This is an intermediate session for directors and shareholders who would like to understand Singapore tax principles in a more in depth manner, including an introduction to tax planning basics and optimizing PIC claims. (Plug-in@Blk71, November 13.) Here are some of the topics we've covered: - Directors fees vs. Dividends; - Development costs of software, website as assets instead of expenses; - Productivity & Innovation Credit: 60% cash payout vs. 400% tax deduction; - Private car expenses; - Medical care expenses, - Depreciation – what period to choose? Best practices; - When to recognize revenue for long term contracts, SAAS offerings. Read more: http://futurebooks.com/blog/filing-company-tax-pic-claims/?preview=true&preview_id=14454&preview_nonce=e66a1b20f5

1. Prepared for Plug-In@Blk71
As of November 2014
FILING COMPANY TAX AND PIC CLAIMS: INTERMEDIATE

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LAUNCH YOUR BIG IDEA

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SPONSORS

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Tax planning basics-from a company formation stage
PIC: 60% cash payoutvs. 400% tax deduction
Income tax computation from annual financial statements
WHAT WE WILL COVER

5. TAX PLANNINGBASICS: COMPANY FORMATION

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DIRECTORS’
REMUNERATION
VS. DIVIDENDS

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Directors’ remuneration
Dividends
Revenue
1,000,000
1,000,000
Less: General expenses
450,000
450,000
Less: Directors' remuneration
250,000
-
Net Profit
300,000
550,000
Tax Exemption (Start-ups)
(200,000)
(200,000)
Profit after exemption
100,000
350,000
Tax @ 17%
17,000
59,500
Profit after tax
83,000
290,500
Personal tax @ 18%
29,750
-
DIRECTORS’ REMUNERATION
VS. DIVIDENDS
A majority shareholder and director of the company is making a decision on
whether to receive money by way of a remuneration or dividends.

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PRIVATE CAR
EXPENSES

9. TAX PLANNING BASICS: TAX FILING

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DEVELOPMENT
COSTS:
SOFTWARE, WEBSITE

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MEDICAL CARE
EXPENSES

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RECOGNIZING
REVENUE ON LONG-
TERM CONTRACTS

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DEPRECIATION VS.
CAPITAL ALLOWANCES

14. PIC CLAIMSOPTIMIZATION

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PRODUCTIVITY &
INNOVATION SCHEME
PIC CASH BACK
PIC TAX ALLOWANCE
PIC BONUS
PIC +
•Up to S$ 100,000 in 6 qualifying activities
•3 local employees
•Active business operations
Year of Assessment 2013-15
•Cash bonus up to S$ 15,000
•3 local employees
•Active business operations
•Minimum S$ 5,000
•400% tax deductions
•S$ 400,000 / activity / year
•Claim directly in the income tax return
Year of Assessment 2015-18
•Up to S$ 600,000 on six qualifying activities instead of S$ 400,000

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PIC SCHEME: OPTIMIZATION
Profit?
Cashflow?
Tax deduction or cashback?

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ABC Pte Ltd has net profits of 1 million dollars.
Two servers worth of 50,000 dollars each were purchased during its financial year.
The company is still enjoying startup partial tax exemption.
PIC SCHEME: SCENARIO

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PIC SCHEME: OPTIMIZATION
60% cash payout
400% tax deduction
Net profit
1,000,000
1,000,000
Server expenses
100,000
(100,000)
Less: 300% enhanced deduction
0
(300,000)
Profit before tax
1,100,000
600,000
Less: Partial tax exemption
(152,500)
(152,500)
Net profit before tax
947,500
447,500
Tax @ 17%
161,075
76,075

19. INCOME TAX COMPUTATION

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INCOME TAX COMPUTATION
Requested by the Inland Revenue Authority of Singapore (IRAS) in addition to Form C / C-S
Referred to by stakeholders, e.g. investors, accountants and auditors, in the future years during due diligence
Starting point is Profit and Loss statement
P&L

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TAX COMPUTATION

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INCOME TAX FILING
Estimated Chargeable Income (ECI) filing – 3 months from financial year end
Corporate tax filing (Form C / C-S) – ensuing 30 November
Extended deadline for online filing – ensuing 15 December

23. TAX PLANNING: ADDITIONAL TIPS

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FOREIGN
BUSINESS TRIP
DOUBLE TAX DEDUCTION
FOR INTERNATIONALISATION

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FOREIGN SOURCED
INCOME
TERRITORIAL SYSTEM OF TAXATION

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DOUBLE TAXATION
TREATIES
FOR RESIDENT COMPANIES:
DTAA WITH 76 COUNTRIES

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NON-RESIDENT STATUS
WHEN TO CHOOSE?

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BUSINESS FIRST.
TAX SECOND.

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WESTMINISTER PRINCIPLE (1936)
“Every man is entitled, if he can, to order his affairs so as that the tax attaching under the appropriate acts is less than it otherwise would be. If he succeeds in ordering them so as to secure this result, then, however unappreciative the commissioners of inland revenue or his fellow taxpayers may be of his ingenuity, he cannot be compelled to pay an increased tax.”
Duke of Westminster’s case (1936) AC 1, Lord Tomlin.

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SECTION 33 OF THE
INCOME TAX ACT
ANTI-AVOIDANCE PROVISION

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LET’S TALK
inquiry@futurebooks.com
@futureb00ks

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TERMS OF USE
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