Tax Deduction / Allowances

Tax deduction 14 May

Tax Deduction / Allowances

Tax deduction

What is tax deduction / allowances?

400% Tax Deduction/ Allowances is one of the option under Productivity and Innovation Credit (PIC) scheme where Inland Revenue Authority of Singapore (IRAS) will multiply 400% of the money that was spent on the total qualifying expenditure and then use that amount to deduct from the business’ payable tax.

Activities must be approved and qualified by Inland Revenue Authority of Singapore (IRAS) before the business is entitled to enjoy the benefits laid down by the PIC scheme.

Cash payout is another option in the PIC scheme. Business can opt for one of the choices if they feel that they can benefit from that particular scheme more than other.

 

Who is eligible to claim 400% tax deduction / allowances?

All businesses that are registered through Accounting and Corporate Regulatory Authority (ACRA) such as sole-proprietorships, partnerships and companies are eligible to claim 400% tax deduction / allowances.

As of from YA 2015 to YA 2018, qualified businesses would be able to claim 400% tax deduction for up to $600,000 instead of $400,000 previously.

 

How 400% tax deduction / allowances works?

Year of Assessment (YA) Expenditure Cap per
Qualifying Activity
Tax Deduction per
Qualifying Acitivity
2011 and 2012

(Combined)

$800,000 $3,200,000

($800,000 x 400%)

2013 to 2015

(Combined)

$1,200,000 $4,800,000

($1,200,000 x 400%)

2016 to 2018

(Combined)

$1,200,000 $4,800,000

($1,200,000 x 400%)

 

Example:

ABC Company bought $10,000 worth of computers, a qualifying expenditure during financial year 2014, YA 2015. ABC Company need to pay tax amounting to $50,000 for YA 2015. Thus, by using the 400% tax deduction / allowances, calculation as per follows:

Qualifying expenditure eligible for tax deduction,

$10,000 (Computers) x 400% = $40,000

Total tax payable,

$50,000 – $40,000 = $10,000

 

Claiming Tax Deduction

Businesses intending to claim tax deduction in their income tax return are required to do so by the filing due date for the respective YA.

Sole Proprietorships and Partnerships have to do so by 15 April, or 18 April if they choose to use e-filing. Companies, on the other hand, are required to claim by 30 November, or 15 December if using e-filing.

Our Clients

Absolute
aprikot
Axcell
IGC
Care-Lyna
CBRE
Century-21
Design-Drive
Digital-Logic
e-marketing
ERC
Gaining-Edge
Huttons
Orange-Tee
Tetra-pak
Singapore-Redcross
GGA
progress-media
Zenprop
Housing-Loan
gohnson-gohnson
KPMG
NUS
pokka
propnex
resort-world-sentosa
singapore-post
Singtel
SP
swisshotel-merchant-court

Our Awards & Recognitions


MOM Licensed Agency

GBiz Trading Partner

OCBC Platinum Partner Award 2011/2012

OCBC Gold Partner Award 2012/2013

OCBC Valued Partner Award 2015/2016

ACRA Approved CSP

Member of SCCCI

Skillsfuture Course Provider

MYOB Professional Partner

Quickbooks Intuit Proadvisor

XERO Certified Advisor

LCCI Approved Center

Featured On