencers

▪ Examples of Non-Deductible Expenses

o Private car expenses even if is used solely for business

purposes

o Private expenses – Food, household and medical for self and

family.

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Examples of Self-Employed Persons

Live commerce streamers / online sellers

▪ Examples of taxable income

o Revenue from selling or renting of goods (dropshipping of

goods)
o Provision of digital or freelance services (live stream events,
online webinars and online tutoring)
o Provision of online content on social media platforms (income
earned may include advertising, subscription and
commission)

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 Examples of Self-Employed Persons

Live commerce streamers / online sellers

▪ Examples of deductible and non-deductible expenses are similar

to that of the social media influencers.

▪ Examples of Deductible Expenses (Live streamers / online

sellers)
o Postage
o Cost of delivery
o Rental

▪ Examples of Deductible Expenses (online tutoring / webinars)

o Cost of preparation of training materials

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Examples of Self-Employed Persons

Home-Based Business
▪ Usually the business is conducted on premises used for
residential purposes

▪ Examples of Deductible Expenses

o Portion of public utilities, telephone and internet usage for
business purposes
o Expenses attributable to business purposes that can be
apportioned into private and business usage
o Public transport from / back to home for business
purposes (private car expenses for business use are not
claimable)
o Online advertising / Cost of maintaining a website

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 Examples of Self-Employed Persons

Food delivery riders

▪ Income from various platforms (e.g. GrabFood, FoodPanda)
▪ Tips received are taxable

▪ Example of Deductible Expenses

o Mobile phone data plan / bills used in the course of providing the
services

o Service fees paid to platform operators

▪ Example of Non-Deductible Expenses

o Private expenses – Food and medical for self and family

o Cost of equipment to deliver items

o Private car expenses even if is used solely for business purposes

Note: Where applicable, delivery riders may elect to claim deductions under FEDR
instead of actual expenses incurred.
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Examples of Self-Employed Persons

Commission agents
▪ Taxability of income
o Incentives as motivation to perform
o Incentives for meeting targets
o All non-monetary incentives received as a reward for
performance are taxable

▪ Examples of non-taxable items

o Items provided have no commercial value
o Provided with hotel stay or overseas ticket as part of team
bonding session meant to foster goodwill and relationship
between agents and agency

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 Examples of Self-Employed Persons

Commission agents
▪ Examples of Deductible Expenses
o Cost incurred for coaching
o Incentives or gifts paid to downlines
o Rental paid for business premises
o Business related entertainment
o Business related travelling expenses (local or overseas)
o Hire purchase interest on equipment used for business
o Advertising, printing, stationery and office supply costs.
o Telecommunications (internet or phone)
Note: Where applicable, commission agents may elect to claim deductions under
FEDR instead of actual expenses incurred.

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Examples of Self-Employed Persons

Commission agents
▪ Examples of Non-Deductible Expenses
o Private expenses – Food, household and medical for self and
family

o Private car expenses even if is used solely for business

purposes

o Traffic fines

o Own CPF contributions

o Remuneration paid to related parties in excess of commercial

value of their services

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 Examples of Self-Employed Persons

Taxi Drivers
▪ Example of Deductible Expenses
o Vehicle rental Fee

o Driving licence Fee

o Vocational licence Fee

o Parking charges

o Vehicle washing expenses

o Fuel expenses

o ERP expenses paid by the taxi driver

Note: Where applicable, taxi drivers may elect to claim deductions under FEDR
instead of actual expenses incurred.

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Examples of Self-Employed Persons

Taxi Drivers

▪ Example of Non-Deductible Expenses

o Traffic Fines

o Private expenses – Food, household and medical for self

and family

o Own CPF contributions

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 Examples of Self-Employed Persons

Private-Hire Car Driver

▪ Example of Deductible Expenses
o Vehicle rental fee

o Mobile phone data plan / bills used in the course of

providing the services

o Fuel, road tax, car insurance, car wash charges.

o Parking charges, interest expenses incurred on car loan.

o Service fees paid to booking service operators

o Licence renewal fees, including renewal of Private Hire

Car Driver’s Vocational Licence (“PDVL”)
Note: Where applicable, PHC drivers may elect to claim deductions under FEDR
instead of actual expenses incurred.

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Examples of Self-Employed Persons

Private-Hire Car Driver

▪ Example of Non-Deductible Expenses
o Traffic fines

o Private expenses – Food, household and medical for self

and family

o Own CPF contributions

o PDVL (licence) and training courses for the purpose of

obtaining the first PDVL

o Purchase cost (including COE) of the private cars

o Personal insurance costs and expenses for medical check-

up, parking fines.

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 Filing of Returns and Accounts

107

Filing of Returns and Accounts

▪ Sole-proprietorship businesses are not separate entities from

individuals who own them
o No separate tax returns issued to sole-proprietorships

▪ Self-employed persons (including sole-proprietors) are required to

o file individual income tax returns
i. Form B for resident individuals
ii. Form M for non-resident individuals

o keep proper and complete records of business transactions

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 Filing of Returns and Accounts

From YA2021 onwards:

Self-employed person with Revenue of $200,000 or less

▪ Declare the 2-Line statement in individual tax return
a) Revenue
b) Adjusted profit/loss

Self-employed person with Revenue of > $200,000 but < $500,000

▪ Declare the following 4-Line statement in individual tax return
a) Revenue
b) Gross profit/loss
c) Allowable business expenses; and
d) Adjusted profit/loss

Self-employed person with Revenue of $500,000 or more

▪ Declare the 4-Line statement in individual tax return
▪ Submit certified Statement of Accounts; and
▪ Computation of Adjusted profit/loss

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Filing of Returns and Accounts

Currency used in Returns

▪ If self-employed person maintains financial accounts in a functional
currency other than Singapore dollars, he is required to

o Submit certified statement of accounts prepared in that foreign

currency

o Declare 4-Line statement in tax return in Singapore dollars

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 Record Keeping Requirements

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Record Keeping Requirements

Required Record Keeping Duration

▪ The self-employed person must retain their accounting records and

supporting documents for at least 5 years from the relevant YA so
that the income earned and business expenses claimed can be
readily determined.

▪ Estimates and improper records are not acceptable.

▪ Failure to do so may result in:

▪ Expenses claimed being disallowed;

▪ Additional income assessed by IRAS based on best estimate; and/or

▪ Penalties.

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 Record Keeping Requirements

For businesses with December financial year end:

YA Financial Year To Keep Records Till

2020 1 Jan 2019 to 31 Dec 2019 31 Dec 2024
2024 1 Jan 2023 to 31 Dec 2023 31 Dec 2028

For businesses with non-December financial year end:

YA Financial Year To Keep Records Till

2020 1 Oct 2018 to 30 Sep 2019 31 Dec 2024
2024 1 Oct 2022 to 30 Sep 2023 31 Dec 2028

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Case Studies

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