Category Archives: Income Taxes

Income Tax – Australia is the first country who has entered into a Competent Authority of Agreement with Singapore


6 September 2016 marked another milestone in the history of Singapore income tax regime. as the Singapore tax authorities have entered into a Competent Authority Agreement with the Australian tax authorities on the Automatic Exchange of Financial Account Information (“AEOI“) based on the Common Reporting Standard (“CRS“)

The CRS is an  internationally agreed standard for AEOI, endorsed by OECD and Global Forum for Transparency and Exchange of Information for Tax Purposes (“GF”).  More than 100 jurisdictions have endorsed the CRS and will commence AEOI in either 2017 or 2018.

Singapore and Australia will commence AEOI under the CRS by September 2018. Under this Agreement, the Singapore tax authorities will automatically exchange with the Australian tax authorities, financial account information of accounts in Singapore held by Australian tax residents while the Australian tax authorities will automatically exchange with the Singapore tax authorities, financial account information of accounts in Australia held by Singapore tax residents.  Both jurisdictions are satisfied with the confidentiality rules and data safeguards that are in place in the other jurisdiction to ensure the confidentiality of information exchanged and prevent its unauthorised use.

With the conclusion of this Agreement, Singapore and Australia have taken another step in enhancing cooperation to support greater tax transparency and fight against tax evasion.  Both jurisdictions seek to work toward implementing AEOI with other major financial centres to ensure a level playing field.

If you have any questions, please contact us at support@whm-consulting.com.

 

Income Tax – What are the indicators suggesting that you could be asked to participate in an unacceptable PIC arrangement?


From our recent experience, there has been an ever-increasing concern about vendors, salespersons and PIC consultants approaching taxpayers and offer to help them claim PIC cash pay-out.  You should understand that where an incorrect PIC cash payout claim is made based on wrong advice by vendors, salespersons and consultants, you will still have to pay a penalty and/or face imprisonment because you are ultimately responsible for the accuracy of your PIC application.

This post summarises what vendors, salespersons and PIC consultants might promise taxpayers and explains the implications to taxpayers.

“No need to pay if PIC cash Payout is not approved by IRAS”

This means that there is no genuine business need for the expenditure and that it was made merely to obtain the PIC cash payout.  This is not acceptable.  Even if the claim is approved, IRAS may, within the next 5 years, check and ask for records to prove that the expenditure was genuine and payment was made.  Taxpayer will have to refund the PIC cash payout if he is not able to produce sufficient records to prove the above. Penalties may apply.

 “Just sign on the form, we will settle the PIC claim for you”

Taxpayer is  ultimately responsible for the accuracy of his claims even if the vendor had helped him submit the claims.  Taxpayer will also  bear the penalties if the PIC claim is found to be incorrect.

“I can help you set up the business and find three employees for you”

Taxpayer should not set up a business or hire three employees merely for the purpose of making a PIC cash payout claim. He is  ultimately responsible for the accuracy of your claims even if the vendor had helped him submit the claim. Taxpayer will also  bear the penalties if the PIC claim is found to be incorrect.

 “To meet the PIC condition, you just need to find any three persons and pay them CPF in that month”

Hiring three employees purely for the purpose of meeting the PIC condition is not acceptable. It must be to meet genuine business needs.  Taxpayer will bear the penalties if IRAS subsequently finds that the three employees were not hired for genuine business purposes.

 “The three local employees can include part-timers”

While a part-timer can be considered  one of the three local employees, it is not acceptable to hire part-timers for the purpose of meeting the PIC conditions and not for meeting any genuine business need.  Taxpayer will bear the penalties if IRAS subsequently finds that the part-timers were not hired for genuine business purposes.

“I can help you set up a business and after claiming PIC cash payout, you just need to close off the business.”

Taxpayer should not set up a business or hire three employees merely for the purpose of making PIC claims. Taxpayer will bear the penalties if IRAS finds that you are abusing the PIC scheme by making use of fraudulent arrangements to obtain PIC benefits.

What does this mean to you if you were involved in promoting PIC scheme?

IRAS says that it will keep a close watch on claims linked to promoters of abusive PIC arrangements. Once detected, IRAS will subject these claims to close scrutiny and may disallow claims linked to promoters of abusive PIC arrangements. As a result of the amendment to the Income Tax Act, IRAS has now enhanced power to  subject the promoters of abusive PIC schemes to criminal investigations.

If you have any questions, please conatc

BFH v Comptroller of Income Tax [2013] SGHC 161


In this case, the taxpayer made a lump-sum payment of S$100M to the Info-Comm Development Authority for the grant of a 3G Facilities Based Operator (“FBO“) Licence and certain radio frequency spectrum for 3G mobile telecommunication services (“3G Spectrum Rights“) for a period of 20 years.

The issue at the Income Tax Board of Review (“ITBR“) was whether the payment in question was a revenue expense deductible under Section 14(1) of the Income Tax Act (“the Act“) or a capital expenditure that is not deductible under Section 15(1)(c).

The ITBR held that the payment was capital in nature and hence not deductible.  BFH appealed to the High Court and Andrew Ang J delivered the judgement.
Continue reading BFH v Comptroller of Income Tax [2013] SGHC 161

Income Tax – Certainty of Non-Taxation of Companies’ Gains on Disposal of Equity Investmnts


 

Dear Friends and Business Associates,

The Inland Revenue Authority of Singapore issued a new E-tax Guide on “Certainty of Non-Taxation of Companies’ Gains on Disposal of Equity Investments” (“the new rule“) on 30 May 2012.

By way of background, this new rule was introduced in 2012 Budget to give upfront tax certainty on gains derived by companies from their disposal of equity investments with effect from 1 June 2012.

Continue reading Income Tax – Certainty of Non-Taxation of Companies’ Gains on Disposal of Equity Investmnts

Income Tax – Why Is It Critical For Taxpayers To Comply With Tax Law?


Dear Friends and Business Associates,

As the title suggests, it is critical for all taxpayers to comply with the tax law and if in doubt, consult your Accredited Tax Advisors from Singapore Institute of Accredited Tax Professionals.  Many taxpayers in SIngapore I know want to save costs and as a result they will resolve the tax issues on their own or seek tax input from non-accredited tax advisors in Singapore because their service charges would be lower than Accredited Tax Advisors.  Here is a question for you to consider – do you focus on how much you can save as a result of getting advice from non-accredited tax advisors only?  If so, I would like to invite you to think about how much would it cost you for getting advice from them and in the end, it is regarded as incomplete, resulting in the tax treatment being disagreed with IRAS.?

Incidentally, it is also critical for taxpayers not to cheat IRAS.  If you believe you can outsmart IRAS and save a few dollars on your tax liability, think twice.  Why?

Continue reading Income Tax – Why Is It Critical For Taxpayers To Comply With Tax Law?