Tax
The recent budget lowered tax on franked dividends from current 22% to 20% starting from 1/1/2004. Companies with large reserves of S44 credit may be better off undergoing some form of tax planning to fully utilize the credits before forfeiture by end 2007.
In fact, with the new change in rates, companies should consider declaring more dividends now than later, to maximise returns to shareholders with 22% tax rebate, as opposed to 20%.
Protective Assessment on Directors' Benefits from Interest-free Loans (updated Feb '03)
IRAS has agreed to a stand-over of collection of the tax assessed via protective assessment raised on directors' benefits from interest-free loans. The stand-over of collection of such tax will be for a period up to 30 June 2003. This is provided that a protective assessment has already been raised by IRAS on the taxpayer in respect of interest-free loans that the taxpayer derived as a director, and if the taxpayer has made a request for a stand-over of collection of tax assessed via the protective assessment. No late payment penalties will be imposed during this period.
One-tier Corporate Tax Systems - Concession (updated Feb '03)
Resident companies are reminded to submit their ECI for YA 2003 to Comptroller of Income Tax by 31 March 2003 to enjoy Section 44 balance concession. This concession applies to all companies regardless of their business and accounting year end.
Taxability of Interest-free Directors/Employees loan (updated Nov '02)
Interest-free loans made to directors/employees are treated benefit-in-kind to that particular individual and therefore subject to personal income tax. For those who have derived this benefit over the years and failed to disclose them, you need to report to IRAS. Taxpayers are encouraged to come forward. Important points to take note:
Backdate to Year of Assessment (YA) 96
5% penalty each year for non-disclosure
Interest on loan based on banks' prime rate
Last day of compliance extended from 31 October to 30 November 2002
Even if you can't comply with the deadline, you can acknowledge with intent to comply to IRAS to prevent being penalised
Any argument is on a case-to-case basis
Payment can be arranged through a one year instalment plan
If you are unsure or wish to speak to someone with confidentiality, kindly leave us your contact at our email box enquiries@philipliew.com.sg, and we will get back to you.
S44 Tax Credit (updated Nov '02)
Adoption of One-tier Corporate Tax System with effect from 1 January 2003.
Full Imputation vs One-tier Corporate Tax System
| Full Imputation System
- Tax payable on normal chargeable income (CI) is not final tax - Tax payable is passed to shareholders as tax credits - Shareholders are taxed on gross dividend & tax credits given - S44 a/c mechanism |
One-tier Corp Tax System
- Tax payable on normal CI is final tax - Tax assessed on or after 1/1/03 will not be in S44 balance @ 31/12/02 - All unutilised S44 balance @ 31/12/02 will not be available - Dividend will be exempt in the hands of shareholders [tax exempt (1-tier) dividends] |
Companies with S44 balance on 31/12/02 will have a grace period of up to five (5) years to fully utilise their tax credits, after which they will automatically move to one-tier system.
Call us for a consultation on how to utilise your tax credits. Please look for Mrs Wee or Miss Choo Hui Ling at (65) 6339 2838.
IRAS - new services (updated Nov '02)
With effect from 30 August 2002, you will be able to check Form C DIN Number & extension of time. For more information, please go to www.iras.gov.sg/TaxInfo/eformcdin/din_logic.asp
Goods & Services Tax (GST) hike (updated Nov '02)
In view of economic uncertainty, the Ministry of Finance (MOF) has decided to increase GST rate from 3% to 4% with effect from 1 January 2003. The full 5% will be implemented in 2004.
Corporate Tax rebate (updated Nov ' 02)
During the October 2001 off-budget measures, the government will grant companies:
YA 2001 - 50% rebate on first $25,500 tax payable
- 5% on the balance of corporate tax payable in excess of $25,500
YA 2002 - new tax exemption scheme - of up to $100,000
- lower corporate tax rate of 24.5%
- additional 5% rebate granted
YA 2003 - lower corporate tax rate of 22%
Please email us @ enquiries@philipliew.com.sg for appointment of tax agent and fee quotation.
Personal Income Tax Rebate (updated Dec '01)
YA 2001 - 10% rebate for tax resident
- further 5% rebate granted
YA 2002 - cut in personal income tax rate
- additional 10% rebate
YA 2003 - cut in personal income tax rate
More information is currently available on the IRAS
website at www.iras.gov.sg
E-filing of Corporate Clients' Estimated Chargeable Income (ECI)
(updated Apr '01)
IRAS will be launching internet filing of ECI for companies in Jan 2001. With e-filing, we will be able to file your ECI for Y/A 2002 electronically at IRAS web site.
For enquires, please e-mail us at doreen@philipliew.com.sg
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Philip Liew & Company
190 Middle Road #14-05 Fortune Centre Singapore 188979
Tel : (65) 6339 2838 Fax : (65) 6339 1138
E-mail : enquiries@philipliew.com.sg