User Guide in Filing an Individual Income Tax Return - IRAS · PDF fileUser Guide in Filing an...

This course will help individual taxpayers to understand their tax

obligations in filing a complete and accurate Income Tax Return.

This course comprises the following topics:

1) Filing an Individual Income Tax Return

2) Tax Obligations of a Self-Employed Person

User Guide in Filing an Individual Income Tax Return

TOPIC 1 : FILING AN INDIVIDUAL INCOME TAX RETURN

FILING AN INDIVIDUAL INCOME TAX RETURN

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Module 1 Income Tax Filing Requirement for Individuals

(excluding Non-Resident and Self Employed Individuals)

Module 2 Income, Deductions and Reliefs Statement (IDRS) and Auto-

Inclusion Scheme (AIS)

Module 3 Declaration of Income

Module 4 Claim for Approved Donations

Module 5 Claim for Tax Deductible Expenses

Module 6 Claim for Reliefs

Module 7 Claim for Parenthood Tax Rebate

Module 8 Common Enquiries

Module 1: Income Tax Filing Requirement for Individuals


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Scenario Required to file? Remarks

I received a SMS, letter

or form informing me to

file an Income Tax

Return.

Yes

Filing is required regardless of the amount of your annual income in the

previous year or whether your employer is participating in the Auto-

Inclusion Scheme (AIS) for Employment Income.

I received a SMS or

letter notifying that I

have been selected for

the No-Filing Service

(NFS).

No

Filing is not required. Your Notice of Assessment (NOA) or tax bill will be

computed based on your auto-included income and previous year’s

relief claims, which may be adjusted if you do not meet the eligibility

criteria.

It is your responsibility to ensure that your NOA is accurate. If you have

other income that is not shown on the NOA, or your relief claims in the

NOA is incorrect, please inform us within 30 days from the date of your

NOA. Alternatively, you have the option of making the relevant changes

by e-Filing your tax return.

I did not receive any

notification from IRAS to

file an Income Tax

Return.

No This is provided that your annual income derived from/received in

Singapore in the previous year did not exceed $22,000.

Yes Your annual income derived from/received in Singapore

(e.g. employment, rental) in the previous year exceeded $22,000.

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When is the filing due date?

a) Electronic Filing due date

The due date for e-Filing is 18th April of the year. We will pre-fill in the IDRS, all the details of

your income, tax deductible expenses (for example, Zakat), tax deductible donations and reliefs

provided by employers and other organisations who are participating in the Auto-Inclusion

Scheme. All reliefs claimed by you and allowed in your tax assessment for the previous year

(e.g. qualifying child relief, parent relief) will also be pre-filled.

You have to verify that the pre-filled information on your income, deductions and reliefs are

accurate and complete.

You can save a draft of your e-Filing and submit your Income Tax Return later.

Re-filing can be done within 14 days from the date of your original submission or 18th of April,

whichever is earlier.

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When is the filing due date?

b) Paper Filing due date

The due date for paper filing is 15th April of the year.

There will be no pre-filling of income, deductions or reliefs in the paper tax form. Thus, the

features such as re-filing and saving a draft of your filing are not applicable to paper filing.

97% of individual taxpayers prefer e-Filing as it is fast and convenient!

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Module 2: Income, Deductions and Reliefs Statement (IDRS)

and Auto-Inclusion Scheme (AIS)

What is the Income, Deductions and Reliefs Statement (IDRS)?

IDRS is a summary of:

the income, deductions and reliefs information provided by the relevant organisations

directly to IRAS. Please clarify directly with the relevant organisations if you require

more details on the information provided by them.

your rental income declared in your last year's tax return or e-stamped tenancy

records (if any); and

the reliefs claimed and allowed to you previously.

You have to verify that the pre-filled information on your income, deductions and reliefs

are accurate and complete.

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Module 2: Income, Deductions and Reliefs Statement (IDRS)

and Auto-Inclusion Scheme (AIS)

What is the Auto-Inclusion Scheme (AIS)?

Organisations participating in the AIS will transmit information on a taxpayer’s income,

deductions and reliefs electronically to IRAS each year. IRAS will show this information in

the IDRS and automatically include it in the tax assessment. You need not declare such

information in your Income Tax Return.

For example, your employer is participating in the AIS for Employment Income. You do not

need to manually declare your employment income, donations (deducted through

salaries) and CPF relief claim in your Income Tax Return. You only need to declare other

employment income from employers that are not participating in the AIS and any other

income that is not auto-included (e.g. rental income) in your Income Tax Return.

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Module 3: Declaration of Income

What should I do if I encounter the following during e-Filing?

Scenario What you need to do

My employer is in the AIS but my

employment income information is not

shown in the IDRS.

1) Scroll down to the bottom of the IDRS and select “Yes, I

need to edit my Tax Form” and click on “Continue to

Main Tax Form”.

2) Tick the box under “Employment" in Section A of the

Main Tax Form. Your employment income information will

be automatically included in your tax assessment when

we receive the information from your employer.

I worked for two employers in the previous

year but one of them is not in the AIS.

You have to verify the information of the employer

participating in AIS, and declare your employment income,

donations (deducted through salaries) and CPF relief claim

from the employer who is not participating in AIS in Section B

of the Main Tax Form .

My employment income information is

reflected in the IDRS but there is

discrepancy in the figures.

You have to seek clarification from your employer on the

discrepancy. We will take into account any subsequent

transmission from your employer when we finalise your tax

assessment. You can still proceed to file your Income Tax

Return.

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Module 3: Declaration of Income

What should I do if I encounter the following during e-Filing?

Scenario What you need to do

I have rental income which is not

shown in the IDRS.

1) Scroll down to the bottom of the IDRS and select

“Yes, I need to edit my Tax Form” and click on

“Continue to Main Tax Form”.

2) You will see the Main Tax Form. Click on “Rent from

Property” under item “4. Other income”.

3) You have to declare the gross rent and details of

the deductible expenses for each property.

Module 4: Claim for Approved Donations

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Cash donations made to any approved Institution of a Public Character (IPC) or the Singapore

Government that benefits the local community are tax-deductible.

For more information on the other types of donations (e.g. shares, artefacts) that are tax-deductible, please

refer to our website at https://www.iras.gov.sg :

Home > Individuals > Locals > Deductions for Individuals (Reliefs, Expenses, Donations) >

Deductions on Donations > Donations

You are required to provide your identification number (e.g. NRIC/FIN) when you make donations to the

IPCs in order to be given tax deductions on the donations. IRAS no longer accept claims for tax deduction

based on donation receipts.

Tax deduction for the approved donations will be automatically included in your tax assessment if:

1) You made donations to an approved IPC and have provided your NRIC number/FIN to the IPC at the

point of donation.

2) You arranged for the donations to the deducted from GIRO and have given your NRIC number/FIN to

the IPC at the point of donation.

3) You arranged for the donations to be deducted from your payroll and your employer is under the Auto-

Inclusion Scheme for Employment Income.

https://www.iras.gov.sg/

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Module 5: Claim for Tax Deductible Expenses

What are the qualifying conditions for tax deductible expenses?

1) The expense must be wholly and exclusively incurred in the production of income.

2) The expense is incurred during the period when the income is derived.

3) The expense must be revenue in nature. Capital expenses are not allowable.

4) The expense must not be for personal purpose.

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Some examples of tax deductible expenses which are not reimbursed by your employer:

(i) Travelling expenses incurred on public transport in the course of carrying out your official

duties

(ii) Entertainment expenses incurred in entertaining clients

(iii) Subscription fees paid to professional bodies or society

(iv) Mosque building fund, zakat, fitrah or any other religious dues authorised by law

Some examples of non tax deductible expenses:

(i) Travelling expenses incurred on private cars

(ii) Travelling expenses incurred to and from home and office

(iii) Entertainment expenses incurred on meals with colleagues


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How to claim Employment Expenses?

You need to enter your employment expenses claim under “employment expenses” in your

Income Tax Return.

In addition, you have to keep complete and proper records of all expenses:

(a) use the “Employment Expenses Schedule” available at our website at

https://www.iras.gov.sg (Home > Individuals > Locals > Deductions for Individuals

(Reliefs, Expenses, Donations) > Deductions for Employees > Employment

Expenses) to record the details of the expenses, and

(b) keep the supporting documents for the expenses (e.g. receipts and invoices).

You only need to submit the above documents upon IRAS’ request.



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Claiming Rental Expenses:

Expenses that are incurred during the rental period are deductible against the rental income.

From 1 January 2015, to simplify tax-filing and reduce the burden of record-keeping, an amount of deemed rental expenses

calculated based on 15% of the gross rent will be pre-filled on the online tax form. In addition to the 15% deemed rental

expenses, property owners can still claim mortgage interest on the loan taken to purchase the tenanted property.

Alternatively, taxpayers can opt to claim the amount of actual rental expenses incurred. The common expenses claimed

against rental income are:

(i) Property tax

(ii) Interest on the loan to finance the purchase of the property

(iii) Maintenance

(iv) Repairs

(v) Fire insurance

If you are claiming rental expenses based on the actual rental expenses incurred, please retain supporting documents such

as tenancy agreements, bank mortgage statements, invoices and receipts for at least 5 years for verification purposes.

You may visit our website at https://www.iras.gov.sg (Home > Individuals > Locals > Deductions for Individuals

(Reliefs, Expenses, Donations) > Deductions on Rental Expenses > Rent from Property > Rental Income and

Expenses) to view the examples.



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Module 6: Claim for Reliefs

You have to ensure that you satisfy all the qualifying conditions of a relief before claiming it in your Income

Tax Return. IRAS will adjust your relief claims from your tax assessment if you do not meet the eligibility

criteria.

If you e-File, IRAS will pre-fill the following reliefs in the Income, Deductions and Reliefs Statement (IDRS):

Reliefs provided by employers and other

organisations who are participating in the Auto-


Reliefs claimed by you and allowed in your tax

assessment for the previous year

• CPF Relief

• Life Insurance Relief

• NSman Relief

• Supplementary Retirement Scheme (SRS) Relief

• CPF Cash Top-up Relief

• Spouse Relief/Handicapped Spouse Relief

• Qualifying Child Relief/Handicapped Child Relief

• Working Mother’s Child Relief

• Foreign Maid Levy Relief

• Grandparent Caregiver Relief

• Parent Relief/Handicapped Parent Relief

• Handicapped Brother/Sister Relief


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Reliefs provided by employers and other

organisations who are participating in the Auto-


Reliefs claimed by you and allowed in your tax

assessment for the previous year

If there is discrepancy in the relief amount (for

example, your CPF relief should be $17,000 but is

reflected as $15,000 in your IDRS), you have to seek

clarification from the relevant organisation.

We will take into account any subsequent

transmission from the relevant organisation when we

finalise your tax assessment.

You can still proceed to file your tax return.

If you no longer meet the qualifying conditions for any

of the pre-filled reliefs or wish to amend the relief

amount, please remove the relief / change the relief

amount from the “Deductions and Reliefs” page.

For example, you have stopped hiring a maid in the

year 2015. However, your IDRS was prefilled with the

Foreign Maid Levy relief of $6,360. You should adjust

the amount to $0 at the “Deductions and Reliefs”

page.

What you need to do when you e-File:

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If you file by a paper tax form, IRAS will not pre-fill any relief in your tax form.

You have to enter details for the following relief

claim(s) in your tax form

You need not claim these reliefs in your tax

form. If you are eligible for the relief(s), they will

be automatically included in your tax

assessment based on the information

transmitted from the relevant organisations

• Spouse Relief/Handicapped Spouse Relief

• Qualifying Child Relief/Handicapped Child Relief

• Working Mother’s Child Relief (WMCR)

• Parent Relief/Handicapped Parent Relief

• Grandparent Caregiver Relief

• Handicapped Brother/Sister Relief

• CPF Relief (from employers who are not

participating in the Auto-Inclusion Scheme)


• Course Fees Relief

• Foreign Maid Levy Relief

• Earned Income Relief

• CPF Cash Top-Up Relief

• NSman Relief

• Supplementary Retirement Scheme (SRS) Relief

Note: For WMCR claim, indicate “Y” under “Section B, 6(b) Child, Claim for WMCR?” in your tax form and

the relief will be automatically calculated and included in your tax assessment based on your eligibility.

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Module 7: Claim for Parenthood Tax Rebate (PTR)

Child Order Amount of PTR

1st $5,000

2nd $10,000

3rd and beyond $20,000

What is PTR?

PTR is an incentive rebate for married Singapore tax residents to encourage procreation.

PTR can be used to offset your income tax payable.

How much can I claim for PTR?

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If you are claiming PTR for an adopted child or a child born before your marriage, please refer to our

website at https://www.iras.gov.sg (Home > Individuals > Locals > Deductions for Individuals

(Reliefs, Expenses, Donations) > Additional Reliefs/Rebates Available to

Married/Divorced/Widowed Taxpayers > Parenthood Tax Rebate) for the qualifying conditions.

Qualifying Criteria

a) Child must be a Singapore citizen at the time of birth; or

b) attain Singapore citizenship within 12 months from date of birth.

For PTR claim in respect of the first/fifth child, he/she must be born on

or after 1 Jan 2008.

When to claim for the

rebate?

You can file your claim for PTR in the respective Year of Assessment

that the child was born. For example, for a child born in 2015, you can

claim PTR in the Year of Assessment 2016.

Any expiry on the claim of

the unutilised balance?

There is no expiry date on the unutilised balance which is automatically

carried forward to offset your future income tax payable. Any credit

balance remaining is not refundable. This rebate may be shared with

your spouse.

You can claim PTR for a child who was born to you and your spouse:


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How do I claim PTR if I e-File my tax return?

1. At the Main Tax Form, go to item “6-22. Total Deductions And Reliefs”.

2. Click on “Change, remove or make new claims for Deductions, Reliefs and Rebates.

(e.g. Donations, CPF, spouse, child reliefs and Parenthood Tax Rebate)”.

3. Scroll to item “22. Parenthood Tax Rebate (For NEW Claims Only)”.

4. Click on “Claim Parenthood Tax Rebate for a newborn child for the first time”.

5. Enter the percentage of Parenthood Tax Rebate as agreed between you and your spouse.

6. Enter the child order under the Child Order column and your child's Singapore Birth Certificate No./

Citizenship Certificate No.

How do I claim PTR if I file a paper tax form?

1. Fill in the details under item 7 in Appendix 2.

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Working Overseas:

If I am posted to work full-time overseas by my

Singapore employer, is my employment income

taxable in Singapore?

If you are posted overseas for the full calendar year,

your employment income will be tax-exempt in

Singapore unless your overseas posting is incidental to

your Singapore employment or you are posted

overseas on behalf of the Singapore Government.

What do you mean by incidental to your Singapore

employment?

If it is included in your job description that you are

required to travel extensively overseas, then the

income will be taxable in Singapore.

Example, you are a regional Manager who is required

to travel to certain parts of Asia to attend meetings,

trainings etc. Your employment income will be fully

taxable in Singapore.

Do I need to submit any documents to IRAS during

e-Filing?

No.

Module 8: Common Enquiries

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Filing of Rental Income and Expenses:

My spouse and I co-own a property which was

rented out in the previous year. Can I choose to

declare 100% of the rental income in my name?

Rental income is taxed on all the joint owners

based on their share in the property. It does

not matter which party receives the rent or

whether the owners paid for the property.

Hence, you have to declare rental income

based on your legal ownership in the property.

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Filing of Rental Income and Expenses:

I have rented out a portion of my property (e.g.

1 room) to my tenants. Do I have to declare

rental income in this instance? If yes, how do I

declare the rental income?

Yes, you are required to declare the rental income and

apportion the claimable expenses incurred based on the

number of rooms rented out.

For example, you are living in a 4-room flat with 3 bedrooms.

You sublet 1 of the rooms to your tenant from 1 Jan to 31 Dec

2015. Your tenant pays you rent of $600 per month. The total

amount of expenses incurred is $3,000.

Your net rent is calculated as follows:

Gross Rent for the year 2015: $600 x 12 = $7,200

Total claimable expenses incurred: $3,000

Total number of rooms in your property: 3 rooms

Total number of rooms rented out: 1 room

Proportion of claimable expenses allowed: $3,000/3 x 1 =

$1,000

Net Rent = Gross Rent – Proportion of claimable expenses

allowed = $7,200 - $1,000 = $6,200

Assuming you own 50% of the property, your share of the

taxable net rent will be $3,100.

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Filing of Reliefs:

I am working full-time in Singapore and studying

MBA part-time. Can I claim for Course Fee Relief?

Yes, you can claim the actual course fees incurred,

up to a maximum of $5,500 per annum. Your claim

should only include registration or enrolment fees,

examination fees and tuition fees.

I am taking a course on sign language / foreign

language. Can I claim for Course Fee Relief?

You are not eligible for the relief if the course is not

related to your job / you took up the course for your

own interest.

Can I claim Life Insurance Relief for my Health

Insurance, Personal Accident Insurance or Home

Insurance?

No. Life Insurance Relief is only applicable for Life

Assurance Policies.

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e-Filing:

I need to amend the details of my original

e-Filing submission. Can I re-file my tax

return?

I am unable to re-file my tax return as the

e-Filing deadline is over. What should I do

if I have changes to make to my original e-

Filing submission?

Taxpayers are provided a maximum of two attempts to

e-File. You can re-file within 14 days from the date of

your original e-Filing submission or 18 April, whichever is

earlier.

When you re-file, you must include all your income

details and expenses/donations/reliefs claims. Once you

have re-filed successfully, your new submission will

override the previous submission.

You have to email us the details of your

income/expenses/reliefs/rebate for amendment.


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Foreigners who are re-employed:


I am a foreigner who returned to Singapore

and worked for a second employer in the

same year. Do I need to file a tax return?

Yes. You must file an Income Tax Return. Please

report the employment income derived from both

employers for the whole year, unless you were

informed during e-Filing that you do not need to

include your employment income that has been

taxed when you ceased employment with your

previous employer.

However, if any of your employers is participating

in the Auto-Inclusion Scheme (AIS), you need not

declare the employment income from the

employer as they would have transmitted the

information to IRAS.

TOPIC 2 : TAX OBLIGATIONS OF A SELF-EMPLOYED

PERSON

General Overview

Module 1 Tax Obligations of a Self-Employed Person

Module 2 Prepare 4-Line Statement

Module 3 File Income Tax

Module 1: Tax Obligations of a Self-Employed Person

Who is a self-employed person

• Individual who carries on a trade, business, profession or vocation

• Sole proprietor of registered business with the Accounting and Corporate Regulatory

Authority (ACRA)

• Partner of a partnership business


Responsibilities of a self-employed person

• Keep proper records and accounts

• Complete and submit Income Tax Return by 15 Apr (18 Apr for e-filed returns)

• Pay tax within one month from the date of the Notice of Assessment


• Make compulsory medisave contributions if you are:

- a Singapore citizen or Singapore permanent resident; and

- earning a yearly net trade income of more than $6,000.

For more information, refer to our website at https://www.iras.gov.sg (Home >

Businesses > Self-employed / Sole proprietors / Partners > Working Out Your

Taxes > Deductions for Self-Employed / Partners (Reliefs, Expenses, Donations) >

CPF / Provident Fund Relief: Compulsory and Voluntary Medisave Contributions)


http://www.iras.gov.sg/irasHome/page04.aspx?id=1260

http://www.iras.gov.sg/irasHome/page04.aspx?id=1260



• Register with IRAS as a GST-registered person if:

- revenue exceeded $1 million in the last 12 months; or

- revenue for next 12 months expected to exceed $1 million

Refer to the courses: GST Introduction and GST Before I register for more

information on GST registration.


Record Keeping Requirements

• Keep proper records and accounts for at least 5 years from end of relevant financial

year

Examples

• Support your records and accounts with invoices, receipts, vouchers and other

supporting documents

Records for financial year Financial year To be kept till

1 Jan 2013 to 31 Dec 2013 2013 31 Dec 2018

1 Apr 2013 to 31 Mar 2014 2014 31 Dec 2019

Module 1: Tax obligations of a Self-Employed Person

Record Keeping Requirements

• Estimates and improper records not acceptable

• No need to forward records unless they are requested for verification purposes

For more information on record keeping, refer to our website at https://www.iras.gov.sg

(Home > Businesses > Self Employed/ Sole Proprietors/ Partners > Learning the

Basics > Keeping Proper Records and Accounts)

Module 1: Tax obligations of a self-employed person


Accounting Period

• Accounting period must be decided for tax filing purposes

• Accounting period is the period for which you calculate your profits or losses of

your business

• Ends on 31 December each year or date other than 31 December

Example 1

• Business commenced on 1 April 2011

• accounting period ends on 31 December every year

1st Accounting Period 01 Apr 2011 to 31 Dec 2011 Year of Assessment 2012

2nd Accounting Period 01 Jan 2012 to 31 Dec 2012 Year of Assessment 2013

3rd Accounting Period 01 Jan 2013 to 31 Dec 2013 Year of Assessment 2014

Module 2: Prepare 4-Line Statement

1st Accounting Period 01 Apr 2011 to 31 Mar 2012 Year of Assessment 2013

2nd Accounting Period 01 Apr 2012 to 31 Mar 2013 Year of Assessment 2014

3rd Accounting Period 01 Apr 2013 to 31 Mar 2014 Year of Assessment 2015

Accounting Period

Example 2

• Business commenced on 1 April 2011

• accounting period ends on 31 Mar every year


Statement of Accounts

At the end of every accounting period, prepare the statement of accounts to determine

your business income. The statement of accounts is made up of:

• Trading and Profit and Loss Accounts

• Balance Sheet

• Certified and signed by the self-employed person, indicating that the accounts are

true and correct

• Certified by the precedent partner for partnership

For more information on preparing statement of accounts, refer to our website at

https://www.iras.gov.sg (Home > Businesses > Self Employed/ Sole Proprietors/

Partners > Filing Your Taxes > Preparing Statement of Accounts)




4-Line Statement

After you have prepared the statement of accounts, you are now ready to calculate your

business income using the following formula

Revenue XX

Less: Cost of Goods Sold (XX)

Gross Profit XX

Less: Allowable Business Deduction (XX)

Adjusted Profit/(Loss) XX


1. Revenue (Total sales/Income) Total payment/fees/commissions received

or receivable for services provided before

deducting any expenses

2. Gross profit/Loss For a trading business, gross profit is the

revenue less cost of goods sold.

For a service business, this is the same as

Revenue.

3. Allowable business expenses Expenses incurred wholly and exclusively

in the production of your income

4. Adjusted profit/Loss Gross profit – Allowable business

expenses


4-Line Statement

Annual Revenue Tax filing requirements

< $100,00 Report 2-line statement :

• Revenue

• Adjusted Profit/Loss

Between $100,000 and $500,000 Report 4-line statement:

• Revenue

• Gross Profit/Loss

• Allowable Business Expenses

• Adjusted Profit/Loss


Tax Filing Requirements

Fixed Asset Schedule

(1) A description of the asset

(2) Cost of the asset;

(3) Whether paid in cash or on hire-purchase terms;

(4) Date of purchase;

(5) Date of sale

Annual Revenue Tax filing requirements

> $500,000 (i) Report 4-line statement;

(ii) submit certified statement of accounts; and

(iii) Submit fixed asset schedule*

• applicable only when claiming capital allowances on business assets


Tax Filing Requirements

Allowable Business Expenses

Generally, you can claim a deduction against your business income for expenses that

you incur wholly and exclusively to earn your business income.

There are some basic rules for deduction:

• Expense must be related to your business

• Expense must be Incurred in the production of income

• Expenses that are capital in nature cannot be claimed

• Expenses that are personal and private in nature cannot be claimed


Examples of Allowable Business Expenses

• Business running costs (e.g. rental, utilities, book-keeping fees)

• Stationery, printing & postage fees

• Repair & maintenance of assets for business use

• Subscription to professional bodies & trade associations

• Cost of hiring (e.g. employee’s salary, bonus & compulsory CPF contribution by

employer)

• Public transport incurred in the course of business

• Business entertainment (e.g. for suppliers & customers)

• Capital allowances on fixed assets

• Renovation & refurbishment of business premises

• Pre-commencement revenue expenses


Examples of Disallowable Expenses

• Donations to charities & gifts to non-customers

• Capital costs (e.g. purchase of fixed assets, hire-purchase instalments)

• Private expenses (e.g. own medical expenses)

• Fines for breach of law (e.g. CPF late payment, interest, fines)

• Sole-proprietor’s & partner’s salary, bonus, CPF & medisave contributions

• All expenses in respect of private vehicles (even if it is incurred in the course of

business)

• Entertainment of family members & friends

For more information on the rules and deductions to save tax, refer to our website at

https://www.iras.gov.sg (Home > Businesses > Self-employed / Sole Proprietors /

Partners / Working Out Your Taxes > Deductions for Self-Employed / Partners

(Reliefs, Expenses, Donations) > Business Expenses)



Adjusted Profit

The adjusted profit to be reported for tax filing is usually different from the net profit

reported in the accounts.

The following may have been included in the profit and loss account:

• Non-trade income

• Expenses that are not deductible for income tax purposes

Adjustments have to be made to the accounting net profit / loss to:

• Exclude the non-trade income

• Add back disallowable expenses

• arrive at the adjusted profit / loss


Examples of non-trade income

Bank interest from deposits with approved banks or licensed finance

companies in Singapore – do not report interest income as it is exempt

Gain / profit on sale of fixed assets – do not report gain / profit as it is

capital in nature and not taxable

Rental income – exclude from business income and report as a separate

income source “Rent from Property” in the Income Tax Return


Template for Computation of Adjusted Profit / Loss

Located at centre page of “Guide on Filing of Income Tax Return”

Available at our website at https://www.iras.gov.sg (Home > Businesses >

Self Employed/ Sole Proprietors/ Partners > Working Out Your Taxes >

Calculating and Reporting Business Income)

Submit the template together with Form B and the certified Statement of

Accounts if business revenue is $500,000 or more



Module 3: File income tax

Filing income tax return (Form B)

• File your income tax return if your annual net trade income in previous year is more

than $6,000

• Net trade income refers to your gross trade income less allowable business

expenses, capital allowances and trade losses as determined by IRAS

• Report the 2-line statement or 4-line statement of your business

• File by 15 Apr (18 Apr for e-filed returns)

Filing income tax return (partner)

• Report your share of the partnership income in the Form B under “Trade,

Business, Profession or Vocation” as follows:

- share of divisible profit/loss

- Partner’s salary, bonus & CPF

- Partner’s other benefits

- Your share of other income from the partnership

• Your share of the partnership income will be added to other income and the total

income after deducting personal reliefs and rebates, will be taxed at individual

income tax rates.

For more information on how to file your personal income tax return, refer to course on

Form B.


Filing income tax return (precedent partner)

• file income tax return (Form B)

• file the income tax return of partnership (Form P)

• inform all partners of their share of income from the partnership

The precedent partner is:

• the partner who, among all the partners present in Singapore, is the first named in

the partnership agreement.

• if there is no partnership agreement, the precedent partner is a partner who is

agreed upon and appointed by the other partners to be the precedent partner.

For more information on filing tax for partnership, refer to our website at

https://www.iras.gov.sg (Home > Businesses > Self Employed/ Sole Proprietors/

Partners > Learning the Basics > Basic Guide for New Partnerships) and the

course on Form P.





Expense

category

Common mistakes The right way

Entertainment Not keeping complete

records of expenses

Claiming estimated

expenses

Claiming personal

and private expenses

Record all expenses

Record the following details:

‾ Date and place of entertainment

‾ Name of the person(s) entertained

‾ Purpose of entertainment

‾ Identity of person incurring it

‾ Amount incurred

Keep receipts

Claim actual expenses incurred in the

production of income

Exclude personal and private expenses

Common Filing Mistakes



Expense

category


Transport Claiming private car

expenses

Not keeping

sufficient or complete

records to

substantiate claim for

public transport

Not to claim expenses on private car

usage, as it is prohibited from deduction

under the Income Tax Act, even if the

expenses are incurred for business

purposes

Record details like:

Date of expense incurred and

destination

Mode of transport

Identity of the person incurring it

Purpose of travel

Amount incurred

Keep taxi receipts for verification



Expense category Common mistakes The right way

Personal and

private expenses

Claiming personal and private

expenses as business expenses

Examples are:

Medical expenses incurred for

the sole-proprietor / partners

Salaries paid to the sole-

proprietor / partners

Income tax of sole-proprietor /

partners

Insurance premiums for

policies taken on the sole-

proprietor / partners’ lives

Gifts to family members /

friends

Exclude personal and

private expenses not

incurred in the production

of income



Expense

category


Payments to

related parties

Making unsubstantiated claims to

related parties

Claim expenses incurred for

your business and based

on actual amounts

Miscellaneous /

General

expenses

Not keeping complete records of

expenses

Claiming estimated expenses

Record details like:

Date incurred

Name of the payee

Purpose of payment

Amount incurred

Keep receipts

Claim actual expenses

incurred (not estimated)



Expense

category


Partner’s

expenses in

Form B

Claiming the partnership

business expenses as your own

expenses

Not to claim expenses that are

charged to the partnership’s Profit

and Loss Account (in Form P) as

your own expenses as a partner in

Form B

For more information on common mistakes to avoid when filing self-employed income,

refer to our website at https://www.iras.gov.sg (Home > Businesses > Self Employed/

Sole Proprietors/ Partners > Filing Your Taxes > Common Filing Mistakes)




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