Filing Estimated Chargeable Income in Singapore
Have you filed your Estimated Chargeable Income for Financial Year ending 31 Dec 2016? In our previous post, we discussed on the Basics of Financial Year End Closing and Compliance Alert. For our article today, we will be emphasizing about the importance of Filing Estimated Chargeable Income ("ECI”) of your company in Singapore. There are a number of key posints in which you can make notes, and each has its advantages and disadvantages.
1. Computing Estimated Tax Payable
It is an important procedure all businesses and companies have to adhere to. To learn more about this, you can check out IRAS's guide on Preparing a Tax Computation.
What is a Tax Computation?
A tax computation is a statement showing the tax adjustments. The table below shows a simple illustration.
|
Accounting Profit |
$500,000 |
|
Adjustment for |
Non-Deductible Expenses |
|
|
Non-Deductible Income |
|
|
Further Deductions / Capital Income |
|
|
Deductions for Past Losses |
|
Arriving at : |
Chargeable Income for Tax |
Q1. When is a Company’s accounting profit not the Chargeable income for tax purposes?
Answer:
- Certain Financial Reporting Standard may defer from tax rules.
- Treatments of certain deductible by Tax department may defer from company expenses. This is because some of your company's expenses may not be deductible for tax purposes and some of the income received by your company may not be taxable, or it may be taxed separately as a non-trade source income.
- You may also wish to claim capital allowance on your fixed assets or claim unutilised losses/capital allowances/donations brought forward from previous Years of Assessment (YA).
Q2. When does a Company’s accounting profit equal to Chargeable income for tax purposes?
Answer:
- All the expenses reflected in your profit/loss accounts incurred are deductible for tax purposes;
- All the income reflected in your profit/loss accounts are taxable;
- Company is not claiming for enhanced deduction and/or allowances under the Productivity and Innovation Credit Scheme;
- Company is not claiming for capital allowances on fixed assets; and
- There are no unutilised (past) losses / capital allowances / donations brought forward from previous Year of Assessment.
2. Company Tax Payable and Tax Installments
If you plan well, you can manage your company’s income tax and cash flow efficiently. This can be done by closing your fiscal year financials, say for 31 December 2016 before or by 31 January 2017 and seeking maximum installment payment with IRAS for the estimated tax payable.
IRAS requires every business or companies to file an Estimated Chargeable Income within 3 months from the date of the Company’s financial year end (i.e. 31 December 2016, by 31 March 2017). The following schedules showing numbers of installments and methods of filing ECI.
|
|
Number of Installments |
|
|
ECI filed within |
By e-filing |
By forms |
|
1 month from financial year end |
10 |
5 |
|
2 months from financial year end |
8 |
4 |
|
3 months from financial year end |
6 |
3 |
|
After 3 months from financial year end |
No instalments allowed |
|
Source: IRAS Filing Estimated Chargeable Income (ECI) and Paying Estimated Taxes
3. Final Corporate Tax Submission
The Corporate Tax Return (Form C), tax computation together with the audited / unaudited financial statements should be filed to Income Tax department by 30 November every year.
If you require any assistance, please make necessary arrangements with your tax agents to file the ECI / submit the company tax return or you could enquiry with us by filling the form below and we will get back to you shortly.
In our following post for our Year-end Closing Series, we will discuss 4 keys factors to consider when preparing Companies Financial statements.