Tax Cheatsheet

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SSI – entitled to receive, FSI – received in Sg

Current a/c interest – accrues evenly over time
Fixed Deposit interest – date of maturity

1.Net Acc profit (before dep & tax)

Charge to P/LNothingAdd
Not chargedMinusNothing
Credited to P/LNothingMinus
Not creditedAddNothing

Add: 10(1)(a) income not credited to P/L
Expense charged for Non 10(1)(a)
Less: Non 10(1)(a) income credited to P/L

2.Adjust Profit (s10(1)(a))
• Less: Further Deductions, Capital Allowances
Add: Non 10(1)(a) income

3.Statutory Income
• Less: Trade Loss, Approved Donation
4.Assessable Income
• Less: Group Relief, Carried-back Items, NCTR
5.Chargeable Income
6.Tax @ 18%
• Less: DTR
7.Net Tax Payable/Refundable

1. Loss arising from 10(1)(a) income may be deducted against income from other sources and carry forward/back for set off against income from other YA. 2. Entitled to claim Capital Allowance in respect of capital expenditure incurred in producing the 10(1)(a) income

Badges of Trade
1. Subject Matter (ready mkt, large qty, periodic income)
2. Period of Ownership 3. Frequency of similar transaction
4. Supplementary work 5. Circumstances for realization
6. Motive (ST profit motive)

Services(determine 10(1)(a) or (g))
1. Frequency 2. Organized/Systematic Ops(Supplementary)

10(1)(a) (Active) VS Others (Passive Source of Income)
Or Capital Gain (from disposal)

Income Vs Capital Receipts(PMA Test)
PMA – asset retained produce income
Circulating Capital – asset bought and sold to produce income and used in the income generation process as the means to

10(1)(g) - profits from transaction not in ordinary cse of biz, intention of making profit - Casual Service Income

No Treaty
• S 2(1) definition of PE
(i) Carry on supervisory activities in connection with a building or construction project (ii) Has another person acting on behalf in Sg who
A) habitually exercise authority to conclude contracts
B) Maintain goods for delivery on behalf
C) Habitually secure orders for that person
• IRAS Clarifications – No PE
(i) Mere purchasing function
(ii) Stocks warehoused for delivery w/o trading here
(iii) Representative office confine to promotional/liaison work

NOTE: No 6 Month Period

Deemed Source Rule
S12(6) –
• Interest
• Commission/fees i.c.w Loans
S12(7) –
• Royalty
• Know-how
• Show-how
• Management Service Fee
• Rent from movable property
(1) Covered by sS12(6)/(7)? (2) Other source rules

(3) Payment of income borne by a SR or PE in Sg?
(4) Payment i.r.o a biz carried on o/s Sg thru PE o/s Sg?

(5) For payer, payment an expense deductible against SSI? (incurred to produce SSI) (6) For S12(6) income, was the loan principal bought into or used in Sg?

(8) Does MOF clarification apply?
- Commission/fee i.c.w Loan
- Show-how payment
- Mgt service fees (Parties not related)
Service Performed entirely outside Sg
Transaction at arm’s length and not for tax avoidance

General Deduction Formula
- Expenses incurred in production of taxable income
- Whole or part (Apportionment)
- Income producing Motive
- Must have been Incurred (legal liability)
- Person claiming must be the one who had incurred
- Source of income must exist in that period (pre-commencement & post-cessation Not deductible - Sufficiently close nexus (regard as part of cost)
- deducted on a source-by-source basis

S 15 Prohibitions
Capital expenditure (Test of Enduring Benefit). S/SZ-plate

Specific Deduction
• Interest Expense – principal sum must be used for a purpose of producing taxable income

• Revenue Repair v Capital Improvement
- Initial Repairs(conditions)
(i) Commercially useable state when purchase (Usable = Revenue Repair. Not usable = Capital improvement) (ii) Price paid for the the asset...
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