Income Tax – Robotic Ice-Cream Machine Dealer Convicted of False PIC Claim


It was reported in IRAS’ website on 27 April 2017 that
Robofusion Asia Pte Ltd (“Robofusion”) has been convicted of giving false information in the Productivity and Innovation Credit (“PIC“) cash payout application form.  Its director, Yong Tai Kok (“Yong“) has also been convicted of his role in assisting Robofusion in making the false PIC Claim.

IRAS’ investigation

IRAS’ Investigations revealed that Yong obtained the consent of two other people who were not employees of Robofusion, to use their names in Robofusion’s PIC cash payout application form dated 23 May 2013.  Robofusion made CPF contributions to their Central Provident Fund accounts in order to represent them as Robofusion’s local employees when in fact they were not.

Robofusion’s PIC cash payout application was for the purchase of “Robofusion Generation 4 Ice Cream Kiosk” costing $93,000 on 28 Feb 2013 and “Software License and Implementation for Cashless Payment System and Kiosk Payment Integration” costing $14,980 on 29 Apr 2013. The amount of PIC cash payout which was wrongfully obtained was $60,000.

Eventually … 

The court ordered Robofusion to pay a penalty of $60,000 for the PIC cash payout that it was not entitled to.

Yong was convicted of intentionally aiding Robofusion to, without reasonable excuse, give false information to the Comptroller of Income Tax to obtain a PIC cash payout which the company was not entitled to.  The court ordered Yong to pay a penalty of $120,000, which is twice the amount of PIC cash payout that was wrongfully claimed and a fine of $4,000.

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

Singapore GST – GST Guide on Insurance: Cash Payments and Input Tax on Motor Car Expenses


On 3 April 2017, the IRAS reissued the Second Edition of its e-Tax Guide on GST Guide on Insurance: Cash Payments and Input Tax on Motor Car Expenses.

One of the changes relates to the clarification of the GST treatment for input tax on medical expenses incurred by insurance companies.

If the claimant incurs the expenses (e.g. medical expenses incurred during a hospital stay) and the hospital forwards the claim directly to the insurance company, the question is whether this would be treated as a supply made by the hospital to the insurance company.

A distinction should be made between motor car policies and medical/health policies.  Unlike motor car insurance policy where the insurance company may have to contract for services from an authorised motor workshop to reinstate the motor car to its original condition as required under the insurance contract, the insurance company does not have any obligation to contract for or provide any medical services to the insured under medical/health policies. Hence, any payment made by the insurance company to the hospital should be regarded as a payment arrangement and not as consideration for a supply of services to the insurance company. The insurance company should not claim input tax based on tax invoices received from the hospital. Instead, the insurance company should claim deemed input tax on the Cash Payment provided certain qualifying conditions as stipulated on the e-Tax Guide are satisfied.

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

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Income Tax – Revised e-Tax Guide on Tax Exemption Under Section 13(12) of the ITA


On 31 March 2017, the IRAS reissued the e-Tax Guide on Tax Exemption Under Section 13(12) of the Income Tax Act.

The tax exemption scheme for infrastructure foreign income will expire on 31 Dec 2022 (unless specifically revoked earlier). Accordingly, where the section 13(12) declaration form is submitted to IRAS after 31 Dec 2022, the infrastructure foreign income will not enjoy the tax exemption, unless the scheme is extended.

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


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Disclaimer – The information transmitted is intended only for the person or entity to which it is addressed and may contain confidential and/or privileged material.  Any review, transmission, dissemination or other use of, taking of any action in reliance upon, this information by person or entities other than the intended recipient is prohibited.  If you receive this in error, please contact the sender and delete the material from any computer.  Any views or opinions expressed in this e-mail are solely those of the author and do not necessarily represent those of WHM Consulting Pte Ltd.

Singapore Stamp Duties – Imposition of Additional Conveyance Duties (ACD)


Effective from 11 March 2017, Additional Conveyance Duties (ACD) will be imposed on any qualifying acquisition and qualifying disposal.

Meaning of Qualifying Acquisition and Qualifying Disposal

A qualifying acquisition happens when equity interest in a Property Holding Entity (“PHE“) (i.e. the target entity) is acquired and the buyer (with any associates) is already a significant owner of the PHE before the acquisition or becomes a significant owner of the PHE after the acquisition.

On the other hand, a qualifying disposal happens when the seller (together with any associates) is a significant owner of the PHE and the equity interest of the PHE disposed of was acquired on or after 11 March 2017; and disposed of within 3 years of acquisition (holding period) on a first-in-first-out basis.

What are the Additional Conveyance Duties?

In addition to existing stamp duty on shares,  ACD to be applied on each of the qualifying transfer of equity interests in PHEs are:

  • Additional Conveyance Duties for Buyers (ACDB):

    Existing Buyer’s Stamp Duty at 1% to 3%
    Additional Buyer’s Stamp Duty at 15% (flat rate)

  • Additional Conveyance Duties for Sellers (ACDS):

    Seller’s Stamp Duty at 12% (flat rate)


What is a Property-Holding Entity (PHE)?

A PHE is a property-holding entity whose primary tangible assets (owned directly/indirectly) are Singapore residential properties.

A PHE can be a Type 1 PHE, a Type 2 PHE or both.

Type 1 PHE means the target entity whose market value of the residential properties makes up at least 50% of the value of its total tangible assets (TTA).

Type 2 PHE means the target entity:

  • Which has 50% or more beneficial interest (directly or indirectly) in one or more entities (henceforth referred to as “related entities”) which is a Type 1 PHE; and

     

  • the sum of the market value of the residential properties beneficially owned by the target entity and its related entities is at least 50% of the TTA of the target entity and its related entities.


Who is a Significant Owner of a PHE?

A significant owner of a PHE refers to a person or entity who beneficially owns at least 50% equity interest or voting power in a PHE either on its own or with its associates.

Who are Associates?

In determining whether the 50% ownership threshold for significant ownership is met, the equity interest of the buyer’s and seller’s associates will be taken into account. In certain scenarios, the associates’ equity interests will also be included in the tax computation.

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

 

Income Tax – Revised Requirements for Filing Form C-S


As announced by the 2nd Minister for Finance on 7 Mar 2017, IRAS will increase the annual revenue threshold for filing Form C-S from the current $1 million to $5 million to reduce compliance cost on businesses.

In view of the above, with effect from YA 2017,  companies will qualify to file Form C-S if they meet all of the following conditions:

  1. The company must be incorporated in Singapore;
  2. The company must have an annual revenue of $5 million or below
  3. The company only derives income taxable at the prevailing corporate tax rate of 17%; and
  4. The company is not claiming any of the following in the YA:
    1. Carry-back of Current Year Capital Allowances/ Losses
    2. Group Relief
    3. Investment Allowance
    4. Foreign Tax Credit  and Tax Deducted at Source

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

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