Starting this year, Taxpayers will be able to file their tax returns using their smartphone.
It is the time of the year for the filing of the individual income tax which runs from 1st March to 18 April.
Starting this year, Taxpayers will be able to file their tax returns using their smartphone.
The eligibility for tax reliefts and other filing details on the current tax season can also be accessed online and on smartphone at https://www.iras.gov.sg/irashome/TaxSeason2016/
E-Tax Guide on Director’s Fees and Bonuses from Employment and Deduction for Statutory and Regulatory Expenses
The IRAS has posted an updated e-Tax guide on the tax treatment on Director's Fees and Bonuses and a new e-Tax on the Deduction for Statutory and Regulatory Expenses on the 12th of September 2014.
The update for the tax treatment on Director's Fees and Bonuses updates paragraph 6.1 of the Income Tax Act (ITA) to clarify that a company may claim deduction for director’s fees and employees’ bonuses only when its liability to pay such fees and bonuses actually arises and also paragraph 7.1 of the ITA such that companies
need not submit the documents/information to IRAS but to prepare and retain them.
The e-Tax guide on the treatment of Statutory and Regulatory expenses disallows the following expenses for tax deductions. They are expense that is capital in nature; fine, penalty or composition amount in relation to a composition of an offence under any written law of Singapore or another country; expense to defend against charges of non-compliance with any statutory and regulatory requirement; and expense in relation to appeals to the courts or any quasi-judicial body (e.g. the Income Tax Board of Review)
For more information on the two e-Tax guides, please refer to the e-Tax guide below:
Following the Budget 2014 announcement, here are some of the notable tax changes.
Extension of Productivity and Innovation Credit (PIC) Scheme
To give businesses more time and certainty to put in place productivity improvements, the PIC scheme will be extended for three years till YA 2018.
For enhanced tax deductions, the expenditure cap of $400,000 per qualifying activity per YA can be combined across YA 2016 to YA 2018 (i.e. $1.2 million per qualifying activity).
For PIC cash payout, the expenditure cap of $100,000 per YA for all six qualifying activities cannot be combined across the three YAs, as is the case currently.
The PIC+ Scheme is introduced to provide support to Small and Medium Enterprises (“SMEs”) who are making more substantial investments to transform their businesses.
Under the PIC+ scheme, the expenditure cap for qualifying SMEs will be increased from $400,000 to $600,000 per qualifying activity per YA. This means that these SMEs that invest beyond the current combined expenditure cap of $1.2 million for each qualifying activity can claim 400% enhanced tax deduction on an additional $200,000 of qualifying expenditure.
PIC+ will take effect for expenditure incurred in YA 2015 to YA2018. The combined expenditure cap will be up to $1.4 million for YA 2015, and up to $1.8 million for YA 2016 to YA 2018.
The expenditure cap for PIC cash payout will remain at $100,000 of qualifying expenditure per YA.
IRAS will release further details by end Mar 2014.
Refining the three-local-employees condition for PIC cash payout
With effect from YA 2016, businesses applying for PIC cash payout will have to meet the three-local-employees condition for a consecutive period of at least three months prior to claiming the cash payout.
Streamlining Stamp Duty Rates for Share Transfers and Mortgages
Stamp duty rates for share transfers and mortgages will also be streamlined for transactions executed on or after 22 Feb 2014
Transfer of stock or shares - 0.2% of the purchase price or market value of the stock or shares transferred, whichever is higher
Mortgage instruments - 0.2% or 0.4% of the relevant amount (depending on the type of mortgage instrument) subject to maximum duty of $500
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A company director was charged for submitting a false Productivity and Innovation Credit (PIC) claim in order to obtain cash payout of $60,000 for his company.
Director made false PIC claims
Alex Rajan made a false declaration in a PIC cash payout application form that EMTPL had purchased PIC automation equipment for $168,000 and that his company met the qualifying conditions for the cash payout.
IRAS’ investigations revealed that EMTPL did not incur such expenditure on the equipment. The company also did not employ or make CPF contributions for at least three local employees in the relevant period. In fact, EMTPL had never been in active business operation.
Mr Alex Rajan s/o Anthony Samy (“Alex Rajan”, 47), director of Exel Mitsui Technologies Pte Ltd (“EMTPL”) which manufactures machine tool accessories, was charged for making false PIC claims by the Courts on the 14 February 2014. Alex Rajan pleaded guilty to the charge and will be sentenced on 21 February for the offence. Meanwhile, the court has ordered EMTPL to pay a fine of $8,000 and a penalty of $180,000.
This is the second case of a director and its company to be charged for making false PIC claims. IRAS had earlier charged Greenit Pte Ltd, a computer equipment and hardware wholesaler and computer memory modules distributor, and its director Khoo Tzyh Shin for fraudulently claiming a PIC cash payout.
IRAS takes a serious view of any abuse of PIC Scheme
IRAS takes a serious view of taxpayers who defraud the government. Offenders convicted of PIC fraud will have to pay a penalty of up to four times the amount of cash payout fraudulently obtained, and a fine of up to $50,000 and/or imprisonment of up to five years.
Examples of what IRAS regards as abuse of the PIC scheme are as follows:
a) Claiming PIC using false records or documents, where no such expenditure was incurred or where the actual amount incurred was lower.
b) Creating a shell company to make PIC claims on purchase of equipment from a related company, where no such purchases were made and where the automation equipment continue to be owned and used by the related company.
c) Claiming PIC based on collusion with a third party to purchase automation equipment, when the selling party is not the legal owner of the equipment and was merely renting or leasing it.
d) Using phantom employees to meet the PIC qualifying condition of having made CPF contributions for three or more local employees.
e) Engaging in arrangements that seek to artificially inflate PIC claims such as purchase/lease arrangements bundled with non-qualifying costs (for example, offering a high cash back for trade-in of an old asset).
f) Artificially inflating the staff cost allocated to software development.
A record number of taxpayers are filing and paying their taxes on time, as revealed in IRAS’ Annual Report for Financial Year 2012/13 released today. Nine out of 10 individuals filed their 2012 tax returns on time, and nine out of 10 GST-registered businesses filed their GST returns on time throughout the year. Corporate taxpayers were also prompt, with eight out of 10 companies filing their 2012 tax returns by the due date.
Tax arrears dropped to a record low of 0.79% of the total net tax assessed. This contributed to the steady decline of total cumulative tax arrears - as at 31 Mar 2013, the total cumulative tax arrears stood at S$374 million, a significant reduction of S$109 million from the S$483 million of the previous Financial Year.
“Our ongoing efforts to promote a high level of voluntary compliance have resulted in more individuals and businesses filing their tax returns and paying taxes on time. On-time filing rates have improved across all tax types, while tax arrears declined to a record low of 0.79%, among the lowest in the world.”
Dr Tan Kim Siew
Commissioner of Inland Revenue
To make tax filing easier for individuals, the Auto-Inclusion Scheme (AIS) for Employment Income was extended to 36,000 employers in 2013’s tax filing season, up from 27,000 employers in 2012 (Figure 3A, Page 30 of Annual Report). The No-Filing Service (NFS) was further extended to 1.13 million taxpayers in 2013, up from 963,000 in 2012. This made this year’s tax filing period a non-event for the majority of taxpayers in Singapore (Figure 4A, Page 34 of Annual Report).
Simplifying Processes to Better Serve Businesses
To make it easier for small companies to report corporate income tax, IRAS introduced the simplified Form C-S in 2012. 63% (or 70,400 companies) of the small companies benefitted from this streamlined tax reporting process, cutting the average time taken to file their 2012 tax returns by half.
96% of Companies Benefiting from PIC are SMEs
Beyond raising voluntary tax compliance levels, IRAS played a key role in managing the Productivity and Innovation Credit (PIC) scheme since its introduction in 2010. In 2012, 44,000 companies or 37% of active companies benefited from the PIC scheme, up from 36,400 companies (33% of active companies) in 2011 (Figure 2A, Page 22 of Annual Report). 96% of the companies that claimed PIC in 2011 and 2012 were Small and Medium Enterprises (SMEs) with annual turnover of up to $100 million (Figure 2D, Page 24 of Annual Report).
In 2012, 62% of PIC claims were for the purchase or lease of automation equipment. 35% of PIC claims were for the training of employees while the remaining 3% of PIC claims were for other qualifying activities (Figure 2E, Page 25 of Annual Report).
Convenient, One-Stop Access to Tax Statistics
To provide members of the public with one-stop access to official tax statistics, 24 datasets with historical data, some dating back to FY 2000, are now available here. These data include details of the taxes collected by IRAS, taxpayer compliance rates, IRAS’ service standards, and other indicators.
In the past, most of these datasets were published in IRAS’ Annual Reports in PDF format. For the convenience of the public, IRAS is now presenting the data in an Excel format. This allows anybody to easily retrieve the data, study its trends and conduct meaningful analyses.
Highlights of FY2012/13 at a Glance
The IRAS 2012/13 Annual Report is available at this link: http://www.iras.gov.sg/irasHome/page.aspx?id=15206
The Tax Statistics webpage is available at this link: http://www.iras.gov.sg/irasHome/page.aspx?id=15060
Inland Revenue Authority of Singapore
Note: IRAS’ Financial Year 2011/12 is from 1 April 2011 to 31 March 2012.
The above is a media release from IRAS taken from the following page
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