Taxable and Non-taxable Income

If the grant is given to supplement the trading receipts or to defray operating expenses of the company, it is treated as revenue in nature. The grant will be taxed as part of the gains or profits from the trade or business, unless exemption from tax is provided under the provisions of the Singapore Income Tax Act.

On the other hand, if the grant is given to the company to acquire capital assets, it is capital in nature and therefore, not taxable.

For more information, please refer to Tax Treatment of Grants/ Payouts Commonly Received by Companies.

If the donations are not voluntary gifts and are paid in return for benefits granted by the recipient organisation, these will become business receipts and constitute income that is taxable in the hands of the recipient. Expenses that are incurred to generate these taxable receipts are deductible provided they are wholly and exclusively incurred in the production of income, revenue in nature and not prohibited from deduction under the Income Tax Act. For more information on the deductibility of expenses, please refer to Business Expenses. If the company makes donations to an approved Institute of a Public Character (IPC) or to the Singapore Government which benefit the local community, tax deductions will be allowed. For more information on the deductibility of donations, refer to Donations.

The nature, tax treatment and applicable period/ Year of Assessment (YA) of each REIT distribution are reflected in the Annual Distribution Statement issued by the Central Depository Pte Ltd (CDP). 

A REIT distribution is taxable in the relevant YA as reflected in the CDP statement, unless stated otherwise (e.g. distribution is tax-exempt or distribution is a return of capital). Where the distribution is taxable, the company is required to report the gross income indicated in the CDP statement, as taxable income in the Income Tax Return for the relevant YA.

For more information on the tax treatment of REIT distributions, please refer to the e-Tax Guide on Income Tax Treatment of Real Estate Investment Trusts and Approved Sub-Trusts (refer to the section on Tax Treatment of the Unit Holder) (336KB).

Remuneration or revenue received in the form of virtual currencies (such as Bitcoins) is subject to normal income tax rules. The receipt will be taxable if it is revenue in nature, and non-taxable if it is capital in nature.

For details, please refer to Income Tax Treatment of Virtual Currencies.

No. The foreign-sourced offshore income used by a company in this manner does not constitute income received in Singapore from outside Singapore and is therefore not taxable.

This is subject to the condition that the one-tier tax exempt dividend is paid directly into the shareholder’s offshore bank account and does not involve any physical remittance, transmission or bringing of funds into Singapore by the dividend paying company for the purpose of the dividend payment. 

No. The foreign-sourced offshore income used by a company in this manner does not constitute income received in Singapore from outside Singapore and is therefore not taxable.

This is subject to the condition that the one-tier tax exempt dividend is paid directly into the CDP’s bank account and does not involve any physical remittance, transmission or bringing of funds into Singapore by the dividend paying company for the purpose of the dividend payment.

It is the amount of foreign income which is applied to acquire the asset and not the asset's net book value or market value at the time the income was brought into Singapore.

 

The taxability of the gains on disposal of properties depends on whether the gains are revenue in nature (i.e., taxable) or capital in nature (i.e., not taxable). This is a question of fact.

Generally, IRAS would apply the Badges of Trade to evaluate the taxability of the gains. All the factors are to be taken into consideration in the evaluation and no single factor is conclusive.

IRAS will accept the remitted funds as non-income funds if the taxpayer meets the following conditions:  

a)     Taxpayer to provide an account of the funds from income and non-income sources before the date of repatriation, and show that after the repatriation, the funds remaining outside Singapore is no less than the amount of foreign-sourced offshore income which has yet to be repatriated. For the purpose of determining the amount of foreign-sourced offshore income which has yet to be repatriated, IRAS is prepared to allow any loss incurred overseas on revenue account to be offset against the foreign-sourced offshore income derived; or  

b)     Taxpayer to demonstrate that the amount repatriated is not more than the non-income fund sent out net of any losses incurred on capital account.

Example 1:
Foreign-sourced offshore income of $1,000 and non-income amount of $500 were applied to acquire overseas investments of $1,500 in year 1. Overseas investments were subsequently disposed of at $1,800 in year 2 and the proceeds were brought into Singapore.

The foreign-sourced offshore income of $1,000 is remitted and subject to tax in year 2.

Example 2:
Using the same example above, overseas investments were subsequently disposed of at $1,800 in year 2, and part of the proceeds of $500 was brought into Singapore.

As the amount repatriated is not more than the non-income fund applied to acquire the investments, IRAS is prepared to accept that only non-income fund is repatriated.

 

Yes. The phrase “debt incurred in respect of a trade or business” is not confined to trade debts that have been claimed as tax deductible expenses for Singapore income tax purposes. It applies to any debt arising from a trade or business carried on in Singapore (e.g. debts arising from the acquisition of trade or business assets, including loans taken for acquiring such assets etc.). The foreign-sourced offshore income used by the company in this manner would constitute income received in Singapore from outside Singapore and is therefore taxable.

No. A passive investment holding company is not considered as carrying on a trade or business in Singapore, thus section 10(25)(b) is not applicable. The foreign-sourced offshore income used by the passive investment holding company in this manner does not constitute income received in Singapore from outside Singapore and is therefore not taxable.

This is subject to the condition that the overseas expenses were paid directly into the payee’s offshore bank account and do not involve any physical remittance, transmission or bringing of funds into Singapore by the passive investment holding company for paying the overseas expenses.  

 

 

No. The overseas investment is not connected/ related to the company’s trade or business carrying on in Singapore, thus section 10(25)(b) is not applicable. The foreign-sourced offshore income used by the company in this manner does not constitute income received in Singapore from outside Singapore and is therefore not taxable.

This is subject to the condition that the debt repayment in relation to the overseas investment is paid directly into the payee’s offshore bank account and does not involve any physical remittance, transmission or bringing of funds into Singapore by the company for payment of the overseas investment.

 

Whether the company is operating in or from Singapore is a question of fact and degree. Particularly for a non-resident Singapore-incorporated company with no business presence in Singapore, IRAS would examine the facts and circumstances such as the reason/ purpose for incorporating the company in Singapore, nature of the company’s business activities, place of control and management of the business etc. in order to make the determination.