Income is assessed on a preceding year basis. This means that the basis period for any Year of Assessment (YA) is the financial year ending in the year preceding the YA. The examples below illustrate the concept of basis period and YA:
- If your financial year end is 31 Mar of each year, the basis period for YA 2012 is 1 Apr 2010 to 31 Mar 2011.
- If your financial year end is 31 Dec of each year, the basis period for YA 2012 is 1 Jan 2011 to 31 Dec 2011.
Attribution of adjusted profit/losses to two YAs
If your company’s first set of accounts covers a period of more than 12 months from the date of incorporation, the adjusted profit/losses must be apportioned and attributed to two YAs because the basis period for each YA cannot exceed 12 months. This should be done by directly identifying the company’s income and expenses to the corresponding basis period for each YA (“direct identification method”). Time apportionment basis may be used if the company is not able to apply the direct identification method.
Please see example as follows:
Company A is incorporated in Singapore on 15 Apr 2010. The financial year end of the company is 30 Jun. Company A’s first set of accounts is prepared for the period from 15 Apr 2010 to 30 Jun 2011.
As the first set of accounts covered a period of more than 12 months, the two relevant YAs are as follows:
|2011 (1st YA)
15 Apr 2010 - 30 Jun 2010
|2012 (2nd YA)
1 Jul 2010 - 30 Jun 2011
The company needs to report its income for the period 15 Apr 2010 to 30 Jun 2010 under YA 2011 and the year 1 Jul 2010 to 30 Jun 2011 under YA 2012.