IRAS: Business expenses

What can be deducted?

Overview of deduction

You can claim deduction for expenses that are wholly and exclusively incurred in the production of income.

To qualify for tax deduction, these conditions must be met:

The expenses must be revenue in nature, (generally refers to the normal day-to-day operating expenses). Capital expenditure is not allowed as a tax deduction.
The deduction must not be prohibited under the Income Tax Act.
The expenses must be incurred. Contingent liability is not allowable as a tax deduction.

Examples of deductible and non-deductible expenses:
Deductible expenses	Non-deductible expenses
Accounting fee Administrative expenses Advertisement Auditors' remuneration	Amortisation
Bad debts (trade debtors) Bank charges Book-keeping services	Bad debts (non-trade debtors)
Commission CPF, skills development levy, foreign workers' levy CPF Statutory contributions to CPF Contributions to employees’ Medisave Account (maximum deduction of $1,500 for each employee per year)* Topping-up of Employees' CPF Minimum Sums Voluntary cash contributions to self-employed persons' Medisave Account	Certificate of entitlement (COE) for motor vehicles** CPF Voluntary contributions to CPF (refers to CPF contributions exceeding the statutory rate)
Directors' fees Directors' remuneration	Depreciation (you may claim capital allowances) Donations
Employee Equity-Based Remuneration (EEBR) Scheme Employment Assistance Payment (EAP) Entertainment Exchange loss (trade and revenue in nature) Exhibition expenses	Entrance fee (country club or other clubs) Exchange loss (non-trade or capital in nature) Expenses incurred prior to commencement of business
	Fixed assets written off Fixed assets acquisition cost (you may claim capital allowances) Fines
	Goodwill payment
Impairment loss on trade debts Income tax borne by employer (according to employment contract) Insurance (e.g. for fire, workmen compensation, underwriting bad trade debts) Interest expenses	Impairment loss on non-trade debts Singapore income tax and any tax on income in country outside Singapore Installation of fixed assets Insurance (certain life insurance) Interest expenses (interest adjustment)
Legal and professional fees (trade and revenue transactions)	Legal and professional fees (non-trade or capital transactions
Medical expenses (restricted to 1% of total remuneration) Motor vehicle expenses (goods / commercial vehicles, e.g. van, lorry and bus)	Medical expenses (amount exceeding 1% of total remuneration) Motor vehicle expenses ("S" plate private passenger cars)
Office upkeep
Periodicals & newspapers Postage Printing & stationery Property tax Provision for bad and doubtful debts (specific)(note impairment loss on trade debts) Provision for obsolete stocks (specific)	Penalties Prepaid expenses (not relating to the relevant basis period) Private and domestic expenses Private hire car Provision for bad and doubtful debts (general)(note impairment loss on trade debts) Provision for obsolete stocks (general)
Rental of business premises Registration of patents, trademarks, designs and plant varieties Repairs and maintenance Research and development	Renovation or refurbishment works (you may claim Section 14Q deduction for qualifying expenditure incurred from 16 Feb 2008)
Retrenchment payments Contractual retrenchment payments Ex-gratia retrenchment payments and outplacement support costs, where there is no complete cessation of business	Retrenchment payments Ex-gratia retrenchment payments and outplacement support costs, where there is a complete cessation of business.
Secretarial fees Staff remunerations (salary, bonus and allowances) Staff training Staff welfare/benefits Stock obsolescence Supplementary Retirement Scheme (SRS)
Tax fees (service fees paid to tax agent) Telephone bills Transport (public transport and goods / commercial vehicles) Travelling	Transport ("S" plate private passenger cars)
Wages Water & electricity

* Such contributions to the Medisave Account are allowed for deduction as medical expenses, subject to the medical expenses cap.
** If the vehicle qualifies for capital allowance (goods / commercial vehicle), you can include the cost of COE to the cost of vehicle and claim capital allowance.

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For companies > Preparing tax computation > What can be deducted >

Business expenses

Overview of deduction