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Chapter 1
BASIC TAX CONCEPTS

¶1-100 Summary checklist

The tax system is territorial, ie income is taxable in Singapore if it is sourced here or received,
• ¶1-101
or deemed received, here.
Income is taxed on a preceding year basis, ie income earned in the year is assessed to tax in
• ¶1-102
the following year of assessment.
Tax is assessed on chargeable income, ie total statutory income less capital allowances, losses
• ¶1-103
and reliefs.
The prevailing tax rate for companies and non-residents is 17%; resident individuals are taxed
• ¶1-104
based on graduated rates.
• Residence of a person determines how a person will be taxed. ¶1-105
• Not Ordinarily Resident Scheme. ¶1-106
• Tax computation for a resident individual. ¶1-107
• Tax computation for a company. ¶1-108

¶1-101 Charge to tax

The tax system in Singapore operates on a territorial basis. The charging section of the Income Tax Act (ITA) can be found in
s 10(1), which states that:
“Income tax shall, subject to the provisions of this Act, be payable at the rate or rates specified hereinafter for each year of
assessment upon the income of any person accruing in or derived from Singapore or received in Singapore from outside
Singapore in respect of:

(a) gains or profits from any trade, business, profession or vocation, for whatever period of time such trade, business,
profession or vocation may have been carried on or exercised;
(b) gains or profits from any employment;
(c) (Deleted)
(d) dividends, interest or discounts;
(e) any pension, charge or annuity;
(f) rents, royalties, premiums and any other profits arising from property; and
(g) any gains or profits of an income nature not falling within any of the preceding paragraphs.”

Section 10(1) of the ITA establishes the scope of taxation as income tax is payable if the income falling within s 10(1)(a) to
10(1)(g) accrues to or is derived by a person from:

Singapore, or
outside Singapore but received in Singapore.

Accordingly, if the income is sourced outside Singapore and is not received or deemed received in Singapore, the income will
not be assessable to tax in Singapore.
Clarification of the meaning of “received”
Section 10(25) of the ITA states that:
“It is hereby declared for the avoidance of doubt that the amounts described in the following paragraphs shall be income
received in Singapore from outside Singapore whether or not the source from which the income is derived has ceased:

(a) any amount from any income derived from outside Singapore which is remitted to, transmitted or brought into,
Singapore;
(b) any amount from any income derived from outside Singapore which is applied in or towards satisfaction of any debt
incurred in respect of a trade or business carried on in Singapore; and
(c) any amount from any income derived from outside Singapore which is applied to purchase any movable property
which is brought into Singapore.”

Example 1
A Pte Ltd, a Singapore incorporated and tax resident company, has a fixed deposit with HSBC Bank in Hong Kong. The
interest earned each year is credited to the current account with the same bank.
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As long as A Pte Ltd does not remit this interest income to Singapore, it is not “caught” within s 10(1) of the ITA as the source
is in Hong Kong and it is not received in Singapore.
What if A Pte Ltd uses the interest income to purchase machinery for its factory in Singapore — would the interest be
considered as being received in Singapore?
By using the interest income to buy machinery in Hong Kong for its factory in Singapore, A Pte Ltd would be deemed to have
“received” the interest income in Singapore as it falls within s 10(25)(c) of the ITA.
Example 2
B Pte Ltd has various investments outside Singapore. The investment income derived has always been credited to B Pte Ltd’s
bank account in the United States of America (USA). The money in this account has been used to pay its trade creditors in
USA in respect of the Singapore business.
As B Pte Ltd is using income derived from outside Singapore to satisfy debts in respect of a business carried on in Singapore,
the investment income is deemed to have been received in Singapore as it falls within s 10(25)(b) of the ITA.
(See Chapter 10)
Tax exemption on specified foreign income received by resident persons (not being an individual)
Tax exemption is granted on specified foreign income (ie foreign-sourced dividends, foreign-sourced branch profits and
foreign-sourced service income) received or deemed received in Singapore by Singapore resident persons not being an
individual, provided:

the specified foreign income was subject to tax (by whatever name called) in the foreign jurisdiction from which the
income is received
in the year the specified foreign income is received in Singapore, the headline tax rate of the foreign jurisdiction from
which the income is received is at least 15%, and
the Comptroller of Income Tax is satisfied that the tax exemption would be beneficial to the person resident in
Singapore.

Where the foreign income consists of dividends paid by a company, the tax referred to in the above shall be:

(a) where the company is resident in the territory from which the dividends are received, the tax paid in that territory by
the company in respect of its income out of which the dividends are paid (i.e. underlying tax), and
(b) the tax paid on the dividends in the territory from which the dividends are received (i.e. dividend withholding tax).

The specified foreign income can also be exempted from tax if it was not subject to tax in the foreign jurisdiction due to a
direct consequence of that foreign jurisdiction granting a tax incentive for carrying out substantive business activities in that
jurisdiction.
Where the above conditions for tax exemption under s 13(9) of the ITA cannot be met, tax exemption may be granted by the
Inland Revenue Authority of Singapore (IRAS) under s 13(12) of the ITA on a case-by-case basis upon application.
Tax exemption on foreign income received by resident individuals
All foreign-sourced income received or deemed received in Singapore by resident individuals on or after 1 January 2004 will
be exempt from tax, if the Comptroller is satisfied that the tax exemption would be beneficial to the individuals, but excludes
such income received by them through a partnership in Singapore.
Any foreign-sourced dividend, foreign branch profit, and income derived from any professional, consultancy and other
services rendered in any territory outside Singapore that is received or deemed received in Singapore by any individual
resident in Singapore through a partnership in Singapore on or after 1 January 2004, will also be exempt from tax provided
the conditions specified in s 13(9) are met and the Comptroller is satisfied that the income is derived from outside Singapore.
Law: s 10(1), 10(25), 13(7A), 13(8)–13(12)

¶1-102 Definitions
“Year of assessment” means “the period of 12 months commencing on such date as the Minister may, by notification in the
Gazette, appoint, and each subsequent period of 12 months”.
Year of assessment (YA) 2018 is the period from 1 January 2018 to 31 December 2018.
“Basis period” for any year of assessment means “the period on the profits of which tax for that year falls to be assessed”.
The basis period thus determines the amount of income which would be taxable for that year of assessment. As the basis of
assessment in Singapore is on the preceding year basis, income earned in the year will be assessed to tax in the following
year of assessment.
Generally, for non-business income, the basis period for a year of assessment is either:

the calendar year immediately preceding that year of assessment, or

the period from the date of commencement to 31 December of the year immediately preceding that year of
assessment, or
the period from 1 January to the date of cessation in the year immediately preceding that year of assessment.

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For business or trading income, the basis period for a year of assessment is the accounting period ending in the year
preceding the year of assessment. On a strict basis, this would mean that non-December year-end businesses with non-trade
income would need to keep track of their non-trade income and have such income assessed on a preceding calendar year
basis.
However, the non-trade income of companies, bodies of persons, sole-proprietorships and partnerships will be taxed on an
accounting year basis. In other words, all income (business or trading and non-business income) and other income of these
taxpayers are taxed on an accounting year basis. Similarly, approved donations will also be allowed tax deduction on an
accounting year basis.
“Person” is defined to include “a company, body of persons and a Hindu joint family”.
A “company” can be incorporated or registered under any law in force in Singapore or elsewhere.
A “body of persons” excludes a company or a partnership.
Commencement of a business, trade, profession or vocation
If the first accounting period is a period of up to 12 months, this accounting period will form the basis period for one year of
assessment. However, if the first accounting period is a period of more than 12 months, this accounting period will form the
basis periods for two years of assessment.
Example 3
Ms Tan resigned from her job on 30 June 2016 and started her own business on 1 July 2016. The business accounting year
end is 30 June and her first set of accounts prepared by her accountant was for the period 1 July 2016 to 30 June 2017.
She moved back to her parents’ house and rented out her private apartment. Her tenants moved in on 15 January 2017.
In 2018, she decided to migrate to Australia. She ceased her business on 31 May 2018 and sold her flat on 30 September
2018. Her tenants moved out on 15 September 2018.
The basis periods for the various sources of income for the relevant years of assessment are:
YA 2017 YA 2018 YA 2019
1 January 2016 to 30 June
Employment income NA NA
2016
Business income NA 1 July 2016 to 30 June 2017 1 July 2017 to 31 May 2018
15 January 2017 to 31 1 January 2018 to 15
Rental income NA
December 2017 September 2018
The ITA does not define when a business is regarded as having commenced operations. Generally, a business may be
regarded as having commenced operations when it opens its doors to receive its first customer.
Under s 14U, a business is deemed to have commenced operations on the first day of the accounting year in which it derives
the first dollar of income from the business.
All outgoings and expenses incurred from the actual date of commencement of business that are not capital in nature or are
not specifically disallowed under s 15 of the ITA will qualify for tax deduction.
With effect from YA 2012, a business is allowed a deduction or further deduction for all revenue expenses incurred in the
accounting year immediately preceding the deemed date of commencement (see ¶4-125).
IRAS Practice: IRAS e-Tax Guide: Determination of the Date of Commencement of Business dated 29 July 2014; IRAS e-Tax
Guide: Concession for Enterprise Development — Deduction of Certain Expenses Incurred Before Business Revenue is
Earned (Second Edition) dated 3 September 2014; IRAS e-Tax Guide: Treatment of Certain Expenses Incurred Prior to the
Commencement of a Business Activity dated 30 September 2016
Law: s 2, 14U, 35

¶1-103 Determination of income

To determine the tax payable, the following income must first be ascertained:

Statutory income — This is the total of the person’s income from all sources (net of deductible expenses) after
deducting capital allowances. Capital allowance is first deducted against any income from any trade, business,
profession or vocation. Any excess capital allowance is then set-off against other income.
Assessable income — This is the remainder of statutory income after deducting:
– losses in respect of any trade, business, profession or vocation
– gifts to an approved museum or any sculpture or work of art for public display to an approved recipient not
being an approved museum or money or services for installing or maintaining any public sculpture or work of art
for public display
– gifts of money made to the Government or to any approved public institution
– gifts of computers (including computer software and peripherals) approved by the Minister or such person as
he may appoint and made by any company to any institution of a public character (IPC) or a prescribed
educational, research or other institution in Singapore
– gifts of shares in a company or units in unit trusts traded in Singapore or listed on Singapore Exchange made
by an individual to any approved public institution
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– gifts of any immovable property to any approved public institution.
To encourage greater charity giving in Singapore and community involvement across the charitable sector, tax
deduction for donations made to approved IPCs and other approved institutions (such as approved museums,
prescribed schools, etc) during the periods 1 January 2009 to 31 December 2014 and 1 January 2016 to 31 December
2018 will be allowed at 250%. For donations made to approved IPCs and other approved institutions during the period
1 January 2015 to 31 December 2015, tax deduction was allowed at 300% as part of the SG50 celebration (see ¶4-
109).
However, gifts of computers (including software and peripherals) by any company to any IPC or any prescribed
educational, research or other institution in Singapore made after 20 February 2017, will no longer qualify for tax
deduction.
No deduction is allowed to a person for a donation made to an IPC if that person does not provide that IPC with such
information within such time and in such form and manner as the Comptroller may specify.
To continue to encourage Singaporeans to give back to community, the Minister has proposed in 2018 Budget on 19
February 2018 to extend the 250% tax deduction for qualifying donations made on or before 31 December 2021. All
other conditions of the scheme remain the same.

Chargeable income — This is the remainder of assessable income after allowing personal reliefs and other
deductions in Pt X of the ITA.

On determination of the chargeable income, the tax liability of the person is ascertained in accordance with the relevant tax
rates.
Law: s 35, 37, 38, 39

¶1-104 Tax rates

The tax rates applicable depend on the type of taxpayer.
Resident individuals
Resident individuals are taxed based on the graduated rates set out in Pt A of the Second Schedule to the ITA.
The following changes to the personal income tax rates take effect from YA 2017:

a more progressive personal income tax rate structure for resident individual taxpayers with an increase in marginal tax
rates for income exceeding $160,000, and
an increase in the top marginal personal income tax rate from 20% to 22% for income exceeding $320,000.

From YA 2018, to further enhance the progressivity of the personal income tax rates regime, the total amount of personal
income tax reliefs that an individual can claim is capped at $80,000 per year of assessment.
The personal tax rates tables for YA 2012 to YA 2016 and from YA 2017 onwards are as follows:
From YA 2012 to YA 2016 From YA 2017 onwards
Chargeable Gross Tax Chargeable Gross Tax
Tax Rate Tax Rate
Income* Payable Income* Payable
($) (%) ($) ($) (%) ($)
On the first 20,000 – – On the first 20,000 – –
On the next 10,000 2 200 On the next 10,000 2 200
On the first 30,000 – 200 On the first 30,000 – 200
On the next 10,000 3.5 350 On the next 10,000 3.5 350
On the first 40,000 – 550 On the first 40,000 – 550
On the next 40,000 7 2,800 On the next 40,000 7 2,800
On the first 80,000 – 3,350 On the first 80,000 – 3,350
On the next 40,000 11.5 4,600 On the next 40,000 11.5 4,600
On the first 120,000 – 7,950 On the first 120,000 – 7,950
On the next 40,000 15 6,000 On the next 40,000 15 6,000
On the first 160,000 – 13,950 On the first 160,000 – 13,950
On the next 40,000 17 6,800 On the next 40,000 18 7,200
On the first 200,000 – 20,750 On the first 200,000 – 21,150

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From YA 2012 to YA 2016 From YA 2017 onwards

Chargeable Gross Tax Chargeable Gross Tax
Tax Rate Tax Rate
Income* Payable Income* Payable
($) (%) ($) ($) (%) ($)
On the next 120,000 18 21,600 On the next 40,000 19 7,600
On the first 320,000 – 42,350 On the first 240,000 – 28,750
Excess over 320,000 20 – On the next 40,000 19.5 7,800
On the first 280,000 – 36,550
On the next 40,000 20 8,000
On the next 320,000 – 44,550
Excess over 320,000 22 –
* Chargeable income = Income after tax reliefs
To align with the highest marginal tax rate for resident individuals, the withholding tax rate for management fees, technical
assistance, service fees and directors’ fees paid to non-resident individuals is 22% (20% for payments made before 1 January
2016) on the gross payment.
Note:
For YA 2015, a personal income tax rebate of 50% on the tax payable (capped at $1,000) was given to all resident individual
taxpayers.
For YA 2017, a personal income tax rebate of 20% on the tax payable (capped at $500) was given to all resident individual
taxpayers.
Non-resident individuals employed in Singapore or who derived income from immovable property in Singapore
Foreign individuals who exercise employment in Singapore for less than 60 days in a calendar year is exempt from Singapore
income tax. Those who exercise employment in Singapore for more than 60 days but less than 183 days in a calendar year, is
subject to Singapore income tax at a flat rate of 15% of the gross amount (without personal reliefs and deduction) or the tax
payable by a resident individual of Singapore, whichever is higher.
The short-term (60 days or less) employment income exemption does not apply to emoluments received by a director of a
company.
Rental income (less allowable expenses) derived from immovable properties in Singapore by non-resident individuals ìs
subject to tax at the rate of 22% (ie 20% before 1 January 2016).
Companies
Companies (both resident and non-resident) are generally taxed at a flat rate of 17% on their normal chargeable income from
YA 2010 onwards.
All companies (excluding those that qualify for the new start-up tax exemption (SUTE) scheme) are eligible for partial tax
exemption on the first $300,000 of their normal chargeable income for each year of assessment, as follows:

Up to the first $10,000 of normal chargeable income, 75% of the income is exempt from tax.
Up to the next $290,000 of normal chargeable income, 50% of the income is exempt from tax.

Adjustment to the partial tax exemption scheme

To strengthen support for firms to build capabilities, the Minister has proposed in 2018 Budget on 19 February 2018 to adjust
the partial tax exemption scheme for all companies (excluding those that qualify for the SUTE scheme) on their normal
chargeable income for each year of assessment from YA 2020 onwards, as follows:

Up to the first $10,000 of normal chargeable income, 75% of the income is exempt from tax.
Up to the next $190,000 of normal chargeable income, 50% of the income is exempt from tax.

New start-up companies

For new start-up companies, tax exemption is granted on the first $300,000 of a qualifying company’s normal chargeable
income for the first three consecutive years of assessment, as follows:

Up to the first $100,000 of normal chargeable income, 100% of the income is exempt from tax.
Up to the next $200,000 of normal chargeable income, 50% of the income is exempt from tax.

The SUTE is not available to the following companies incorporated on or after 26 February 2013:

Property development companies that buy or lease land and arrange for a building to be built on the land in order to
lease, manage or sell the building.

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Investment holding companies whose principal activity is that of investment holding and which derive only investment
income such as rental, dividend or interest.

The rationale is that the SUTE is designated to encourage entrepreneurship and not intended for such companies, as
property development companies will typically incorporate a new company for each new property development project, while
investment holding companies derive only passive income. Nevertheless, property development and investment holding
companies will still enjoy the partial tax exemption, ie 75% tax exemption on the first $10,000 of normal chargeable income
and 50% tax exemption on the next $290,000 of normal chargeable income.
Adjustment to the start-up tax exemption scheme
Similarly, to strengthen support for firms to build capabilities, the Minister has proposed in 2018 Budget on 19 February 2018
to adjust the tax exemption for the first three consecutive years of assessment under the SUTE scheme from YA 2020
onwards, as follows:

Up to the first $100,000 of normal chargeable income, 75% of the income is exempt from tax.
Up to the next $100,000 of normal chargeable income, 50% of the income is exempt from tax.

All other conditions of the scheme remain unchanged.

Corporate income tax rebate
For YA 2013 to YA 2015, a 30% corporate income tax rebate, capped at $30,000 per year of assessment was given on the
corporate income tax payable.
For YA 2016 and YA 2017, the corporate income tax rebate on the corporate income tax payable was increased to 50%, but
capped at $20,000 and $25,000, respectively.
For YA 2018, the corporate income tax rebate on the corporate income tax payable is reduced to 20% and capped at
$10,000.
Enhancement and extension of corporate tax rebate
To ease business costs and support restructuring by companies, the Minister has proposed in 2018 Budget on 19 February
2018 to enhance and extend the corporate income tax rebate as follows:

Enhance the rebate for YA 2018 from 20% to 40% on the corporate tax payable, and capped at $15,000 instead of
$10,000, and
Extend the rebate for another year to YA 2019, but at a reduced rate of 20% on the corporate tax payable, and capped
at $10,000.

A “qualifying company” means a company incorporated in Singapore which for any of the first three years of assessment is
resident in Singapore and for that year of assessment has its total share capital beneficially held directly by no more than 20
shareholders:

all of whom are individuals throughout the basis period for that year of assessment, or
at least one of whom is an individual shareholder holding at least 10% of the total number of issued ordinary shares of
the company throughout the basis period for that year of assessment.

In the case of a company limited by guarantee:

all of its members must be individuals throughout the basis period for that year of assessment, or
at least one of its members is an individual throughout the basis period for that year of assessment, and the
contribution of that individual under the Memorandum of Association of the company to the assets of the company in
the event of its being wound up, amounts to at least 10% of the total contributions of the members of the company
throughout the basis period for that year of assessment.

Clubs and associations

A body of persons such as clubs and associations is taxed at a flat rate of 17%, same as for companies under s 43(6). They
will also enjoy a partial tax exemption on the first $300,000 of their normal chargeable income, as follows:

Up to the first $10,000 of normal chargeable income, 75% of the income is exempt from tax.
Up to the next $290,000 of normal chargeable income, 50% of the income is exempt from tax.

Law: s 42(4), 42(5), 43(1), 43(6), 43(6A), 43(10)

¶1-105 Residence
The residence of a person determines how a person will be taxed. Section 2 of the ITA defines “residence” as follows:

“(a) in relation to an individual, means a person who, in the year preceding the year of assessment, resides in
Singapore except for such temporary absences therefrom as may be reasonable and not inconsistent with a claim by
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such person to be resident in Singapore, and includes a person who is physically present or who exercises an
employment (other than a director of a company) in Singapore for 183 days or more during the year preceding the year
of assessment; and
(b) in relation to a company or body of persons, means a company or a body of persons the control or management of
whose business is exercised in Singapore.”

Residence of individuals
The above definition gives rise to two commonly used tests: the quantitative test and the qualitative test.
The quantitative test examines the number of days an individual is either physically present in Singapore or employed in
Singapore. As long as the individual is physically present or employed in Singapore for 183 days or more during the basis
period, he/she is considered as resident in Singapore. However, the employment test does not apply to directors.
Employment income is deemed to be derived from Singapore if employment is exercised in Singapore (see ¶3-114).
The qualitative test examines the “quality” of the individual’s stay in Singapore. Is he/she normally resident in Singapore
except for his/her temporary absence? Even if he/she is away for a few years, he/she could still be considered as being
temporarily away given the circumstances of the situation, eg if he/she intends to return to Singapore after his/her overseas
training. Some of the other factors which would be taken into account include:

nationality
usual place of residence
financial ties
social ties, and
reasons for going overseas.

Under a two-year administrative concession, foreign employees, whose physical presence (including total employment period)
of at least 183 days straddles over two calendar years, would be treated as tax resident in Singapore for both calendar years,
even though they may have been physically present in Singapore for less than 183 days within each calendar year. This
concession applies to foreign employees (excluding directors of a company and public entertainers) who entered Singapore
on or after 1 January 2007.
The above concession will be granted automatically to the employee by the IRAS based on the employee’s facts and
circumstances, although it would appear that the employee can choose to opt out of this concession.
Foreign employees who have exercised employment in Singapore for a continuous period of at least 183 days which
straddles over two calendar years and whose total annual income from all sources (both employment and personal) from
Singapore is below $22,000 may not be liable to tax for both calendar years if they are treated as tax resident under the two-
year administrative concession.
Under a three-year administrative concession, an individual, whose physical presence in Singapore span at least three
consecutive calendar years, will be treated as tax resident for the three years of assessment even though the number of days
of his/her presence or exercise of employment in Singapore is less than 183 days in the first and third year.
Example 4
Andrew arrived in Singapore on 15 June 2017 and commenced employment on 15 July 2017. He ceased employment on 1
May 2018. On 1 September 2018, he returned to Singapore to take up another employment and he ceased employment on
31 March 2020. His residence for the relevant years of assessment is:
Number of days in basis period Residence
YA 2018 Physical presence >183 days Resident
Employment <183 days
Physical and employment presence >183
YA 2019 Resident
days
Physical and employment presence >183
YA 2020 Resident
days
Physical and employment presence <183
YA 2021 Non-resident*
days
* As Andrew has completed at least three consecutive years of assessment, he will also be treated as a resident for YA 2021.
Residence of company and body of persons
The incorporation of a company in Singapore does not automatically mean that it is tax resident in Singapore. Similarly, a
body of persons is not tax resident in Singapore simply because it is registered in Singapore.
They are tax resident in Singapore if control and management is exercised in Singapore. For companies, the place where
control and management is exercised is often the place where the directors’ meetings are held.
Example 5

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(a) ABC Pte Ltd is a wholly-owned subsidiary of an American company. There are five directors; two reside in New York and
three reside in Singapore. All directors’ meetings are held in Singapore.
ABC Pte Ltd is a tax resident of Singapore as management and control of the company is exercised in Singapore.
(b) XYZ Pte Ltd is a wholly-owned subsidiary of a Malaysian company. There are six directors; four reside in Malaysia and two
reside in Singapore. All the board meetings are held in Malaysia. 
XYZ Pte Ltd is a non-tax resident of Singapore as management and control of the company is exercised outside Singapore.
Law: s 2

¶1-106 Not Ordinarily Resident Scheme

An individual who is neither a citizen of Singapore nor a Singapore permanent resident (SPR) can apply for the Not Ordinarily
Resident (NOR) scheme if he/she meets the following qualifying criteria:

the individual is tax resident in Singapore for that year of assessment, and
he/she is not tax resident in Singapore for the three consecutive years of assessment immediately before that year of
assessment.

An individual who meets the above qualifying criteria will be granted the NOR status for five consecutive years of assessment
starting from the year of assessment in which he/she first satisfies the qualifying criteria. Other than the first year of
assessment where the NOR must be a tax resident of Singapore, there is no requirement for him/her to be a resident for any
year of assessment during the five-year qualifying period in order to retain his/her status as an NOR taxpayer.
An individual can be accorded the NOR status more than once as long as the above qualifying criteria are met. In determining
whether or not an individual can qualify as an NOR taxpayer for any subsequent five-year period, all years of assessment for
which he/she is a non-resident, including any such year of assessment that may fall within an earlier five-year qualifying
period for which he/she was accorded the NOR status, will be taken into account, as follows:

A foreign individual who is accorded NOR status will be entitled to time apportionment of his/her Singapore employment
income and/or tax exemption of the employers’ contribution to non-mandatory overseas pension funds or social security
schemes during the NOR period in respect of his/her Singapore employment if he/she satisfies the following criteria:
Time apportionment of employment income:

he/she must have spent at least 90 days outside Singapore for business reasons pursuant to Singapore employment,
and
his/her total Singapore employment income must be at least $160,000.

The income eligible for time apportionment includes perquisites and leave pay, but excludes director’s fees and any amount of
income tax payable in Singapore that is borne directly or indirectly by his/her Singapore employer.
Where the tax payable on the apportioned Singapore employment income is less than 10% of his/her total employment
income, he/she will be subject to a tax of 10% of his/her total employment income.
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Tax exemption of employer’s contribution to non-mandatory overseas pension fund or social security scheme:

he/she is neither a Singapore citizen nor a SPR

his/her Singapore employment income must be at least $160,000, and
his/her employer must not claim tax deduction on contributions made to non-mandatory overseas pension or provident
funds and social security schemes up to the amount of the NOR cap.

The amount exempt from tax or NOR cap is computed based on the Central Provident Fund (CPF) capping rules in respect of
the employer’s contributions to the CPF for a Singapore citizen as required under the Central Provident Fund Act.
The two-year or three-year administrative concession and the NOR scheme
The two-year or three-year administrative concession and the NOR scheme need not be mutually exclusive. An individual is
not required to revoke the resident status granted under the two-year or three-year administrative concession to enable
him/her to be granted NOR status. Similarly, an individual who has applied for NOR status could still avail himself/herself of
the resident treatment under the two-year or three-year administrative concession during the period of his/her NOR status.
Notwithstanding this concession, an individual is still required to satisfy the following qualifying criteria of the NOR scheme if
he/she wishes to apply for NOR status:

the individual must be a resident for the year of assessment in which he/she wishes to avail himself/herself of the NOR
status. The resident status can be satisfied using the two-year or three-year administrative concession, and
the individual must be a non-resident for the three consecutive years immediately before that year of assessment in
which he/she wishes to avail himself/herself of the NOR status. If the individual is enjoying the two-year or three-year
administrative concession, his/her resident status for any year of assessment covered by the concession will be that of
a resident.

For the purposes of determining whether the individual can apply for the tax concessions under the NOR scheme, it should be
noted that while an individual who has been accorded the NOR status can avail himself/herself of the two-year or three-year
administrative concession, the individual shall not be entitled to the tax concessions under the NOR scheme for those years
of assessment in which he/she is a resident by virtue of the two-year or three-year administrative concession.
IRAS Practice: IRAS e-Tax Guide: Not Ordinarily Resident Scheme updated on 29 August 2008
Law: s 2, 13N

¶1-107 Tax computation for a resident individual

INCOME FROM VARIOUS SOURCES:
– trade, business, profession or vocation (Chapter 6) X
Less: WEAR AND TEAR ALLOWANCES
– brought forward (Chapter 9) (X)
– current (Chapter 5)  (X)  (X) 
X
Less: TRADE LOSSES
– brought forward (Chapter 9) (X)
– current  (X)   (X) 
X
EMPLOYMENT X
INTEREST (other than from approved banks and finance companies) AND DISCOUNTS X
PENSION, CHARGE, ANNUITY (Chapter 3) X
RENT, ROYALTIES, PREMIUMS AND OTHER PROFITS ARISING FROM PROPERTY X
OTHER GAINS AND PROFITS
(Net of deductible expenses — Chapter 4)  X 
STATUTORY INCOME X
Less: DONATIONS (See ¶4-109)  (X) 
ASSESSABLE INCOME X

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Less: PERSONAL RELIEFS (Chapter 7)  (X) 

CHARGEABLE INCOME  X 

TAX PER TAX RATES IN PT A OF THE SECOND SCHEDULE X

Less: % REBATE (if applicable) (X)
PROCREATION REBATES (See ¶7-124)  (X) 
TAX PAYABLE/(TAX REFUND)  X 

¶1-108 Tax computation for a company

NET PROFIT AS PER ACCOUNTS X
Less: INCOME –
NON-BUSINESS SOURCE INCOME
(X)
UNDER SECTIONS 10(1)(d) to 10(1)(g) (Chapter 3)
CAPITAL RECEIPTS (Chapter 3) (X)
EXEMPT INCOME (X)
PIC CASH PAYOUT (X)
FOREIGN INCOME NOT REMITTED OR
 (X) 
EXEMPTED
 (X) 
Add: DISALLOWABLE EXPENSES – X
SECTIONS 14 AND 15 (Chapter 4) X
PIC QUALIFYING EXPENSES ELECTED FOR
X
CASH PAYOUT
PIC CASH PAYOUT CLAW-BACK X
CAPITAL EXPENDITURE  X 
 X 
Less: SPECIAL/FURTHER DEDUCTIONS – X
SECTIONS 14B, 14E AND 14K (Chapter 4) (X)
FURTHER/PIC ENHANCED DEDUCTIONS UNDER
(X)
SECTIONS 14DA, 14R, 14S AND 14T (Chapter 4)
DEDUCTIONS UNDER SECTIONS 14D, 14H AND
 (X) 
14Q (Chapter 4)
ADJUSTED TRADING PROFITS (SECTION 10(1)(a))  (X) 
Less: WEAR AND TEAR ALLOWANCES X
– brought forward (Chapter 9) (X)
– current year (Chapter 5)  (X)   (X) 
X
Less: TRADE LOSSES
– brought forward (Chapter 9) (X)
– current year  (X) 
 (X) 
Add: NON-BUSINESS SOURCE INCOME X
UNDER SECTIONS 10(1)(d) to 10(1)(g) (Chapter 3)  X 
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X
Less: APPROVED DONATIONS (See ¶4-109)  (X) 
ASSESSABLE/CHARGEABLE INCOME X
Less: INVESTMENT ALLOWANCES (Chapter 15)  (X) 
X
Less: GROUP RELIEF CLAIM (IF APPLICABLE)  (X) 
X
LOSS CARRY-BACK RELIEF CLAIM (IF
Less:  (X) 
APPLICABLE)
X
Less: PARTIAL EXEMPTION (IF APPLICABLE)  (X) 
NET CHARGEABLE INCOME  X 

TAX AT PREVAILING CORPORATE TAX RATE X

DOUBLE TAXATION RELIEF/UNILATERAL TAX
Less:   (X)  
RELIEF (Chapter 10)
X
Less: TAX REBATE (IF APPLICABLE)  (X) 
Less: TAX PREVIOUSLY ASSESSED X
ADDITIONAL TAX PAYABLE/(TAX TO BE DISCHARGED)  (X) 

¶1-109 Revision questions

(1) Explain the following terms in your own words:
(a) territorial basis of taxation
(b) year of assessment
(c) basis period
(d) statutory income
(e) assessable income, and
(f) chargeable income.
(2) The basis period for a year of assessment is always based on the calendar year. Explain whether you agree or
disagree with the statement.
(3) Mr Lee is employed as an accountant in Cool Cool Pte Ltd. He also sells star toys in his spare time. He makes up
the accounts for his part-time business to 30 June annually.
State the basis period for each source of income for YA 2018.
(4) B Pte Ltd makes up its accounts to 31 March annually. During the financial year ended 31 March 2017, the
company deposited (on 1 June 2016) its surplus funds in a deposit account. Interest is paid on a monthly basis. State
the basis period for each source of income for YA 2018 and YA 2019.
(5) Mrs Ang resigned from her job on 30 November 2017 to start her own business on 1 December 2017. The
accounting year end is 31 December but the first set of accounts was prepared for the period 1 December 2017 to 31
December 2018. She also rented out a room in her HDB flat from 1 February 2018. State the basis period for each
source of income for YA 2018 and YA 2019.
(6) D Pte Ltd was set up on 15 March 2016 to tap the China market. Due to poor management, the company has been
making substantial losses since commencement. To avoid any further losses, the directors decided to wind up the
company on 30 June 2018. The company’s year end is 31 October. State the basis periods for each of the relevant
years of assessment.
(7) E Pte Ltd commenced business on 1 February 2017 and prepared the first set of accounts for 17 months to 30
June 2018. The company’s year end is 30 June. Details of the company’s income are as follows:
Trading income:
1/2/17 to 30/6/18 $17,000
1/7/18 to 30/6/19 $35,000

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State the company’s statutory income for the relevant years of assessment. Also show the basis periods for each of
the relevant years of assessment.
(8) Mr Beng received the following income:
Amount
Period
 $ 
Trading income 1/7/16 to 30/6/17 35,000
Employment income 1/1/17 to 31/12/17 20,000
DBS Fixed deposit interest income 1/1/17 to 31/12/17 1,200
Rental income 1/1/17 to 31/3/17 (ceased) 6,000
Mr Beng has trade losses of $5,000 brought forward from the previous year. He is also entitled to personal reliefs of
$7,000.
Calculate Mr Beng’s assessable and chargeable income for YA 2018. The relevant basis periods must also be shown.
(9) G Pte Ltd received the following income:(9) G Pte Ltd received the following income:
Period Amount
$
Trading income 1/7/16 to 30/6/17 35,000
Interest income 1/2/17 to 30/6/17 400
1/7/17 to 31/12/17 1,200
Rental income 1/1/17 to 31/12/17 6,000
G Pte Ltd has trade losses of $2,000 brought forward from the previous year.
Calculate the company’s assessable and chargeable income for YA 2018. The relevant basis periods must also be
shown.
(10) Results of H Pte Ltd are as follows:
Profits/(Losses)
Year ended
 $ 
30/9/15 (10,000)
30/9/16 28,000
30/9/17 40,000
Donations made to IPCs for the respective years of assessment are:
Approved donations
        $
2,000 (cash donations made on 15 May
YA 2016
2015)
YA 2017 5,000 (cash donations made on 20 July 2016)
YA 2018 4,800 (cash donations made on 2 June 2017)
Calculate the company’s chargeable income for YA 2016, YA 2017 and YA 2018.
(11) Mr Chan, a Singaporean, was assigned to China on a two-year employment contract commencing 1 August 2016.
He came back to Singapore at the end of his contract on 31 July 2018 and commenced another employment in
Singapore on 1 August 2018. What is Mr Chan’s residence status for the relevant years of assessment?
(12) While in USA, Jerome, an American, signed a one-year employment contract with a Singapore company as its
regional marketing manager. His Singapore employment was to commence on 1 June 2017. However, he was required
to travel to the regional offices outside Singapore to familiarise himself with the company’s overseas operations prior to
his arrival in Singapore on 15 July 2017. He will return to the USA on his last day of employment. Determine his
residence status for the relevant years of assessment.
(13) Facts as in (12) above except that Jerome returned to Singapore on 1 August 2018 to commence employment
with another Singapore company. This time his contract is for two years.
Determine his residence status for all the relevant years of assessment, including the earlier years of assessment.
(14) Ace Pte Ltd was incorporated in Singapore on 15 January 2017 but commenced business only on 13 March 2017.
The company chose 31 January as its accounting year end. Its first accounting period was to 31 January 2018.
State the basis periods for the first three relevant years of assessment.
[AAT adapted]

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(15) Black Pte Ltd was incorporated in 2011 and prepares its accounts to 31 December annually. The company ceased
business on 30 June 2018. State the s 10(1)(a) basis periods for the last two relevant years of assessment.
[AAT adapted]
(16) The statutory income of COM Pte Ltd during the years ended 31 August 2016 and 2017 were $5,000 and
$180,000 respectively. The following donations were made on the dates shown and have no naming rights:
Amount
Date Recipient Remarks
 $   
20 hospital
28/9/15 Geylang East Home for the Aged* 10,000
beds
15/1/16 Boy’s Town* 4,000 Cash
1/4/17 Refugees’ Fund 3,000 Cash

30/6/17 National Museum 20,000# Sculptures

31/7/17 National University of Singapore@ 5,000 Computers

28/8/17 Yayasan Mendaki* 7,000 Cash

* approved public institution
# value approved by the Minister

@ prescribed educational institution

Calculate the chargeable income of the company for YA 2017 and YA 2018.
[ICSA adapted]

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