What is a tax computation
A tax computation is a statement showing the tax adjustments to the accounting profit to arrive at the income that is chargeable to tax. Tax adjustments include non-deductible expenses, non-taxable receipts, further deductions and capital allowances.
Your company is required to submit a tax computation and the audited/unaudited* accounts, together with the Form C annually.
Companies filing Form C-S are not required to submit financial accounts, tax computation and supporting schedules. They are still required to prepare their financial accounts, tax computation and supporting schedules and submit them to IRAS upon request.
Why is there a need to make tax adjustments
The chargeable income of your company may be different from the net profit/loss shown in its accounts.
This is because some of your company's expenses may not be deductible for tax purposes. Similarly, some of the income received by your company may not be taxable or it may be taxed separately as a non-trade source income.
Besides, you may wish to claim capital allowance on your fixed assets or claim unutilised losses/capital allowances/donations brought forward from previous Years of Assessment (YA).
As a general guide for most companies, you would need to make the following adjustments to your net profit/loss:
- Deduct income which is not taxable
- Deduct investment income (e.g. interest, dividend and rental) which is to be assessed separately as non-trade income
- Add disallowable expenses
- Add direct expenses relating to the investment income (to be allowed against the respective investment income taxed as non-trade income)
- Deduct Section 14Q deduction for expenditure incurred on renovation or refurbishment works where applicable (only applies to qualifying expenditure incurred from 16 Feb 2008)
- Claim enhanced deduction under the Productivity and Innovation Credit scheme
- Add net investment income such as interest, dividend and rental (after deducting the direct expenses relating to the investment income)
- Deduct unutilised capital allowances brought forward from previous YA where applicable
- Deduct capital allowances (including enhanced allowances under the Productivity and Innovation Credit scheme) for the current YA if you wish to claim for capital allowances on fixed assets
- Deduct unutilised losses brought forward from previous YA where applicable
- Deduct unutilised donations brought forward from previous YA where applicable
- Deduct donations made to approved Institutions of a Public Character (IPCs) if any.
You are still required to submit a tax computation even if you do not need to make any adjustment to your net profit/loss, if you are filing Form C.
- All the expenses reflected in your profit/loss accounts incurred are deductible for tax purposes;
- All the income reflected in your profit/loss accounts are taxable;
- You are not claiming for enhanced deduction/allowances under the Productivity and Innovation Credit scheme;
- You are not claiming for capital allowances on fixed assets; and
- There are no unutilised losses/capital allowances/donations brought forward from previous YA.
In this case, your tax computation will show disallowable items to be added back as "Nil" and the adjusted profit/loss amount will be the same as the net profit/loss as per your accounts. You also need to show the chargeable income and the tax payable or the unutilised losses carried forward in your tax computation whichever is applicable.
You may refer to our Basic Tax Calculator to prepare your tax computation.
Basic Tax Calculator
Basic Tax Calculator is a template specially designed to help you with the preparation of tax computation and supporting schedules such as capital allowances and rental income schedules for your company. With the Basic Tax Calculator, you can work out the tax payable for your company.
The Basic Tax Calculator can also help you in your completion of Form C/ Form C-S. After you have printed your tax computation using our Basic Tax Calculator, you will notice that there is a column on "corresponding Form C/ Form C-S line number". This Form C/ Form C-S line number will serve as a guide for you to fill in the amount in the relevant lines in your Form C/ Form C-S.
This Basic Tax Calculator is not applicable for preparing tax computation for:
What if there is a change in accounting year-end
You must notify IRAS of a change in accounting year-end via the form Request for Income Tax Return (Form C/ Form C-S) and Notification of New Accounting Year-End (42KB).
If your accounts covers a period that is more than twelve months as a result of a change in accounting year-end, you may have to apportion and attribute the adjusted profit/losses to two different Years of Assessment (YA). 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.
Example 1 (no apportionment required)
Where the change is within the same YA (e.g. accounting year-end changes from 30 Jun to 31 Dec with effect from year 2013), the company can prepare one set of tax computation for YA 2014 based on the accounts from 1 Jul 2012 to 31 Dec 2013. In this case, it is not necessary to apportion the adjusted profit/losses although the accounts covers a period of more than twelve months. The YAs and corresponding basis periods are as follows:
YA Basis period
2013 1 Jul 2011 to 30 Jun 2012 (12 months)
2014 1 Jul 2012 to 31 Dec 2013 (18 months)
2015 1 Jan 2014 to 31 Dec 2014 (12 months)
Example 2 (apportionment required)
Where the change is across two YAs (e.g. accounting year-end changes from 31 Dec 2012 to 31 Mar 2013), the company needs to prepare two separate tax computations i.e. for YA 2013 and YA 2014. The YAs and corresponding basis periods are as follows:
YA Basis period
2013 1 Jan 2012 to 31 Dec 2012 (12 months)
2014 1 Jan 2013 to 31 Mar 2013 (3 months)
2015 1 Apr 2013 to 31 Mar 2014 (12 months)
In this example, the company should:
i) furnish an estimate of its chargeable income for YA 2013 (basis period from 1 Jan 2012 to 31 Dec 2012) and YA 2014 (basis period from 1 Jan 2013 to 31 Mar 2013) by 31 Mar 2013 and 30 Jun 2013 respectively, unless the administrative concession on waiver to file ECI applies.
ii) when submitting Form C for YA 2014, attach the accounts for the period 1 Jan 2012 to 31 Mar 2013 and provide a covering letter stating that you have enclosed the tax computations for both YA 2013 and YA 2014.
However, if the company is submitting Form C-S, it is only required to provide a covering letter enclosing the Form C-S for YA 2014 and tax computation for YA 2013. It is not required to submit the accounts and tax computation for YA 2014.