Whether you are a business owner, accountant, financial advisor or tax planner, identifying tax and non tax deductible item in your business expense is crucial when it comes to prepare and file a correct tax return. It also navigates you as the decision maker on your company's budgeting and spending as not all business expense are tax deductible. Tax deductible business expenses reduce your company’s taxable income and amount of tax you are going to pay.

What is business expense?
Expenses incurred in the course of running the business.
What is tax deductible business expense?
There are several criteria for business expenses to be considered deductible for taxation purposes:
1. Type of expense must be incurred in the process of generating business income
2. Type of expense must be revenue and not capital in nature.
3. Expenses are not a contingent liability, meaning the expense has to be already incurred and does not depend on an event that may or may not occur in the future.
4. Type of expenses that are not disallowed under Income Tax Act 1947
What is non tax deductible business expense?
Are all other expenses that fall outside above criteria. For example: Employee’s entertainment or travelling expense incurred but not related to business purposes. Or purchase of a fixed asset which is capital in nature.
Here are list of tax deductible business expense:
Accounting fee
Administrative expenses
Advertisement
Auditors' remuneration
Bad debts (trade debtors)
Bank charges
Book-keeping services
Borrowing costs as a substitute for interest expense or to reduce interest costs
Carbon credits
Commission
CPF, skills development levy
CPF-related Statutory contributions to CPF
Ad-hoc contributions to employees' CPF MediSave Account via the Additional MediSave Contribution Scheme
Topping-up Employees' CPF Retirement Accounts/ Special Accounts on Their Behalf
Voluntary cash contributions to self-employed persons' MediSave Account
Digital taxes imposed in the form of turnover taxes (not income taxes)
Directors' fees
Directors' remuneration
Employee Equity-Based Remuneration (EEBR) Scheme
Employment Assistance Payment (EAP)
Entertainment
Exchange loss (trade and revenue in nature)
Exhibition expenses
Foreign worker levy (FWL) (only the reduced FWL incurred by your company, after deducting the FWL rebate for the corresponding period, is allowed tax deduction)
Income tax of employee borne by employer (in accordance with employment contract)
Insurance premium
Insurance for underwriting bad trade debts
Interest expenses
Interest incurred on late payment of fees to a Management Corporation for a Strata Title Plan (MCST)
Interest incurred on loans to re-finance prior loans or borrowings
Intellectual property (IP) licensing expenditure
Legal and professional fees (trade and revenue transactions)
Upfront lease expenses incurred by tenants (commission, advertising, legal fees and stamp duty incurred in obtaining, renewing or extending leases), subject to Section 14ZE of the Income Tax Act 1947
Medical expenses (restricted to 1%/ 2% of total remuneration if company is under Portable Medical Benefits Scheme (PMBS) or Transferable Medical Insurance Scheme (TMIS))
Motor vehicle expenses (such as upkeep, maintenance, running and financing costs of goods/ commercial vehicles e.g. van, lorry and bus)
Office upkeep
Periodicals and newspapers
Postage
Printing and stationery
Property tax
Provision for bad and doubtful debts (specific) (note impairment loss on trade debts)
Provision for obsolete stocks (specific)
Additional Petrol Duty Rebate (Budget 2021)2
Reinstatement costs (expenses incurred to reinstate premises to its original condition prior to vacating it at the end of the tenancy agreement)
Rental of business premises
Registration of patents, trademarks, designs and plant varieties
Repairs and maintenance
Research and development
Road tax rebate (Budget 2021)3
Retrenchment payments
Contractual retrenchment payments
Ex-gratia retrenchment payments and outplacement support costs, where there is no complete cessation of business
Secretarial fees
Staff remunerations (salary, bonus and allowances)
Staff training
Staff welfare/ benefits
Statutory and Regulatory expenses
Stock obsolescence
Supplementary Retirement Scheme (SRS)
Tax fees (service fees paid to tax agent)
Telephone bills
Transport (public transport and goods/ commercial vehicles)
Travelling
Wages
Water and electricity
And here are list of non-tax deductible business expense:
Amortisation
Bad debts (non-trade debtors)
Certificate of entitlement (COE) for motor vehicles1
CPF-related Voluntary contributions to CPF (refers to CPF contributions exceeding the statutory rate)
Topping-up Employees' CPF MediSave Accounts on Their Behalf
Interest incurred on late CPF contributions
Depreciation (you may instead claim capital allowances)
Digital taxes imposed as income taxes
Dividend payments made on preference shares
Donations
Entrance fee (country club or other clubs)
Exchange loss (non-trade or capital in nature)
Expenses incurred before commencement of business
Fixed assets written off
Fixed assets acquisition cost (you may instead claim capital allowances)
Fines
Goodwill payment
Impairment loss on non-trade debts
Singapore income tax and any tax on income in country/ territory outside Singapore
Installation of fixed assets
Interest expenses on non-income producing assets (interest adjustment)
Legal and professional fees (non-trade or capital transactions)
Medical expenses (amount exceeding 1%/ 2% of total remuneration if company is under PMBS or TMIS)
Motor vehicle expenses (S-plated, Q-plated and RU-plated cars)
Penalties
Prepaid expenses (not relating to the relevant basis period)
Private and domestic expenses (expenses not incurred for business purpose)
Private hire car
Provision for bad and doubtful debts (general) (note impairment loss on trade debts)
Provision for obsolete stocks (general)
Renovation or refurbishment works (you may claim Section 14N deduction for qualifying expenditure)
Retrenchment payments
Ex-gratia retrenchment payments and outplacement support costs, where there is a complete cessation of business
Transport (S-plated, Q-plated and RU-plated cars)
Withholding tax on interest payments borne by companies on-behalf of non-residents
Source: IRAS
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