PDF VERSION
MORE MORE MORE Deductions! In the following issues, I will be exploring some more deductions you can make use of.
Please send in your request for topics you will be interested in to support@accountingbpo.com
Renovations
IRAS used to disallow renovations, but has now made some changes to help SMEs.
IRAS has now allowed deductions for the following:
- General electrical installation and wiring to supply electricity;
- General lighting;
- Hot/cold water system (pipes, water tanks etc);
- Gas system;
- Kitchen fittings (sinks, pipes etc);
- Sanitary fittings
(toilet bowls, urinals, plumbing, toilet cubicles, vanity tops, wash basins etc.);
- Doors, gates and roller shutters (manual or automated);
- Fixed partitions (glass or otherwise);
- Wall coverings (such as paint, wall-paper etc.);
- Floorings (marble, tiles, laminated wood, parquet etc.);
- False ceilings and cornices;
-Ornamental features or decorations that are not fine art (mirrors, drawings, pictures, decorative columns etc.);
- Canopies or awnings (retractable or non-retractable);
- Windows (including the grilles etc.);
- Fitting rooms in retail outlets.
NOT deductible
Any designer fees or professional fees;
Any antique; or
Any type of fine art including painting, drawing, print, calligraphy, mosaic, sculpture, pottery or art installation.
Any catch?
Must be incurred during the period 16 Feb 2008 to 15 Feb 2013 under Section 14Q of the Income Tax Act.
Must be claimed over three consecutive Years of Assessment.
If your company is in a loss position or the Section 14Q deduction is higher than the adjusted profit, the amount of unutilised Section 14Q deduction can be:
- deducted against the company's other sources of income;
- carried forward to offset against the company’s assessable income for future YAs if there is no substantial change in the shareholders and their shareholdings and no change in the principal activities; or
carried back to the immediate preceding YA to be offset against the assessable income under the loss carry-back relief.
Restricted to S$150,000 cap for every 3 relevant period.
Life insurance
If it is your company policy to buy insurance policies for the employees and the beneficiaries of the policy are the employees, the life insurance premiums paid are tax-deductible expenses as it constitutes as staff cost.
(Please note that the life insurance premiums are taxable as employment benefits of the employees and these benefits must be declared in their Form IR8A)
If your company is the beneficiary, the insurance premiums are not deductible unless they satisfy the conditions of a "keyman" insurance.
Sunday, August 24, 2008
Wednesday, July 23, 2008
Issue - 2
Click here for PDF file: Here
Last month, we talk about the SRS scheme where you can save money by paying less taxes.
This month, I will continue on the “loop holes” available to you. Yes, these are LEGAL, actually, they are NOT loopholes but just tax incentives given to entrepreneurs in Singapore.
Leave the car in the garage – Bob Oh
IRAS clearly states that ALL expenses for S-plated vehicles are NOT tax-deductible. That means no deduction for petrol, repairs, parking etc.
You MAY claim petrol expenses from your company, it is allowed, it is however NOT allowed for income tax deduction.
For example,
The tax payable will be calculated on the TAX PROFIT not Accounting profit.
Can you expense off petrol claims by your employees?
For accounting purposes – Yes
For tax purpose – No
How can you claim as tax expenses for petrol expenses then?
Pay a fixed transport allowance to your staff.
Pros
The company can claim in full the transport allowance given.
Cons
The company must pay CPF on such allowances.
The staff must pay income tax on these allowances.
Other suggested solution
Take a taxi – every single cent is claimable.
Staff to take taxis
Purchase a business vehicle (e.g. G-plate)
Engage a chauffeur (car provided)
Why Business vehicle?
a. You can claim petrol, repairs and other related
expenses. (except for fines & summons)
b. You are given a capital allowance deduction.
c. You can advertise your company on your business
vehicle
d. You need not pay CPF and your employee is not
taxed for using the vehicle.
Why a chauffeur?
a. Save you the driving, gives you more time to prepare for your sales meeting.
b. Expense off this service received and get a tax deduction.
c. Move the maintenance of a car and driver to another person.
Last month, we talk about the SRS scheme where you can save money by paying less taxes.
This month, I will continue on the “loop holes” available to you. Yes, these are LEGAL, actually, they are NOT loopholes but just tax incentives given to entrepreneurs in Singapore.
Leave the car in the garage – Bob Oh
IRAS clearly states that ALL expenses for S-plated vehicles are NOT tax-deductible. That means no deduction for petrol, repairs, parking etc.
You MAY claim petrol expenses from your company, it is allowed, it is however NOT allowed for income tax deduction.
For example,
The tax payable will be calculated on the TAX PROFIT not Accounting profit.
Can you expense off petrol claims by your employees?
For accounting purposes – Yes
For tax purpose – No
How can you claim as tax expenses for petrol expenses then?
Pay a fixed transport allowance to your staff.
Pros
The company can claim in full the transport allowance given.
Cons
The company must pay CPF on such allowances.
The staff must pay income tax on these allowances.
Other suggested solution
Take a taxi – every single cent is claimable.
Staff to take taxis
Purchase a business vehicle (e.g. G-plate)
Engage a chauffeur (car provided)
Why Business vehicle?
a. You can claim petrol, repairs and other related
expenses. (except for fines & summons)
b. You are given a capital allowance deduction.
c. You can advertise your company on your business
vehicle
d. You need not pay CPF and your employee is not
taxed for using the vehicle.
Why a chauffeur?
a. Save you the driving, gives you more time to prepare for your sales meeting.
b. Expense off this service received and get a tax deduction.
c. Move the maintenance of a car and driver to another person.
Issue - 1
PDF version
Recently, there were several questions from clients in regards to the SRS scheme. We have therefore decided that our inaugural launch would feature this tax saving instrument available to you.
Saving on Taxes with New SRS Scheme – By Bob Oh
The Supplementary Retirement Scheme (SRS) was established on 1st April 2001 to encourage individuals to save for their retirement by offering tax incentives. The SRS is open to all Singaporeans, Singapore Permanent Residents (PRs) and foreigners who are at least 21 years of age. However the individual must not be a bankrupt or of unsound mind.
Each individual is allowed only one account. Individuals without any earned employment income in the previous year can contribute to the SRS in the current year.
Benefits
1.Claim tax relief for contributions made to the SRS.
2.Investment gains in the SRS are tax free with the exception of Singapore dividends received, which are taxable.
3.Tax will be payable only when SRS savings are withdrawn. If savings are withdrawn in its entirety upon retirement, only 50% will be subject to tax.
4.Withdrawals may also be staggered over 10 years to enjoy greater tax savings.
Making contributions
All SRS contributions are to be made in cash at any time before 31st December each year.
Capping
Singaporeans and Singapore PRs — S$11,475
Foreigners — S$26,775
What can I do with my SRS funds?
Funds in the SRS account may be invested in a range of financial products. For example,
fixed deposits
insurance products and unit trusts
single premiums with life cover of not more than three times the single premium will be allowed.
All proceeds from the realisation of SRS investments must be returned to the SRS account.
Where and how can I contribute?
You can contribute by opening an SRS account with any appointed SRS operator. All SRS contributions must be in the form of cash. Currently the appointed SRS operators are DBS, OCBC, and UOB.
Can employers contribute directly?
Employers can contribute to their employees’ SRS accounts, subject to the current SRS contribution limits, and claim full tax deduction. SRS members will enjoy tax relief on the contributions made by their employers.
That means it is part of employers expense but part of employee's remuneration.
See PDF file for calculation examples
What is it worth to you?
S$11,475 savings for 20 years @ 5% returns p.a. - S$393,050
S$11,475 savings for 20 years @ 10% returns p.a. - S$726,146
S$11,475 savings for 20 years @ 15% returns p.a. - S$1,431,735
S$11,475 savings for 20 years @ 20% returns p.a. - S$2,973,605
Recently, there were several questions from clients in regards to the SRS scheme. We have therefore decided that our inaugural launch would feature this tax saving instrument available to you.
Saving on Taxes with New SRS Scheme – By Bob Oh
The Supplementary Retirement Scheme (SRS) was established on 1st April 2001 to encourage individuals to save for their retirement by offering tax incentives. The SRS is open to all Singaporeans, Singapore Permanent Residents (PRs) and foreigners who are at least 21 years of age. However the individual must not be a bankrupt or of unsound mind.
Each individual is allowed only one account. Individuals without any earned employment income in the previous year can contribute to the SRS in the current year.
Benefits
1.Claim tax relief for contributions made to the SRS.
2.Investment gains in the SRS are tax free with the exception of Singapore dividends received, which are taxable.
3.Tax will be payable only when SRS savings are withdrawn. If savings are withdrawn in its entirety upon retirement, only 50% will be subject to tax.
4.Withdrawals may also be staggered over 10 years to enjoy greater tax savings.
Making contributions
All SRS contributions are to be made in cash at any time before 31st December each year.
Capping
Singaporeans and Singapore PRs — S$11,475
Foreigners — S$26,775
What can I do with my SRS funds?
Funds in the SRS account may be invested in a range of financial products. For example,
fixed deposits
insurance products and unit trusts
single premiums with life cover of not more than three times the single premium will be allowed.
All proceeds from the realisation of SRS investments must be returned to the SRS account.
Where and how can I contribute?
You can contribute by opening an SRS account with any appointed SRS operator. All SRS contributions must be in the form of cash. Currently the appointed SRS operators are DBS, OCBC, and UOB.
Can employers contribute directly?
Employers can contribute to their employees’ SRS accounts, subject to the current SRS contribution limits, and claim full tax deduction. SRS members will enjoy tax relief on the contributions made by their employers.
That means it is part of employers expense but part of employee's remuneration.
See PDF file for calculation examples
What is it worth to you?
S$11,475 savings for 20 years @ 5% returns p.a. - S$393,050
S$11,475 savings for 20 years @ 10% returns p.a. - S$726,146
S$11,475 savings for 20 years @ 15% returns p.a. - S$1,431,735
S$11,475 savings for 20 years @ 20% returns p.a. - S$2,973,605
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