Introduction to Corporate Tax

7/31/2019 Introduction to Corporate Tax

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CopyrightIRAS 2007All Rights Reserved

Presented by: Ms Ang Siok Peing


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Overview of Presentation

1. Scope of Tax

2. Basis of Assessment3. Enhanced Partial Tax Exemption Scheme

4. Enhanced Tax Exemption Scheme for NewStart-Up Companies

5. General Filing Requirements

6. Statutory Record Keeping Requirement

7. Introduction to the Basic Tax Calculator

8. Corporate Tax e-Services


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Scope of Tax

Income tax payable on:

Income accruing in orderived from Singapore(i.e. income sourced inSingapore)

Income received inSingapore from outsideSingapore (i.e. foreignincome received in

Singapore)E.g. trade income ofcompany carrying on

business in Singapore

E.g. interest incomefrom a foreign bank

outside Singapore thatis received inSingapore


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All Rights Reserved

Basis of Assessment

Year of assessment (YA)

Year in which income tax is charged

Current YA is YA 2008

Income is assessed on a preceding year basis

Basis period for a YAPeriod of income relevant to the YA



All Rights Reserved

ExampleYA 2008 basisperiod for aJune year-endcompany

1 Jul 2006to

30 Jun 2007

1 Jan 2007to

31 Dec 2007

Trade / businessincome

Passive non-trade income

Basis period fora YA

Accounting periodpreceding the YA

Calendar yearpreceding theYA

With effect from 1 Jan 2008 (YA 2009), all income

whether trade or non-trade, will be assessed onaccounting year basis.

Basis of Assessment



All Rights Reserved

Payable on Chargeable Income (afterExempt Amount)

YA 2008 : 18%

Corporate Tax


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With effect from YA 2008

Given on Chargeable Income (excludingSingapore franked dividends) of up to$300,000 which is subject to tax at the

normal corporate tax rate:First $10,000 @75% $7,500

Next $290,000 @ 50% $145,000

$300,000 $152,500

Maximum exempt amount is $152,500

Enhanced Partial Tax Exemption Scheme


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Enhanced Tax Exemption Scheme For

New Start-Up Companies

With effect from YA 2008

Granted to qualifying new company for anyof its first 3 consecutive YAs

Exemption granted on normal chargeableincome (excluding Singapore frankeddividends):

First $100,000 @100% $100,000

Next $200,000 @ 50% $100,000

$300,000 $200,000


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Qualifying conditions

Company incorporated in Singapore (other than acompany limited by guarantee)

Tax resident in Singapore for that YA

No more than 20 shareholders throughout basisperiod for that YA

Only individuals as shareholders throughout basisperiod for that YA

Beneficially held, directly or indirectly, by individualsas shareholders throughout basis period for that YA

Company that does not meet the above qualifyingconditions would still be eligible for partial taxexemption

Enhanced Tax Exemption Scheme ForNew Start-Up Companies


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New Start-Up Companies YA 2009

Qualifying conditions

Company incorporated in Singapore (other than acompany limited by guarantee)

Tax resident in Singapore for that YA

No more than 20 shareholders throughout basisperiod for that YA

a. all of whom are individuals beneficially anddirectly holding the shares in their names; OR

b. where there are non-individual shareholders, at

least 1 shareholder is an individual holding at least10% of the issued ordinary shares of the co.


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Example

31.12.1231.12.101. 1. 07 31.12.1131.12.0831.12.07 31.12.09

Incorporated on

1.08.07(accounting yearended 31.12.08)

Partial exemption

YA 2011 onwardsYA 2008(First YA uponIncorporation)

YA 2009 YA 2010

Tax ExemptionScheme for New Start-

Up Companies


New Start-Up Companies


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General Filing

Requirements


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Estimated Chargeable Income (ECI)

All companies are required to furnish ECIwithin 3 months after the end of the

accounting periodExampleAccounting year ended 31 Aug 2007

ECI for YA 2008 must be filed by 30 Nov 2007

Claiming tax exemption under tax exemptionscheme for new start-up companies declaration required


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Dormant / making losses: NIL returnrequired (i.e. ECI = 0)


Company fails to submit its ECI by due dateEstimated assessment will be raised

and/ or enforcement actions may be taken


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Example: ABC Pte Ltd

Accounting Period: 1.9.2006 31.8.2007

Year of Assessment: 2008

ECI (before Exempt Amount)

Less: Exempt Amount

100% x $100,000

50% x $100,000

ECI (after Exempt Amount)

Estimated tax @ 18%

100,000

50,000

$200,000

150,000

50,000

$9,000.00

To furnish ECI as $200,000

Exempt amount will be automatically calculated



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Income Tax Return (Form C)

All companies are required to submit Form C

Claiming tax exemption under tax exemptionscheme for new start-up companies declaration required

Dormant: NIL return requiredDue date for filing Form C for YA 2008 is 30Nov 2008

Failure to submit tax return by filing due dateEnforcement action


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Complete Tax Return

Form C

Appendices to Form C Additional Information on Income & Deductions (Form IRIN

301)

Where applicable:

Exempt Dividend Account (Form IRIN 306)

Schedule of Dividends / Interest / Trust DistributionReceived and Tax Deducted (Form IRIN 307)

Details of Interest-Free / Subsidised Loans to Individual

Directors / Shareholders (Form IRIN 312)


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Complete Tax Return (contd)

Tax computation with supporting schedules,

showing how chargeable income and taxpayable is arrived at

Type of accounts to be filed depends on howthe financial statements have been filed withACRA

full set in XBRL format- File detailed profit and loss account with IRAS

partial set in XBRL format or not in XBRL format

- File full set of accounts with IRAS


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Under the Companies Act administered by theAccounting and Corporate Regulatory Authority(ACRA), the following companies are not

required to have their accounts audited :

Dormant companies

Exempt private companies with an annual

revenue of not more than $5 million.

Audit Exemption


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Tax Filing Requirement For CompaniesQualifying For Audit Exemption

Company qualifies for audit

exemption

Company chooses not to have

accounts audited

Submit:

Accounts (including notes toaccounts)

Directors reportDirectors statement prepared in

accordance with Companies Act.

Company chooses to have

accounts audited

Submit:

Audited accounts


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Statutory Requirements

Payment of Tax

- Within 1 month from date of notice,whether or not objecting to assessment

Objection to Notice of Assessment

- Must be lodged in writing within 30 daysfrom date of notice

- State precise grounds of objection

- Failure to comply late payment

penalties


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Prior to YA 2008

- 7 years from the relevant YAE.g. Records for 2006 (YA 2007) shouldbe kept up to 31 Dec 2013

Statutory Record Keeping Requirements

YA 2008 and each subsequent YA

- 5 years from the relevant YA

E.g. Records for 2007 (YA 2008) shouldbe kept up to 31 Dec 2012


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Changes to Form C Filing Deadline

YA Statutory filing deadline2007 31 July

(YA 2007 is last YA in whichextension will be granted)

2008 30 Nov 2008

2009 and thereafter 31 Oct


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Payment of Tax by Instalments

ECI filed by E-filers ECI filed by Paper-filers

10 24 Jan

24 Feb

24 Mar

After 24 Mar

8

5

4

36

No instalments No instalments

26 Jan

26 Feb

26 Mar

After 26 Mar

For current year ECI only

Number of instalments

Companys accounting year ends on 31 Dec

GIRO application form downloadable fromIRAS website


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Preview

Basic Tax Calculator



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Launch


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Case Study Pte Ltd

Income Tax Computation for the Year of Assessment 2008Basis Period: 01.09.2006 to 31.08.2007

S$ S$ Net Profit as per audited accounts 80,600

Less: Non taxable items Gain on sale of fixed assets 1,000 P & L 79,600 Less: Separate source of income

Interest Income 11,900 P & L Rental Income 40,000 51,900 P & L 27,700 Add: Disallowable expenses Depreciation 1,000 P & L

Donations 1,000 P & L Fines& penalties 1,000 Sch 6 Medical expenses 6,000 Sch 7 Property tax 7,000 Sch 8

Upkeep of motor vehicles 5,000 Sch 9 21,000 Adjusted profit before capital allowance 48,700

Cont Case Study Pte Ltd


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Con t Case Study Pte Ltd

Income Tax Computation for the Year of Assessment 2008Basis Period: 01.09.2006 to 31.08.2007

Adjusted profit before capital allowance 48,700 Less: Capital allowance Sch 11 S19 IA 3,600 S19AA 2,400

S19A(1)AA 300 S19A(2)AA 3,300 9,600

Adjusted profit after capital allowance 39,100 Add: Separate source of income

Interest 11,900 Sch 2 Rental 40,000 Sch 3 Less: Property tax 7,000 33,000 Sch 8 84,000Less: Donations (Double deduction) 1,200 Sch 5

Chargeable Income before exempt amount 82,800 Less: Exempt amount (see notes) First $10,000 @ 75% 7,500 Next $72,800 @ 50% ($82,800 -$10,000) 36,400 43,900 Chargeable Income after exempt amount 38,900

Tax @ 18% 7,002.00


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Corporate Tax

e-Services


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e-Services Authorisation System

Allows organisation to authorise- Own staff; or- Third party

To access IRAS e-Services (i.e. CT, GST & e-TaxClearance) and other government agencies e-Services (i.e. JTC e-services) on its behalf

When an organisation authorises a third party, thethird party will also use EASY to authorise its ownstaff to perform e-services for this organisation

What is EASY?

How to access EASY


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Overview of EASY


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Overview of EASY

IRAS issues differentAccess Code

Co Staff

Authorisation of

staff via EASY

Tax Agent Firm (TA)

Access Code handled byappointed EASY Administrator

Authorisation of3rd party via EASY

Using SingPass

or IRAS PIN

TA Staff

Authorisation ofstaff via EASY

Login to :

myTax Portal

Using SingPassor IRAS PIN

How to access myTax Portal


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Logging into myTax Portal


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https://mytax.iras.gov.sg

How to sign up for e-Services Workshop


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Introduction to Corporate Tax

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Transcript of Introduction to Corporate Tax