tag:blogger.com,1999:blog-345731102024-03-14T13:17:41.925+08:00Tax with EdgarTax Avoidance. Tax Evasion.Edgar Wonghttp://www.blogger.com/profile/13392618709615819827noreply@blogger.comBlogger94125tag:blogger.com,1999:blog-34573110.post-23166332187265613242011-12-30T19:58:00.000+08:002011-12-30T23:37:33.337+08:00Unusual treatment for UnUsUal Entertainment<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="http://1.bp.blogspot.com/-go-ExCYHm5k/Tv3abPu1mmI/AAAAAAAABU8/NTSwfABJAMI/s1600/Photo_120906_005.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="150" src="http://1.bp.blogspot.com/-go-ExCYHm5k/Tv3abPu1mmI/AAAAAAAABU8/NTSwfABJAMI/s200/Photo_120906_005.jpg" width="200" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">multi million dollars from entertaining you</td></tr>
</tbody></table>
<b><span style="color: #990000;">What is the law?</span></b><br />
GST-registered businesses must charge GST output tax on the sale of their goods and services at the prevailing GST rate and account accurately to IRAS.<br />
<br />
<b><span style="color: #990000;">What happened?</span></b><br />
<br />
IRAS found out that <b><span style="color: #990000;">UnUsUal Entertainment</span></b> ("UnUsUal") had wrongly declared or "under declared" its output tax for 2005 and 2006. UnUsUal had not included the GST collected on tickets sales for both years as output tax in its GST returns.<br />
<br />
<b><span style="color: #990000;">How did IRAS find out?</span></b><br />
This is the interesting part. IRAS found that sales figures submitted by UnUsUal for income tax purposes did not tally with the sales figures reported for output tax for 2005 and 2006. For example, the sales revenue declared for 2005 income tax was $9,136,361.00, against the $2,810,668.00 declared as total sales in their GST returns in the same year.<br />
<br />
The conviction demonstrates the effectiveness of inter-departmental sharing of information.<br />
<br />
<b><span style="color: #990000;">What is the side issue?</span></b><br />
The GST submission and income tax computation was done by its tax agent. The case also reminded us that it was clearly stated that the responsibility of accounting for GST on ticket sales lies with taxpayer. However, UnUsUal failed to check the GST returns prepared by its tax agent, which resulted in incorrect tax returns. <br />
<br />
<b><span style="color: #990000;">What is the penalty?</span></b><br />
<br />
UnUsUal was found guilty of wrongly stating the output tax in its Goods and Services Tax (GST) returns, resulting in an underpayment of $502,922.27 in GST. UEPL was ordered to pay a penalty of $601,632.72 and a fine of $10,000.<br />
<br />
UEPL pleaded guilty to four charges of under-declaration of GST without reasonable excuse. Four remaining charges were taken into consideration for sentencing.<br />
<div>
<br /></div>
<div>
Adapted from IRAS Media Release.</div>
<br />
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<br /></div><div class="blogger-post-footer">Click www.AccountingWithEdgar.com for another view of Edgar.</div>Edgar Wonghttp://www.blogger.com/profile/13392618709615819827noreply@blogger.com0tag:blogger.com,1999:blog-34573110.post-51785084753379450752011-10-26T13:15:00.003+08:002011-10-26T13:16:13.396+08:00Cloud computing costs are now PIC-ableOn Deepavali Day, I received a very <b><span class="Apple-style-span" style="color: #990000;">pleasant </span></b>surprise.<br />
<br />
I just read that <b><span class="Apple-style-span" style="color: #990000;">Cloud Computing Costs</span></b> are not only tax-deductible (which we know) as business expenses, they now qualify for additional deduction under Productivity & Innovation Credit.<br />
<br />
An <b><span class="Apple-style-span" style="color: #990000;">example </span></b>cited in ST's news article - "word processing that exist online rather than on individual computers". A $100 expense would qualify for up to $400 deduction against your income (subject to meeting other terms and conditions.)<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh4znxG79cQSdmpUTJNfD-_ABIwIhyJI8DtEpVneIRe2JWsEaXdXpnscXjH-fUTB3xWxaR-L5b7PslkgOcgX5S_ggIZJ_C8_8_q1xVcAGbESGgo-TWMMAuWODN2Xe05nfBARkHMCg/s1600/13122008.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="150" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh4znxG79cQSdmpUTJNfD-_ABIwIhyJI8DtEpVneIRe2JWsEaXdXpnscXjH-fUTB3xWxaR-L5b7PslkgOcgX5S_ggIZJ_C8_8_q1xVcAGbESGgo-TWMMAuWODN2Xe05nfBARkHMCg/s200/13122008.jpg" width="200" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Christmas present?</td></tr>
</tbody></table>
Important <b><span class="Apple-style-span" style="color: #990000;">terms and conditions</span></b> to note before we jump for joy are:-<br />
1. spent on qualifying expenditure and are entitled to PIC during the time period concerned<br />
2. active business operations in Singapore<br />
3. at least 3 local employees at the VERY last month of the qualifying time period<br />
<br />
(Who are the 3 employees? INCLUDING Singaporeans & PRs but EXCLUDING sole proprietors, partners under contract for service and shareholders who are directors of company)<div class="blogger-post-footer">Click www.AccountingWithEdgar.com for another view of Edgar.</div>Edgar Wonghttp://www.blogger.com/profile/13392618709615819827noreply@blogger.com0tag:blogger.com,1999:blog-34573110.post-48717634899309457472011-07-12T02:12:00.001+08:002011-07-12T09:49:59.759+08:00Zero GST for basic goods?<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgt3EjjpwQAMxyh-b1WSQbkUPx_pMh-yMdmuyNCMwckwY23QMLY4Veo2DRpcoPGw3oQ6IBtDrcWR-6cqNg-bizpijia4d1hW1YElVWfFka8ThTEQAhmJc5EOegJvvTXuvXnZQrhbw/s1600/04052008%2528005%2529.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="150" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgt3EjjpwQAMxyh-b1WSQbkUPx_pMh-yMdmuyNCMwckwY23QMLY4Veo2DRpcoPGw3oQ6IBtDrcWR-6cqNg-bizpijia4d1hW1YElVWfFka8ThTEQAhmJc5EOegJvvTXuvXnZQrhbw/s200/04052008%2528005%2529.jpg" width="200" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">food n price to be paid</td></tr>
</tbody></table>On Jul 8, 2011, <b><span class="Apple-style-span" style="color: #990000;">Dr Mukul Asher</span></b>, my ex-lecturer of welfare economics in NUS back in 1980s, was asked to answer the questions as follows.<br />
<ol><li>What would be the effect of implementing a zero percent Goods and Services tax for basic commodities?</li>
<li>Would it help to lower the cost of living for lower income families in Singapore?</li>
</ol><b><span class="Apple-style-span" style="color: #990000;">Firstly</span></b>, he uniquely used the term <b><span class="Apple-style-span" style="color: #990000;">"basic commodities"</span></b> while the article is entitled "... basic goods". I generally interpreted "basic commodities" as totally unprocessed or barely prossessed raw materials. Consequently, he said GST's orientation would change to tax on value added at manufacturing, wholesale and retail levels. Example - No GST is to be applied on $5 of carrot and $4 of flour imported. When the carrot and flour became a $25 carrot cake, GST is to be applied on $16 value added. He opined that this system would increase cost of administering the tax by authority and compliance costs by businesses. He didn't elaborate as to how it could be so. Alternatively we could consider the Australian's where its GST free supplies include health, education, childcare, religious services, certain foods etc.<br />
<br />
Secondly, he concluded that <b><span class="Apple-style-span" style="color: #990000;">GST revenue would drop</span></b> due to exemption of basic commodities and prompting higher GST rate. Currently we apply GST on almost on goods and services with government sending cheques with GST rebates to selected individuals to offset regressive tax burdens (a system I am in favour with). So when we compare the two methods in totality, will there be a significant change in collection? Which is more efficient and effective?<br />
<br />
Thirdly, Dr Asher applied the <b><span class="Apple-style-span" style="color: #990000;">basic economic concepts</span></b> of substitution effect on demand and price when he said households would switch demand from "GSTed" items to "non-GSTed" basic commodities leading to an increase in prices of the latter. This also assume supply of basic commodities would generally be unresponsive. Too simplistic an assumption?<br />
<br />
As Dr Asher is a professor of public policy at Lee Kuan Yew School of Public Policy, I am sure he has done much more in depth studies and thinking on the issues but the article is too simplistic with conclusions only given cursory elaboration.<br />
<br />
<span class="Apple-style-span" style="font-size: xx-small;">Reference - ASHER, Mukul, "Zero GST for basic goods? Bad idea.", The Straits Times, July 8, 2011.</span><div class="blogger-post-footer">Click www.AccountingWithEdgar.com for another view of Edgar.</div>Edgar Wonghttp://www.blogger.com/profile/13392618709615819827noreply@blogger.com0tag:blogger.com,1999:blog-34573110.post-68711623857500763812011-01-05T16:44:00.003+08:002011-01-07T17:52:51.566+08:00When do your business need to register for GST under new rules?Under the new GST - Time of Supply Rules effective Jan 1, 2011, there is no more prospective and retrospective test that we used to do.<br />
<br />
Under the new law, the time of supply for most transactions will be triggered by the earlier of the following two events:-<br />
a) when payment in respect of the supply is received; and<br />
b) when invoice in respect of the supply is issued.<br />
<br />
Consequently the rules to determine when a business need to register for GST would have to change too.<br />
<br />
Suppose Company performed and completed only 2 transactions in the year 2011. Each transaction is $600,000.<br />
<br />
One transaction has been invoiced and paid. The other transaction, while completed, has NOT been invoiced nor paid as at Dec 31, 2011.<br />
<br />
The value of supply made in 2011 under the new rules is only $600,000/-. Therefore company's liability to register has not yet arisen on Jan 1, 2012.<div class="blogger-post-footer">Click www.AccountingWithEdgar.com for another view of Edgar.</div>Edgar Wonghttp://www.blogger.com/profile/13392618709615819827noreply@blogger.com0tag:blogger.com,1999:blog-34573110.post-8509276516130137932011-01-01T00:01:00.001+08:002011-01-01T00:01:02.350+08:00Simplifying GST accounting from todayThe output GST recognition rule will be simplified from today to allow most businesses to account for GST when a tax invoice to account for GST when a tax invoice is issued or when payment is received, whichever is earlier,<div class="blogger-post-footer">Click www.AccountingWithEdgar.com for another view of Edgar.</div>Edgar Wonghttp://www.blogger.com/profile/13392618709615819827noreply@blogger.com0tag:blogger.com,1999:blog-34573110.post-65375878679997497022010-12-18T16:57:00.002+08:002010-12-18T17:08:21.593+08:00Taxman overruled again!!The Court of Appeal overrules IRAS again, twice over the last two months.<br />
<br />
<b><span class="Apple-style-span" style="color: #990000;">What is the issue?</span></b><br />
Are portable dormitories considered "plants" as per plaintiff being in the business of providing dormitory services or "buildings" as per IRAS?<br />
<br />
At a total cost of $2.6 million, the plaintiff had built and operated 6 blocks of three-storey container-like as temporary workers' accommodation and administrative use within an industrial estate. Each block was made of "steel beams held by nuts and bolts while panels were inserted within this steel framework to form walls. "The floor was made of timber and each dormitory was topped with a metal roof".<br />
<br />
<b><span class="Apple-style-span" style="color: #990000;">Decision and Basis</span></b><br />
IRAS has been told by the Court of Appeal to treat such portable dormitories as "plants".<br />
<br />
The three-judge court led by <b><span class="Apple-style-span" style="color: #990000;">CJ Chan Sek Keong</span></b> overruled the earlier decisions of Income Tax Review Board and the High Court and defined such assets as "plant" on the following criteria:-<br />
<ul><li>built on prefabricated materials</li>
<li>could be dismantled and moved elsewhere within 90 days' notice</li>
</ul>The Court of Appeal concluded that the definition of plant would depend on "its exact operational role in the taxpayer's business, its characteristics and the precise factual matrix and context concerned".<br />
<br />
Leung Yew Kwong and Tan Shao Tong from WongPartnership, <b><span class="Apple-style-span" style="color: #990000;">lawyers for the Plaintiff</span></b>, had argued that their client's business of providing dormitory service involved moving and reusing such assets in other sites in the future. <span class="Apple-style-span" style="font-size: xx-small;">[The same team from the same law firm won in the Nov 2010's case.]</span><br />
<br />
<b><span class="Apple-style-span" style="color: #990000;">IRAS' lawyers</span></b>, Irving Aw and Quek Hui Ling, had relied on past rulings of similar situations. They cited a specific example where circus tents functioned as premises and would not qualify as plants.<br />
<br />
To the plaintiff, the decision could now claim for tax relief and secure "a tax savings of at least $500,000 based on 2004 tax rates".<br />
<br />
In my humble opinion, it is a difficult issue for IRAS as acknowledged by Judge of Appeal <b><span class="Apple-style-span" style="color: #990000;">Andrew </span></b><span class="Apple-style-span" style="color: #990000;"><b>Phang</b></span>. The law does not provide the definition of "plant" (as such words from my tax lecturer still echo in my head after years) and the three-judge court had to dwell on its precise definition in arriving at the decision.<br />
<br />
<span class="Apple-style-span" style="font-size: x-small;">Source - K.C. Vijayan, "Court of Appeal overrules taxman", The Straits Times, Dec 18, 2010.</span><div class="blogger-post-footer">Click www.AccountingWithEdgar.com for another view of Edgar.</div>Edgar Wonghttp://www.blogger.com/profile/13392618709615819827noreply@blogger.com0tag:blogger.com,1999:blog-34573110.post-52304743955182724262010-11-07T00:15:00.003+08:002010-11-13T21:48:41.402+08:00Court overrules tax authority<div class="separator" style="clear: both; text-align: center;"></div><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh93t_eBlwjDf4_D4POa6Fi7JIT7PlYgt-ElO9tIIMnzG8tn7dqGKn7STgPoxtdnic4Fn87xmWQLbUmZ_MIboVVRc-zKvlgvwR21KiDb2n8Km5YLaQPjKDn0Ps0LxG2BeKy0M9CRw/s1600/12082010024.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="240" px="true" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh93t_eBlwjDf4_D4POa6Fi7JIT7PlYgt-ElO9tIIMnzG8tn7dqGKn7STgPoxtdnic4Fn87xmWQLbUmZ_MIboVVRc-zKvlgvwR21KiDb2n8Km5YLaQPjKDn0Ps0LxG2BeKy0M9CRw/s320/12082010024.jpg" width="320" /></a></div><span style="font-size: xx-small;">can you pick up customers in yellow box?</span></div><br />
<strong><span style="color: #990000;">What is the issue in dispute?</span></strong><br />
The company is in the business of leasing aircrafts. The company has subsidiary firms in Cayman Island. The subsidiary firms bought aircrafts with loans pegged to floating interest rates. The aircrafts are rented out to airlines on fixed rental rates.<br />
<br />
The subsidiary firms are supposed to use the rental proceeds to service the interest obligations. Often, the firms face revenue shortfall to meet those obligations.<br />
<br />
The Singapore parent then entered into interest rate swap arrangements with banks in Singapore to hedge against the risk of floating interest rates on behalf of its subsidiaries. During the 17-month period from October 2006, the Singapore parent company made payments to its subsidiaries overseas as part of interest rate swap arrangements. <br />
<br />
<div></div><strong><span style="color: #990000;">IRAS's position</span></strong><br />
<ul><li>IRAS has taken the position that these interest payments overseas are subject to withholding tax under provisions dealing with loans borne by the parent firm.</li>
<li>The Comptroller argued that such broad interpretation of the relevant section for such payments to be taxable has been accepted by tax advisers, practitioners and businesses in the <strong><span style="color: #990000;">past</span></strong>.</li>
</ul><span style="font-size: x-small;">P/S - The name of legal counsel representing IRAS was not mentioned by K.C. Vijayan, the ST law correspondent.</span><br />
<br />
<strong><span style="color: #990000;">The Singapore parent's position</span></strong><br />
<ul><li>The tax authority has taken a too broad an interpretation of the law.</li>
<li>Such braod interpretation may actually discourage foreign investors from doing business in Singapore.</li>
</ul><span style="font-size: x-small;">P/S - Leung Yew Kwong / Tan Shao Tong from WongPartnership represented the plaintiff.</span><br />
<br />
<strong><span style="color: #990000;">High Court - Justice Andrew Ang</span></strong><br />
The Court ruled in favour of the Singapore parent on the following grounds:-<br />
<ul><li>interest rate swap payments are not subject to withholding tax under s12(6)(a) of Income Tax Act</li>
<li>the payments were not in relation to any loan borne by the firm here</li>
<li>IRAS has taken a too broad an interpretation of the law</li>
<li>past acceptances by tax advisers, practitioners etc should not be cited to justify an interpretation of the law</li>
</ul>The ruling would mean that the Comptroller of Income would have to make substantial refund and pay costs to the Singapore company. The costs to IRAS could go higher when business entities which were involved in similar situations and had paid the taxes may now seek a review with IRAS given the ruling.<br />
<br />
<span style="font-size: x-small;">Reference - K.C Vijayan, "Court overrules taxman, orders refund for firm", Straits Times, Nov 6, 2010.</span><div class="blogger-post-footer">Click www.AccountingWithEdgar.com for another view of Edgar.</div>Edgar Wonghttp://www.blogger.com/profile/13392618709615819827noreply@blogger.com0tag:blogger.com,1999:blog-34573110.post-51265713278926107442010-08-15T02:17:00.000+08:002010-08-15T02:17:24.490+08:00Biggest GST fraud in Singapore$5,695,823.65 being the tax undercharged.<br />
Then multiply that amount by 3 to arrive at <b style="color: #990000;">$17,087,470.95</b> penalty payable.<br />
In return for that "contribution", the person responsible gets 54 months of free food and free lodging in prison.<br />
<br />
Who gets such "honours"?<br />
The man is none other, <b style="color: #990000;">Mr Mahesh Sukhram Daswani</b>.<br />
He was in the business of trading mobile phones. He subsequently found it more lucrative to "manage" (ie. forge) his business records very aggressively.<br />
<br />
First;y, he <b style="color: #cc0000;">under reported</b> his sales ie. collected output GST from his customers and decided to keep a lot for himself.<br />
Secondly, he kept himself busy with creating detailed but <b style="color: #cc0000;">"fictitious" purchases</b>. He probably used photoshop (just kidding) to digitally alter zero-rated suppliers' invoices to standard-rated. He then directed his staff to include those invoices in the quarterly claims.<br />
Thirdly, he had to go create <b style="color: #990000;">export documents</b> to show that the mobile phones had been exported. Export sales, remember is zero-rated. I guess he was trying to show how he was able to dispose off millions of dollars of phone purchased.<br />
<br />
The trickeries of Mahesh are not new but definitely not sustainable.<br />
<br />
1. IRAS would definitely be paying attention to who have been issued millions of dollars of refund cheques. A request for audit of the respective taxpayers' books would be <b style="color: #990000;">good practice</b>.<br />
2. In the press release, it was specifically highlighted that IRAS has used a lot of <b style="color: #cc0000;">technologies </b>to nab Mr Mahesh. Phrases such as "advanced computer forensics techniques", "computerised analysis programmes" and "specialised computer forensic tools" were deliberately informed to public. Perhaps IRAS colleagues have exchanged notes with their colleagues in Commercial Affairs Department.<br />
<br />
The <b style="color: #990000;">moral </b>of the story (as always) - Please don't try to muck around with your GST returns.<div class="blogger-post-footer">Click www.AccountingWithEdgar.com for another view of Edgar.</div>Edgar Wonghttp://www.blogger.com/profile/13392618709615819827noreply@blogger.com0tag:blogger.com,1999:blog-34573110.post-28996916491642746212010-07-18T11:04:00.004+08:002010-07-18T11:53:13.730+08:00Property tax today and 2011<div style="text-align: center;"><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg8caE1DHzYkg4avAB2A3KV_neXoWGK9QLx7EYUkW0_7qxlr2WBY4ZOIgr2iPcY9qu1D8LoQl2ezYwGrz3pVx5RO1zPURxmct-sVD9pTMzfCkSHKyqZ8Jyvs1FOckdlcrXgpkaPEA/s1600/24052010192.jpg"><img style="display: block; margin: 0px auto 10px; text-align: center; cursor: pointer; width: 200px; height: 150px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg8caE1DHzYkg4avAB2A3KV_neXoWGK9QLx7EYUkW0_7qxlr2WBY4ZOIgr2iPcY9qu1D8LoQl2ezYwGrz3pVx5RO1zPURxmct-sVD9pTMzfCkSHKyqZ8Jyvs1FOckdlcrXgpkaPEA/s200/24052010192.jpg" alt="" id="BLOGGER_PHOTO_ID_5495088589675717682" border="0" /></a><span style="font-size:78%;">Marina Bay's construction from my car</span><br /></div><br />On the 13th July in The Straits Times’ Forum, <span style="font-weight: bold; color: rgb(153, 0, 0);">Ms Deanna Choo</span>, Director (Corporate Communications) of IRAS responded to <span style="font-weight: bold; color: rgb(153, 0, 0);">Mr Paul Chan</span>’s misconceptions (3rd July) below:-<br /><br />1) He thought IRAS estimates the annual value of properties based future market trends.<br />2) He also felt that increases in the annual value of a property based on market rentals were not right for owner-occupiers.<br /><br />IRAS responded as followed:-<br />1) “The property tax is pegged to the annual value of the property, which is determined based on market rentals of similar properties prevailing at the time of assessment. It does not take into account any forecast or estimate of future movements in market rentals.”<br /><br />2) Property tax is a tax on property ownership ie. regardless of whether the property is tenanted. Income tax is imposed levied on rental income from properties that are rented out.<br /><br />IRAS is of the opinion that property tax calculated against current market rentals (as against transacted property prices) is relatively more stable to homeowners.<br /><br /><span style="font-weight: bold; color: rgb(153, 0, 0);">Question for IRAS</span> – Can share with us on how you collect information on current market rentals?<br /><br /><br /><span style="font-weight: bold; color: rgb(153, 0, 0);">Future changes</span><br />The Government introduced in Budget 2010 a progressive property tax schedule for owner-occupied residential properties from 1 Jan 2011.<br /><br />Currently, home owners who are eligible for the owner-occupier concession pay property tax at a flat rate of 4% on the Annual Values of their properties. Owners of non owner-occupied residential properties and other properties are taxed at 10%.<br /><br /><span style="font-weight: bold; color: rgb(153, 0, 0);">Will you as a homeowner be expected to pay more or less on property tax?</span><br /><br />Based on IRAS estimates, all HDB flat owners and the vast majority of residential property owners will enjoy an effective property tax rate lower than 4% of annual value under the new method. IRAS has done some calculations to demonstrate how and why most of us would be paying less property tax in e-Tax Guide cited below.<br /><br />For owner-occupied properties,<br /><ul><li>If your annual property value is $6,000 or less, you pay nothing under existing and new 2011 law.</li><li>If your annual property value is $24,000, you would enjoy $240 tax savings.</li><li>If your annual property value is $80,000, you would pay $60 more than under current law.</li></ul><span style="font-size:78%;"><span style="font-weight: bold;">Reference</span><br />IRAS e-Tax Guide - http://www.iras.gov.sg/irasHome/uploadedFiles/Quick_Links/e-Tax_Guides/Property/e-Tax%20Guide.pdf<br />The Straits Times, July 13, 2010</span><div class="blogger-post-footer">Click www.AccountingWithEdgar.com for another view of Edgar.</div>Edgar Wonghttp://www.blogger.com/profile/13392618709615819827noreply@blogger.com0tag:blogger.com,1999:blog-34573110.post-7142534070690235122010-06-26T09:39:00.005+08:002010-06-26T10:03:19.705+08:00Company director jailed for GST fraud<span style="font-weight: bold; color: rgb(153, 0, 0);">What happened?</span><br />Tang Ee Boon (“Tang”), 32, the managing director of V-Teb Services Pte Ltd (“V-Teb”) was convicted of GST fraud amounting to $327,837.49 and was sentenced to 12 months' jail. Tang was brought to court for 21 charges of making inflated and false claims of GST refunds for the period 1 Jan 2004 to 30 Jun 2007.<br /><br /><span style="font-weight: bold; color: rgb(153, 0, 0);">Rule</span><br />GST-registered businesses can offset the GST they pay on their purchases (input tax) against the GST they collect from sales (output tax), and pay the net difference to IRAS. If a business incurs more GST on purchases (input tax) than it collects from sales (output tax), it can claim the difference as GST refund from IRAS.<br /><br /><span style="font-weight: bold; color: rgb(153, 0, 0);">What went wrong for Tang's ploy?</span><br />V-Teb provides cleaning services locally. By nature of his business, the company is not expected to claim GST refunds.<br /><br />However, IRAS’ tax auditors noted a pattern of submitting increasing amounts of GST refund claims in the GST returns on a frequent basis. IRAS actually verifies the value of V-Teb’s taxable purchases with the alleged suppliers.<br /><br /><span style="font-weight: bold; color: rgb(153, 0, 0);">What did Tang get for his mischiefs?</span><br /><br />Tang pleaded guilty to a total of 14 charges of evading GST,<br /><ul><li>comprising three charges of understating output tax,</li><li>eight charges of overstating input tax, and;</li><li>three charges of making false entries in V-Teb’s GST returns.</li></ul>In addition to the jail term, the court also ordered Tang to pay a penalty of <span style="font-weight: bold; color: rgb(153, 0, 0);">$983,512.47</span>, which is three times the amount of GST undercharged.<br /><br /><span style="font-size:78%;">Source - www.iras.gov.sg - Edgar basically paraphrase/paragrapg the original article.<br /></span><div class="blogger-post-footer">Click www.AccountingWithEdgar.com for another view of Edgar.</div>Edgar Wonghttp://www.blogger.com/profile/13392618709615819827noreply@blogger.com0tag:blogger.com,1999:blog-34573110.post-75194426518112558172010-06-05T11:29:00.008+08:002010-06-05T13:24:37.427+08:00What can I do with trade loss, unabsorbed capital allowance and donations?I have summarised the article by <span style="font-weight: bold; color: rgb(153, 0, 0);">Mr Clement Tan Kai Guan</span> entitled "Order of Claiming Qualifying Deductions - Maximising Tax Benefits" published in Singapore Accountant, June 2010.<br /><br /><span style="font-weight: bold; color: rgb(153, 0, 0);">Question </span>- When a taxpayer incurs a trade loss for the current year and has current year unabsorbed Capital Allowances (CA) and approved donations, what options does he have with regard to the utilisation of these qualifying deductions?<br /><br /><span style="font-weight: bold; color: rgb(153, 0, 0);">Answer</span><br /><br />1. Prior to YA2003, you can <span style="font-weight: bold; color: rgb(153, 0, 0);">ONLY </span>carry <span style="font-weight: bold; color: rgb(153, 0, 0);">forward </span>the current year unabsorbed CA, losses and donations for setoff against his future years' taxable profits.<br /><br />2. With effect from YA2003, <span style="font-weight: bold; color: rgb(153, 0, 0);">group relief</span> option was introduced.<br />Loss making Singapore incorporated companies are allowed to transfer their current year qualifying deductions to other profitable member companies of the same group.<br /><br />3. From YA2006, the <span style="font-weight: bold; color: rgb(153, 0, 0);">carry-back</span> clause was introduced.<br />Any person carrying on a trade, business, profession or vocation may carry back his current year unabsorbed CA and losses, subject to a maximum of $100,000, for setoff against his Assessable Income (AI) for the immediate preceding year of assessment.<br />Note - Donations cannot be carried back under the loss carry-back option.<br />(Edgar - In the case of carry-back, there is the possibility of tax refund by IRAS on tax paid on previous year's profit.)<br /><br />4. In February 2009, the carry-back option was <span style="font-weight: bold; color: rgb(153, 0, 0);">enhanced</span>.<br />The amount allowed to be carried back is increased to to $200,000 and extending the period of<br />carry-back from the current 1-year period to a 3-year period.<br />The enhanced carry-back relief system is only applicable to unabsorbed CA and unabsorbed losses relating to the YA2009 and YA2010.<br /><br /><span style="font-weight: bold; color: rgb(153, 0, 0);">Rule - Which to apply first?</span><br />Group relief first, then carry-back and carry-forward.<br />CA first, then trade loss.<br /><br />- Transferred out CA to group companies<br />- Then transferred out trade loss to group companies<br />- Lastly transferred out Approved Donations to group companies" height<br />- Assume Company A first, the Company B<br />- Any leftovers from Group Relief, then Carry-back.<br />- Any leftovers from Carry-back, then Carry forward.<br /><br />Clement made a <span style="font-weight: bold; color: rgb(153, 0, 0);">simple </span>but interesting observation.<br />He asked us to ensure that the trade loss be used to offset profit before exemption in excess of $300,000 first, if possible. This is due to the partial exemption.<br /><br /><span style="font-weight: bold; color: rgb(153, 0, 0);">Example </span>- For YA2009 (ie. 18% tax rate), we have Company A with $200,000 profit and Company B with $380,000 profit. Both companies have $80,000 trade loss carried forward. Compare tax payable before and after applying the trade loss of $80,000 for the two companies.<br /><ul><li>Company A to pay $10,350 after deducting trade loss or pays $17,550 without deducting trade loss. The trade loss of $80,000 would save $7,200 for Company A.</li><li>Company B to pay $26,550 after deducting trade loss or pays $40,950 without deducting trade loss. The trade loss of $80,000 would save $14,400 for Company B.<br /></li></ul><span style="font-weight: bold; color: rgb(153, 0, 0);">Moral of story</span> - use the deductions for entity with profit in excess of $300,000 in the current year of assessment or keep for use in future years instead.<div class="blogger-post-footer">Click www.AccountingWithEdgar.com for another view of Edgar.</div>Edgar Wonghttp://www.blogger.com/profile/13392618709615819827noreply@blogger.com0tag:blogger.com,1999:blog-34573110.post-91027673806438850222010-04-25T17:28:00.005+08:002010-04-25T17:55:46.192+08:00Lessons from Raffles Town Club's appeal<div style="text-align: center;"><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjUXHt7ZTp6KESliOnsFxU_O923NT3UQWhDQs5HxAtxIdaP_dqBRAOQRF3aVDQ2ZcRMM-Sa7n5TbCxHvjqlsLtBkUeDDwmp8zpHwvuLeC2gp0eozKYy8ORHW9uMo5eRpqgAF_m3ZA/s1600/23042010160.jpg"><img style="display: block; margin: 0px auto 10px; text-align: center; cursor: pointer; width: 200px; height: 150px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjUXHt7ZTp6KESliOnsFxU_O923NT3UQWhDQs5HxAtxIdaP_dqBRAOQRF3aVDQ2ZcRMM-Sa7n5TbCxHvjqlsLtBkUeDDwmp8zpHwvuLeC2gp0eozKYy8ORHW9uMo5eRpqgAF_m3ZA/s200/23042010160.jpg" alt="" id="BLOGGER_PHOTO_ID_5464010839148005794" border="0" /></a><span style="font-size:78%;">nearing completion?</span><br /></div><br />In yesterday's Today, it was reported that <span style="font-weight: bold; color: rgb(153, 0, 0);">Raffles Town Club (RTC)</span> has lost its arguments in the Court of Appeal on the following:-<br /><ul><li>failed to obtain tax deductions for the costs involved in <span style="font-weight: bold; color: rgb(204, 0, 0);">leasing </span>its land and in <span style="font-weight: bold; color: rgb(204, 0, 0);">constructing</span> the clubhouse on the ground that $108 million cost of acquiring the land from the State and the $91.4 million incurred in building the clubhouse were capital in nature and therefore<br />not eligible for tax deduction;<br /></li><li>secondly, it failed to have its <span style="font-weight: bold; color: rgb(204, 0, 0);">membership fee</span>s taxed over 30 years, the life span of the club (this is an interesting attempt in defining the timing of revenue recognition and consequently, timing of taxability);<br /></li><li>thirdly, it failed to secure relief for YA2001 from the tax department for the $53.28 million in <span style="font-weight: bold; color: rgb(204, 0, 0);">damages </span>it had to pay members after it lost the 2005 class action suit filed by several thousand members who claimed the club had falsely led them to believe they were part of an exclusive establishment and;</li><li>lastly, it failed to secure tax deductibility for the $2.34 million that RTC paid for <span style="font-weight: bold; color: rgb(153, 0, 0);">geomancy</span> fees.<br /></li></ul>Consequently, RTC is liable to pay tax for the Years of Assessment 1998-2003 on the full amount of $526.14 million it collected from its 19,000-odd members who had paid $28,000 each to join.<br /><br />I have quoted verbatim the learning points from Justice Phang's concluding remarks:-<br /><ul><li>"Where ordinary accounting principles <span style="font-weight: bold; color: rgb(204, 0, 0);">run counter</span> to the principles of tax law, they must yield to the latter for the purposes of computing gains and profits for tax."<br /></li></ul><ul><li>"Accounting and tax have different objectives in mind. Financial accounting is intended to provide information regarding firm performance to the market place while taxable income is prescribed by the government to meet budgetary needs ... Regardless of how persuasive accounting evidence is, the prerogative still lies with the court to decide whether a particular item should be regarded as income that has accrued for the purposes of liability to tax."</li></ul><ul><li>He pointed out that while accounting treatment focuses on the balance sheet, "taxation requirements are <span style="font-weight: bold; color: rgb(153, 0, 0);">centred </span>on the profit and loss accounts, so that the distinctions between revenue and capital, which are vital for tax purposes, may be lost in the accounting treatment".<br /></li></ul><ul><li>Concluding, he said: "I am also of the view that the present case turns on how well-established tax principles and tax law would apply rather than on the correct treatment of the items brought to tax."<br /></li></ul><div class="blogger-post-footer">Click www.AccountingWithEdgar.com for another view of Edgar.</div>Edgar Wonghttp://www.blogger.com/profile/13392618709615819827noreply@blogger.com0tag:blogger.com,1999:blog-34573110.post-82254265320658564952010-03-03T00:20:00.005+08:002010-03-03T00:40:59.268+08:00Budget 2010 - Productivity and Innovation Credit<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEirTD_3gqsaLLChZyMo37FIOHADOfd4n636c1ygTBNQMlqX5pW1RJLKokWZG7XnSXBbnx6-L1d38PPxAkUCWx8U88dQccp0Pbw16BqNA3XUWQEfhGf_b3de5Cuj_u4NEg7OhWWEWw/s1600-h/20022010045.jpg"><img style="display: block; margin: 0px auto 10px; text-align: center; cursor: pointer; width: 200px; height: 150px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEirTD_3gqsaLLChZyMo37FIOHADOfd4n636c1ygTBNQMlqX5pW1RJLKokWZG7XnSXBbnx6-L1d38PPxAkUCWx8U88dQccp0Pbw16BqNA3XUWQEfhGf_b3de5Cuj_u4NEg7OhWWEWw/s200/20022010045.jpg" alt="" id="BLOGGER_PHOTO_ID_5444076979075016386" border="0" /></a><br />It was announced in Budget 2010 that a Productivity and Innovation Credit (ie.“The Credit”) will be available for 5 years for Year of Assessment (YA) 2011 to YA 2015. The Credit will provide significant tax deductions for investments in a broad range of activities along the innovation value chain.<br /><br />On such activities is investing in automation. Of course, IRAS defines "automation" as costs incurred to acquire "prescribed automation equipment" (e.g. laser printer, modem).<br /><br />You would be entitled to 250% allowance for the first $300,000 of qualifying expenditure, 100% allowance for the balance expenditure.<br /><br />Example: Laptop costs $2,000<br />Capital Allowance under the Credit = 250% x $2,000 = $5,000.<br /><br />Taxpayer can either claim $5,000 as capital allowance in its tax return or opt to convert such capital allowances in respect of Laptop into a cash grant. The cash grant is computed at 7% of the capital allowance under the Credit ie. $350.<br /><br /><span style="font-weight: bold; color: rgb(153, 0, 0);">Question - Why the flexibility for you to choose to claim or to convert?</span><br />The simple answer is taxpayer should claim if it could help to save on paying 17% corporate tax and you should covert to cash if there is very little or no tax payable eg. for new company with exempt income.<div class="blogger-post-footer">Click www.AccountingWithEdgar.com for another view of Edgar.</div>Edgar Wonghttp://www.blogger.com/profile/13392618709615819827noreply@blogger.com0tag:blogger.com,1999:blog-34573110.post-16188315084608286582010-02-14T15:56:00.003+08:002010-02-14T18:09:55.309+08:00Current Tax Trends<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhJVf-6kIgvmVKxubpwRU1ykePxJ4NSDJEsd7DhTybzC4YAhD0vgJwPr_6wlvLmYV8_rysrvoDzasEmpjFLI-fwhcEJuf4JM9zxaq3enFrScNw3I3LCzy0DrPBnjrFg1MQBT2n-0A/s1600-h/07022010017%5B2%5D.jpg"><img style="margin: 0px auto 10px; display: block; text-align: center; cursor: pointer; width: 200px; height: 150px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhJVf-6kIgvmVKxubpwRU1ykePxJ4NSDJEsd7DhTybzC4YAhD0vgJwPr_6wlvLmYV8_rysrvoDzasEmpjFLI-fwhcEJuf4JM9zxaq3enFrScNw3I3LCzy0DrPBnjrFg1MQBT2n-0A/s200/07022010017%5B2%5D.jpg" alt="" id="BLOGGER_PHOTO_ID_5438038536676324418" border="0" /></a><br />Here are the current tax trends and their respective consequences as observed and explained by <span style="font-weight: bold; color: rgb(153, 0, 0);">Lor Eng Min</span> and <span style="font-weight: bold; color: rgb(153, 0, 0);">Ang Lea Lea</span> of Ernst & Young Solutions LLP:-<br /><br />a) Increased information <span style="font-weight: bold; color: rgb(153, 0, 0);">sharing </span>among tax authorities of different countries<br />Businesses with operations over several countries would have to be careful in ensuring consistent information being given to the various tax authorities.<br />[Edgar - The same attitude should be adopted in providing information to various departments within a tax authority.]<br /><br />b) Tax authorities sharpen their focus on <span style="font-weight: bold; color: rgb(153, 0, 0);">large </span>companies.<br />As many governments have incurred budget deficits in 2009, enhancing tax revenue collection could be a priority. By focusing on large companies, a significant portion of revenue could be collected very quickly while sending a signal to the rest of market to comply.<br />[Edgar - Given the advancement in technology and information availability, tax authority now has the ability to drill down and cross reference on companies, big and small.]<br /><br />c) <span style="font-weight: bold; color: rgb(153, 0, 0);">Shorter </span>filing deadlines<br />In Singapore, the interval between filing of tax returns and the financial year end of company has been reduced substantially. If your company's year end is Dec 31, 2009, you are to submit your Form C in Nov 2010. [Edgar - Secondly, companies are encouraged to submit Estimated Chargeable Income. Failing which, the authority may present its own preliminary assessment and tax is payable within a month.]<br /><br />d) <span style="font-weight: bold; color: rgb(204, 0, 0);">Timely and voluntary</span> disclosure requirements<br />Incentives in term of lighter penalty are explicitly stated to achieve the above.<br /><br />e) <span style="font-weight: bold; color: rgb(153, 0, 0);">Transfer pricing</span> documentation and Advanced pricing arrangements<br />Given complex costing and pricing issues between entities in a group, the Group is encouraged to seek a formal understanding on any inter-company arrangement with tax authority.<br /><br /><span style="font-size:85%;">Reference - Singapore Accountant, Jan 2010.</span><div class="blogger-post-footer">Click www.AccountingWithEdgar.com for another view of Edgar.</div>Edgar Wonghttp://www.blogger.com/profile/13392618709615819827noreply@blogger.com0tag:blogger.com,1999:blog-34573110.post-62816330500729183272010-01-01T13:40:00.001+08:002010-01-01T13:44:00.309+08:00Gan Oh Boon and Tax Exemption SchemeA businessman, <span style="font-weight: bold;">Gan Oh Boon</span>, warmly embraced the idea from Chng Chor Tong, his auditor, of spreading the profits from his steel forming and rolling business over 6 new companies set up in 2004.<br /><br /><span style="font-weight: bold; color: rgb(153, 0, 0);">Law </span>- The law exempts new companies from paying tax on the first $100,000 of chargeable income and partially exempted for the next $200,000.<br /><br /><span style="font-weight: bold; color: rgb(153, 0, 0);">Modus operandi</span><br />Company A signs management agreement with each of the 6 shell companies. The profit from Company A is evenly distributed to 6 companies by fictitious expenses (valued $1,6mio) with no work or services performed by the 6 shell companies for Company A.<br /><br />The fictitious expenses were "correctly named" and comprised of commission fees, technical consultancy fees, marketing consultancy fees, engineering consultancy fees and management fees.<br /><br />The said fees were for the work and services purportedly performed by the 6 shell companies. Even though these fees were reported as income by the respective shell company, the overall tax burden has been reduced substantially for the Years of Assessment (YA) 2005 to 2007.<br /><br /><span style="font-weight: bold; color: rgb(153, 0, 0);">What went wrong for Mr Gan in applying the law?</span><br />The tax exemption scheme under section 43(6A) of the Income Tax Act, which took effect from YA 2005, was introduced to support entrepreneurship and encourage growth of local enterprises.<br /><br />But in my humble interpretation, the 6 shell companies are basically shells with no independent employees and resources carrying out its own economic activities.<br /><br />You can't just create companies to distribute the profits around!!!<br /><br /><span style="font-weight: bold; color: rgb(153, 0, 0);">What are the punishments?</span><br /><ul><li>For the company, a fine of $24,000 and a penalty of $988,933.58. </li><li>For Mr Gan Oh Boon personally, 2 weeks of imprisonment and a total fine of $8,000. </li><li>In default of payment of the fine, the default sentence would be 6 weeks of imprisonment. </li><li>He was also ordered to pay a total penalty of $988,933.58. In default of payment of penalty, the total default sentence would be 34 months of imprisonment.</li></ul><div class="blogger-post-footer">Click www.AccountingWithEdgar.com for another view of Edgar.</div>Edgar Wonghttp://www.blogger.com/profile/13392618709615819827noreply@blogger.com0tag:blogger.com,1999:blog-34573110.post-76575017561494546022009-12-17T21:11:00.004+08:002009-12-17T22:19:13.034+08:00Windfall tax on bankers' bonuses<div style="text-align: center;"><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg0UMH59xXArzRC6_DWvmOWf2MxoDi3cSsXY2kJwD8kGqKltkaHasZxFr9LQPEDkO97w1z8FhFWilE_RtGeNqT0wCdIRcsFoyyC4KHgKTUaIbKo5a3LRKl77c3WzFgAobREmrkURg/s1600-h/30042008(003).jpg"><img style="margin: 0px auto 10px; display: block; text-align: center; cursor: pointer; width: 200px; height: 150px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg0UMH59xXArzRC6_DWvmOWf2MxoDi3cSsXY2kJwD8kGqKltkaHasZxFr9LQPEDkO97w1z8FhFWilE_RtGeNqT0wCdIRcsFoyyC4KHgKTUaIbKo5a3LRKl77c3WzFgAobREmrkURg/s200/30042008(003).jpg" alt="" id="BLOGGER_PHOTO_ID_5416209333203036786" border="0" /></a><span style="font-size:78%;">was here last weekend</span><br /></div><br />Britain and France have decided to impose a <span style="font-weight: bold; color: rgb(204, 0, 0);">windfall </span><span style="font-weight: bold; color: rgb(204, 0, 0);" id="hitDiv4">tax</span> on bankers' bonuses.<br /><br />Under the new one-time tax, any bank operating in Britain must pay a tax of 50% on all discretionary bonuses of more than GBP25,000 (SGD$56,500) paid between now and April 5 next year. Banks attempting 'avoidance schemes' by postponing bonuses would face further, unspecified punishments. As the bonus payouts are mostly contracted, the banks are obliged to pay. Nobel prize-winning economist Paul Krugman supports the idea.<br /><br /><span style="font-weight: bold; color: rgb(153, 0, 0);">So what could these fat cat bankers do?</span><br />Firstly, they can fly out of Europe to anywhere else such as Asia. They can then do whatever they are doing in Europe but do it in Singapore or Hong Kong instead.<br /><br />Or secondly, they can stop calling themselves "bankers". The windfall tax is on bankers' bonuses and not cleaners'. Perhaps the bankers can call themselves cleaners and they get to keep their bonuses after deducting a nominal income tax. A small humiliation with full pockets.<div class="blogger-post-footer">Click www.AccountingWithEdgar.com for another view of Edgar.</div>Edgar Wonghttp://www.blogger.com/profile/13392618709615819827noreply@blogger.com0tag:blogger.com,1999:blog-34573110.post-46339453208799545322009-09-19T14:44:00.003+08:002009-09-19T15:01:35.370+08:00Top chefs in hot soup?<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiWbCoQ5LfX_Ew5I9C0cl6LtkSoKdoQ3cXMbSSTrhS5KTPI6l6f9G_vs14_5VY2hgganIdJbeQRV6jTM3HAwGeO4i5ZivfD9KR4X7RlkbXj9Gu0lnq0bFrdDiWw-2NJlmltNVYEjQ/s1600-h/23112008(001).jpg"><img style="margin: 0px auto 10px; display: block; text-align: center; cursor: pointer; width: 200px; height: 150px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiWbCoQ5LfX_Ew5I9C0cl6LtkSoKdoQ3cXMbSSTrhS5KTPI6l6f9G_vs14_5VY2hgganIdJbeQRV6jTM3HAwGeO4i5ZivfD9KR4X7RlkbXj9Gu0lnq0bFrdDiWw-2NJlmltNVYEjQ/s200/23112008(001).jpg" alt="" id="BLOGGER_PHOTO_ID_5383070072141236706" border="0" /></a><br />Some top hotels in Singapore are now without their respective chefs in their Chinese restaurants. They have been summoned to Corrupt Practices Investigation Bureau (CPIB) to "assist" in investigation of accepting bribes from a seafood provider.<br /><br />What is the <span style="font-weight: bold; color: rgb(204, 0, 0);">modus operandi</span>?<br />Top chefs are king of their mountain ie. kitchen, in the hotels. They dictate what to buy and from who in the name of ensuring quality for their top Chinese restaurants. Suppliers have to show their appreciation for a more than amicable business relationship by showering them with "love" and "attention" in the form of gifts and money.<br /><br />How did CPIB got a sniff of these <span style="font-weight: bold; color: rgb(153, 0, 0);">violations</span>?<br />CPIB was notified by Inland Revenue Authority of Singapore (IRAS). IRAS is investigating a seafood supplier on tax evasion. IRAS found some computer files with payout information in computers seized from the seafood supplier.<br /><br />So the next time when you are eating sharkfins, fish maw, scallops in these expensive restaurants, you are not sure whether they are really "clean" or not.<div class="blogger-post-footer">Click www.AccountingWithEdgar.com for another view of Edgar.</div>Edgar Wonghttp://www.blogger.com/profile/13392618709615819827noreply@blogger.com0tag:blogger.com,1999:blog-34573110.post-77866837561755472852009-08-25T23:13:00.004+08:002009-08-25T23:34:04.275+08:00Tax spies and top income bracket<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhw-ahkwQBuUYnsdqJpEWIprT8fvjJg9TZ1mnQUILN5igR6eUvJjJ82JYmsgT2ovlfswJilnPN0zgToWfdVBv9aUtCGc1kUU2ayJAtaDsQGjkw7Txh_mVoe4awHTtOs6XE1-ir-xg/s1600-h/28072009.jpg"><img style="margin: 0px auto 10px; display: block; text-align: center; cursor: pointer; width: 200px; height: 150px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhw-ahkwQBuUYnsdqJpEWIprT8fvjJg9TZ1mnQUILN5igR6eUvJjJ82JYmsgT2ovlfswJilnPN0zgToWfdVBv9aUtCGc1kUU2ayJAtaDsQGjkw7Txh_mVoe4awHTtOs6XE1-ir-xg/s200/28072009.jpg" alt="" id="BLOGGER_PHOTO_ID_5373925034070387218" border="0" /></a><br /><span style="font-weight: bold; color: rgb(153, 0, 0);">Mr Ooi Boon Jin</span>, head of international executive services at <span style="font-weight: bold; color: rgb(153, 0, 0);">KPMG</span>, made this observation in today's BT. He said, "Our study has recorded a general decline in top personal income rates over the past seven years, but for 2010 we are seeing indications that a reversal may be on the way."<br /><br />A reversal in falling tax rates in attempt to drive tax collections to pay for the trillions of stimulus packages implemented over the last 12 months.<br /><br />In another development reported in today's BT, <span style="font-weight: bold; color: rgb(153, 0, 0);">Mr Mochamad Tjiptardjo</span>, the new tax chief since last month, said, "(Indonesia) must boost tax revenues significantly to meet the government's ambitious target in a country where tax evasion has been routine."<br /><br />How does he plan to do it? Among the many initiatives, he intends to send "tax spies" to places to gather evidences of Indonesians have stowed their ill-gotten gains and evading taxes.<br /><br />So if you are a high income earner, it is time you seriously review your tax residency status if you have not.<br /><br />KPMG illustrated that a <span style="font-weight: bold; color: rgb(153, 0, 0);">Singapore tax resident</span> would pay top personal tax rate of 20% if and if their next chargeable income exceeds SGD$320,000 or USD217,317/-. If you are a <span style="font-weight: bold; color: rgb(153, 0, 0);">Malaysia tax resident</span>, you would have the honour of paying the top personal income tax rate of 27% at a significantly modest annual income of USD28,470/-.<div class="blogger-post-footer">Click www.AccountingWithEdgar.com for another view of Edgar.</div>Edgar Wonghttp://www.blogger.com/profile/13392618709615819827noreply@blogger.com0tag:blogger.com,1999:blog-34573110.post-7872596649416027102009-08-22T23:27:00.003+08:002009-08-22T23:39:51.131+08:00Enhanced Loss Carry Back - Priority issue<span style="font-weight: bold; color: rgb(153, 0, 0);">Rule</span> - A company that has assessable income for a particular YA may be eligible to offset the income with losses carried forward from a prior YA as well as losses carried back from a subsequent YA.<br /><br />Consider this<span style="font-weight: bold; color: rgb(153, 0, 0);"> scenario</span>. There could be loss carried forward from YA2006 available to offset the<br />assessable income of $80,000 in YA 2007 in addition to the loss carried back from YA2009.<br /><br /><span style="font-weight: bold; color: rgb(153, 0, 0);">Question</span> - What should the priority of offset be? Should it be carry forward first, then carry back, or vice versa?<br /><br /><span style="font-weight: bold; color: rgb(153, 0, 0);">Answer</span> - Based on section 37E(1) and (17) of the Income Tax Act, the losses brought forward would be deducted first.<div class="blogger-post-footer">Click www.AccountingWithEdgar.com for another view of Edgar.</div>Edgar Wonghttp://www.blogger.com/profile/13392618709615819827noreply@blogger.com0tag:blogger.com,1999:blog-34573110.post-55260356841081220872009-06-21T15:38:00.003+08:002009-06-21T15:51:13.459+08:00Transfer pricing in retro - 2006<div style="text-align: center;"><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhJLjl1Kx9zB9WWdxBAkOv1qVt1LcP4rvADi6EwnNUIJYiesfely4dEAS3RaO92Z1h430YsfNM5q-uQ4vLd3kV9wh023LrS2akzdF1YgYxhJ6mowkloOz6GyZew0Ppux0TfB7TTFw/s1600-h/Photo_031307_001.jpg"><img style="margin: 0px auto 10px; display: block; text-align: center; cursor: pointer; width: 200px; height: 150px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhJLjl1Kx9zB9WWdxBAkOv1qVt1LcP4rvADi6EwnNUIJYiesfely4dEAS3RaO92Z1h430YsfNM5q-uQ4vLd3kV9wh023LrS2akzdF1YgYxhJ6mowkloOz6GyZew0Ppux0TfB7TTFw/s200/Photo_031307_001.jpg" alt="" id="BLOGGER_PHOTO_ID_5349685036467471394" border="0" /></a><span style="font-size:78%;">a portrait</span><br /></div><br />Back in July 2006, the Inland Revenue Authority of Singapore (IRAS) organised its <span style="font-weight: bold; color: rgb(204, 0, 0);">first</span> transfer pricing conference in collaboration with several renowned tax and business consulting firms, including PricewaterhouseCoopers (PwC).<br /><br />Over 600 executives and tax practitioners attended the half-day forum titled: <span style="font-weight: bold; color: rgb(204, 0, 0);">Transfer Pricing in Singapore – What you need to know.</span><br /><br />It officially signalled IRAS's intention to focus resources in this area in the coming years. In future postings, I will attempt to provide the latest update on this front.<br /><br />In 2006, Mr. See Jee Chang, IRAS’s Director for International Tax/Tax Policy & Ruling, highlighted two areas that require further clarification.<br /><ul><li>One area relates to the current practice of not requiring interest on intercompany loans. </li><li>The second relates to the common practice of charging a 5% profit mark-up for intercompany services. </li></ul><br />At that preliminary stage, IRAS did not provide any detailed guidance but only signalled that related party loans involving foreign entities may be subject to adjustments.<br /><br />With regard to intercompany services, IRAS mentioned that while a 5% mark-up may be accepted for routine services, the arm’s length principle may imply higher mark-ups for non-routine, value-added services.<div class="blogger-post-footer">Click www.AccountingWithEdgar.com for another view of Edgar.</div>Edgar Wonghttp://www.blogger.com/profile/13392618709615819827noreply@blogger.com0tag:blogger.com,1999:blog-34573110.post-27087576522744015752009-05-30T18:12:00.003+08:002009-05-30T18:52:43.403+08:00Transfer pricing in taxationIn management accounting, transfer pricing is a topic which addresses the issues with regard to determining a price for the transfer of goods and services between two divisions in a decentralised set-up.<br /><br />In <span style="font-weight: bold; color: rgb(204, 0, 0);">taxation</span>, transfer pricing relates to the following areas:-<br /><br /><ul><li>When entity A sells goods on credit to entity B and the receivable remains outstanding beyond the normal credit term - Entity A may be deemed to have provided interest-free funding to entity B.</li></ul><ul><li>Entity A and entity B are related. Entity B uses entity A's accounts department as its accounting resource. How much should entity A charge entity B? IRAS is prepared to accept a 5% mark-up on the basis that this has been a practice commonly adopted by related party service providers in Singapore as remuneration for providing routine support services. Other mark ups are acceptable. subject to arm's length principle.</li></ul><ul><li>In the third situation, entity A and entity B are utilising a service provided in a cost pooling arrangement. Issue here is the way the costs are allocated between the entities.</li></ul><div class="blogger-post-footer">Click www.AccountingWithEdgar.com for another view of Edgar.</div>Edgar Wonghttp://www.blogger.com/profile/13392618709615819827noreply@blogger.com0tag:blogger.com,1999:blog-34573110.post-63840965807250770252009-03-27T18:04:00.003+08:002009-03-27T18:25:52.089+08:00ACCA F6 - Discussion with ExaminerBelow is my interpretation of what was discussed in today's meeting with the Examiner.<br /><br />Generally computation ie. greater than or equal to 60% of total marks.<br /><br /><span style="font-weight: bold; color: rgb(204, 0, 0);">Question 1</span><br />Only 21% has >15 marks based on sample.<br />There are more parts to this question.<br />And this change in question structure is apparently the main reason for the generally poor overall performance of F6 students.<br /><br /><span style="font-weight: bold; color: rgb(153, 0, 0);">Question 2</span><br />56% achieved more than 11 marks based on sample.<br />The peculiar exceptions below were the killers ie.<br />- spousal transfer<br />- tax concession on royalty income of an author<br />- accrued income concept<br />- unable to compute net rental income<br /><br /><span style="font-weight: bold; color: rgb(204, 0, 0);">Question 3</span><br />less than 1% achieved more than 11 marks (Shocking!!!!)<br />Limited Liability Partnership is almost a sure thing for the coming exam.<br />Students unable to appreciate that past relevant deductions > than contributed capital.<br /><br /><span style="font-weight: bold; color: rgb(153, 0, 0);">Question 4 - GST</span><br />Part (a) and (b) were on GST. Part (c) - not GST.<br />Examiner said at least 10 marks will be assigned to GST in the exam.<br />Students unable to address pre-commencement expenses.<br /><br /><span style="font-weight: bold; color: rgb(204, 0, 0);">Question 5</span><br />51% scored more than 11 marks.<br /><br /><span style="font-weight: bold; color: rgb(153, 0, 0);">Other comments</span><br />Students did well in June 2008 exam but did very badly for Dec 2008 exam.<br />Warning to students - Order of set-off must be correctly stated in the utilisation of Capital Allowances/Losses/Donations.<br />Budget 2009 will not be examined in June 2009 exam.<br />Try to find out about tax-on-tax, tax reimbursement and tax allowance for the coming exam.<div class="blogger-post-footer">Click www.AccountingWithEdgar.com for another view of Edgar.</div>Edgar Wonghttp://www.blogger.com/profile/13392618709615819827noreply@blogger.com0tag:blogger.com,1999:blog-34573110.post-66940086066472117402009-03-27T17:44:00.002+08:002009-03-27T18:03:52.532+08:00ACCA P6 Meeting with the ExaminerThe following is my interpretation of what was discussed in the meeting the Examiner this afternoon.<br /><br /><span style="font-weight: bold; color: rgb(204, 0, 0);">What was done well?</span><br />- Knowledge - particularly in personal income tax, recent tax changes and withholding tax (but lacking in mitigation of liability under witholding tax).<br />- Approach & structure - students are observed to be attempting the more "approachable" questions in Part B first, then Part A. (Statistically from a worldwide basis, questions should be attempted in the order as per numbered ==> otherwise perform badly)<br /><br /><span style="font-weight: bold; color: rgb(204, 0, 0);">What was not done well?</span><br />Students failed to plan their time and answers. How?<br />Massive download of unnecessary info into the answers.<br />Don't produce rote answers.<br />Don't do unnecessary calculations.<br />Unable to structure answers to "advisory" questions.<br />Students should "tailor" their answer to the requirements of each question.<br />Poor performance on GST in all three sittings under the new syllabus to date. (wink! wink! study harder in this area)<br /><br /><span style="font-weight: bold; color: rgb(153, 0, 0);">What to focus on?</span><br />Need to know the technical details under F6 being foundation knowledge to P6.<br />Answer all parts of the questions. Address each paragraph in the question.<br />Focus on command words.<br />"What you intend to write must be to earn marks"<br /><br /><span style="font-weight: bold; color: rgb(153, 0, 0);">Other comment</span><br />Do the students have enough questions to practice? The old Paper 3.2 is different from current P6.<br />When the question asked for "a five-year period", students only need to do one calculation for 5 years and NOT five single-year calculations.<br />P6 questions are on multi-tax type basis.<br /><br />In the last sitting, there was someone who scored "zero" mark despite having written pages after pages. Why? The person spent the time copying the exam questions word for word twice into the answer script.<br /><br />Students do not seem to under the meaning of "business undertaking".<br /><br />Tax cases are examinable. But the participants had a very vigorous discussion on where to get the details of the tax cases.<div class="blogger-post-footer">Click www.AccountingWithEdgar.com for another view of Edgar.</div>Edgar Wonghttp://www.blogger.com/profile/13392618709615819827noreply@blogger.com0tag:blogger.com,1999:blog-34573110.post-11871331732086572902009-02-28T23:44:00.003+08:002009-03-01T11:07:49.888+08:00Tax Deferment Scheme<span style="font-weight: bold; color: rgb(204, 0, 0);">What is the Scheme about?</span><br />Inland Revenue Authority of Singapore (IRAS) allows taxpayers with GIRO arrangement to defer income tax instalments for 3 months, from May 2009 to July 2009.<br /><br />I thought IRAS was in the same helpful mode as per Budget just presented earlier ie. delaying its collection of current tax payable due to IRAS.<br /><br />But which 3 months are we talking about? May, Jun and July 2009!!! For these months, we are actually paying tax in <span style="font-weight: bold; color: rgb(153, 0, 0);">ADVANCE </span>ie. for YA2009. They are actually not due until we receive our Assessment after we report our income on April 15.<br /><br />So IRAS, are you really helping us to alleviate our financial burden? I don't think so.<br /><br /><span style="font-weight: bold; color: rgb(153, 0, 0);">Bottomline </span>- You are not defering tax on money I owe you but rather you are defering on tax I am not due to pay you.<div class="blogger-post-footer">Click www.AccountingWithEdgar.com for another view of Edgar.</div>Edgar Wonghttp://www.blogger.com/profile/13392618709615819827noreply@blogger.com0tag:blogger.com,1999:blog-34573110.post-58642329189399566642009-01-30T12:51:00.000+08:002009-01-30T12:52:41.354+08:00Singapore Budget 2009 - My budget chatsDear Friends,<br /><br />Happy 'Niu' Year to you.<br /><br />The Singapore Budget 2009 has been touted as bold. I do agree with this labelling to a big extent.<br /><br />I have placed my comment at <a title="http://accountingwithedgar.blospot.com/" style="font-weight: bold; color: rgb(153, 0, 0);" href="http://accountingwithedgar.blospot.com/">AccountingWithEdgar blog</a>. My latest entry is my views on Dr Basant Kapur's idea to roll back GST to stimulate Consumption.<br /><br />So please have a read through and share with me your views and comment too.<br /><br />Gongxi to you!<div class="blogger-post-footer">Click www.AccountingWithEdgar.com for another view of Edgar.</div>Edgar Wonghttp://www.blogger.com/profile/13392618709615819827noreply@blogger.com0