Due date for filing of Form C
Whether a company has made profits or losses in the preceding accounting year ended in 2008, it is required to file its Form C together with the company's financial accounts, tax computation and relevant supporting documents. A full set of these documents must be submitted to IRAS by 30 November 2009.
Have you done the following in preparation of your Form C submission?
- Preparation of Accounts
Prepared a full set of accounts according to the Companies Act, including:
Auditor's report (except for companies that enjoy audit exemption*)
Profit and loss statement
Notes to the accounts
Statement by Directors
Prepared a detailed profit and loss statement
- Preparation of Tax Computation and Supporting Schedules
- Prepared tax computation
- Collated all relevant donation receipts to support claims if you have not given your tax reference number to the IPCs
- Completion of Form C and Appendices
- Read the explanatory notes to Form C and Appendices before completing the forms
- Where applicable, declared in Form C that your company has satisfied all qualifying conditions to claim tax exemption for new start-up companies
- Ensured the chargeable income declared is before exempt amounts
- Signed and completed all parts of the forms
*Under the Companies Act, dormant companies and exempt private companies with annual revenue of not more than $5million are not required to have their accounts audited.
An exempt private companies are companies which
- has not more than 20 shareholders and none of them is a corporation; or is wholly owned by the Government, which the Minister, in the national interest, declares by notification in the Gazette to be an exempt private company.
Common tax concessions and rules for companies
Below are some of the more common tax concessions that companies may benefit from by way of a reduction in income tax.
Tax Exemption Scheme for New Start-Up Companies
The tax exemption scheme for new start-up companies was first introduced in YA 2005 and enhanced in YA 2008 to support entrepreneurship and to help local enterprises grow.
Details of the tax exemption are as follows:-
|Tax exemption on the 1st $ 300,000 chargeable income
|100% exemption on the 1st $100,000 chargeable income
|50% exemption on the next $200,000 chargeable income
|Maximum exempt amount each year
To qualify for the scheme in YA 2009, a company must have any of its first three YAs upon incorporation falling in YA 2009. In addition, the company must:
- be incorporated in Singapore (other than a company limited by guarantee);
- be a tax resident in Singapore for YA 2009; and
- have no more than 20 shareholders throughout the basis period for YA 2009 where:
All other companies, including non start-up companies, will be accorded partial tax exemption. Companies can enjoy a partial tax exemption on normal chargeable income of up to $300,000.
- all of the shareholders are individuals beneficially holding the shares in their own names; or
- at least one shareholder is an individual beneficially holding at least 10% of the issued ordinary shares of the company.
Details of the partial tax exemption are as follows:-
|Partial tax exemption on the 1st $ 300,000 chargeable income
|75% exemption on the 1st $10,000 chargeable income
|50% exemption on the next $290,000 chargeable income
|Maximum exempt amount each year
- Renovation and Refurbishment Costs - Tax deduction under Section 14Q
With effect from YA 2009, companies can claim for tax deduction on qualifying capital expenditure incurred on renovation or refurbishment works (R&R costs) between 16 February 2008 and 15 February 2013. Claims are capped at $150,000 in equal portions over three years – a maximum of $50,000 a year.
For example, a company which spent $200,000 in March 2008 on R&R costs can claim a tax deduction of $50,000 ($150,000/3) for YA 2009 to YA 2011.
- Capital Allowance – Tax deduction under Section 19A(1)
With effect from YA 2009, companies that purchase commercial vehicles with maximum laden weight not exceeding 3,000 kg and motor cycles for business purposes will be able to claim capital allowance over three years. Previously, such assets were granted capital allowance over their prescribed working life, which is generally six years.
- Loss Carry-Back Relief System
As announced in 2009 Budget, the loss carry-back relief scheme has been enhanced for YAs 2009 and 2010. Companies can carry back their current year unutilised capital allowances and/or trade losses to the previous three YAs, subject to conditions. The amount of capital allowances and/or trade losses that can be carried back has also been increased from $100,000 to $200,000.
For example, a company which has incurred a trade loss of $300,000 in YA 2009 can carry back $200,000 (the maximum) to YA 2006. This loss will be offset against the assessable income of the company, thus reducing the tax amount. Based on the difference, a tax refund will then be paid to the company.
- Carry Forward of Unutilised Capital Allowances, Losses and/or Donations
Companies can carry forward the current year unutilised capital allowances, losses and/or donations to offset against the assessable income for the subsequent YAs, subject to certain conditions.
- Training Costs (Net of Grant)
Many companies send staff for training courses to enhance their level of skills and productivity. To encourage Singaporeans to upgrade their skills so they can stay employed or seek re-employment, the Government also provides course fee subsidies to companies that send their workers for training.
Companies that incur costs for the training of staff in areas relevant to the business will be generally entitled to claim a deduction for such expenses incurred. If companies receive or obtain government grants that help to reduce their training costs, only the training costs net of grant (i.e. actual costs borne by companies), will be tax deductible.
- Tax exemption will be granted on foreign-sourced dividends, foreign branch profits, and foreign-sourced service income remitted into Singapore on or after 1st June 2003, subject to the two conditions below:
- The foreign income had been subjected to tax in the foreign country from which they were received.
- The highest corporate tax rate (headline tax rate) of the foreign country from which the income was received is at least 15%.
- Retrenchment costs incurred in the process of streamlining business operations and to improve company's profitability are tax deductible.
- Interest and other borrowing costs, which are incurred as substitute for interest expense or to reduce the interest costs, for the purpose of financing business operations are tax deductible.
- Donations made to an approved Institution of a Public Character (IPC) or the Singapore Government that benefit the local community will qualify for double tax deduction.
- View the mistakes commonly made by companies in their income tax filing and their tax computations.
A case study illustrating how companies can lower their tax burden by claiming the various tax concessions can be found here.
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