Common mistakes made by self-employed persons, sole-proprietors and partners when filing the annual tax return (Form B/B1/P).
On this page:
1. Declaration of trade income
I am a:
- Commission agent (e.g. insurance agent, real estate agent)
- Hawkers
- Private tutor
I declare my income as Employment or Other Income in Form B/B1.
The correct way to file
You are considered a self-employed person.
When e-Filing:
You should declare your income as trade income under item 2 "Trade, Business, Profession or Vocation" > "Sole-Proprietorship/ Self-Employed Income".
When Paper filing:
- Form B: You should declare your income in the 4-Line Statement (i.e. items 6 to 9)* under section 1a. "Sole-Proprietorship/Self-Employed Income 1" in page 2.
* For revenue of $200,000 or less, you only need to report a 2-Line Statement (i.e. Revenue (item 6) and Adjusted Profit/Loss (item 9). - Form B1: You should declare your income in "Other Income" under section A in page 2 and complete section 1 "Trade, Business, Profession or Vocation" in Appendix 1.
2. Declaration by property/ insurance agents
I am a property/ insurance agent. I do not have to declare my self-employment income as my company is participating in the Auto-Inclusion Scheme.
The correct way to file
As an agent earning commission, your self-employment income will not be auto-included in your assessment.
You have to declare your commission under "Trade, Business, Profession or Vocation". As you are providing a service, your "Revenue" is equal to your "Gross Profit/Loss". Your "Adjusted Profit/Loss" is equal to "Revenue" / "Gross Profit/Loss" minus "Allowable Business Expenses".
Pre-filling of commission information:
- If your company is participating in the e-Submission of Commission, your commission information will be pre-filled in the electronic tax returns. You will need to log in to myTax Portal to check the pre-filled commission income and amend the pre-filled commission income in the "Revenue" field (e.g. to include any additional commission).
- You can enter your claim for business expenses incurred in the “Allowable Business Expenses” field. Alternatively, if your commission income is not more than $50,000, you can claim 25% of your gross commission income as deemed expenses.
3. Declaration of estimated income/ expenses
I declare an estimated trade income as I do not keep proper records of my daily earnings / commission / expenses.
The correct way to file
As a self-employed person, you are required to keep proper records and accounts of your business transactions for 5 years.
Estimates and improper records are not acceptable. For more information, please refer to Keeping proper records and accounts.
4. Declaration of partnership salary
I declare my partnership salary as Employment /Sole-Proprietorship Income in Form B/B1.
The correct way to file
You should declare your partnership salary / bonus / CPF / benefits (remuneration) as "Partnership" Income.
When e-Filing:
You should declare it as 'Partner's Salary, Bonus & CPF' under section 2 "Trade, Business, Profession or Vocation" > "Partnership".
When Paper filing:
- Form B: You should declare it in "Your Salary/Bonus/CPF/Benefits from Partnership" under item 1b "Partnership' in page 2.
- Form B1: You should declare it in "Other Income" under section A in page 2 and complete section 1 "Trade, Business, Profession or Vocation" in Appendix 1.
5. Declaration of partnership income
I do not know my share of the partnership income, so I:
- do not declare it in my Form B; or
- declare the total partnership income in my Form B.
The correct way to file
You should obtain your share of the partnership income from the precedent partner and declare it in your Form B before submitting it.
However, if the precedent partner of the partnership e-files the Form P for Year of Assessment 2023 by 28 Feb 2023, the partnership allocation will be pre-filled in your Form B.
6. Claim for partner’s expenses in Form B
I am a partner and I claim expenses in my Form B when expenses are already charged to the partnership’s profit and loss account.
The correct way to file
You cannot claim expenses in your individual Income Tax Return (Form B) when the expenses were charged to the partnership’s profit and loss account as the expenses would be claimable as deductions in the partnership income tax Form P.
For expenses to be deductible, they have to be incurred wholly and exclusively in the production of the income.
Please refer to Business expenses for more details.
7. Claim for partner’s salary in Form P
Claiming salary, bonus and CPF paid to partner under 'Allowable Business Expenses' in Form P.
The correct way to file
Partners' salary, bonus, CPF are not to be included under "Allowable Business Expenses" in Form P. You should enter it as "Partner's Salary, Bonus & CPF" in Form P.
8. Not filing Form B
My precedent partner has submitted Form P, so I do not need to file my Form B or declare my share of precedent income in my Form B.
The correct way to file
You are still required to file your Form B to declare your share of the partnership income and your income from other sources, if any.
However, if the precedent partner of the partnership e-files the Form P for Year of Assessment 2023 by 28 Feb 2023, your share of the partnership allocation will be pre-filled in your Form B.
9. Not filing Form P
My partner(s) had filed his/her Form B, so I do not need to file the Form P.
The correct way to file
The precedent partner is still required to file the Form P on the partnership income.
10. Declaration of partnership rent
I declare my partnership rent income as Other Income.
The correct way to file
When e-Filing:
You should declare your share of partnership rent income under section 2 "Trade, Business, Profession or Vocation" > "Partnership" > "Declare Other Income and Donations from this Partnership" > "Rent".
For Paper filing:
- Form B: You should declare your share of partnership rent income in "Rent" under item 1b "Partnership 1" in page 2.
- Form B1: You should declare it in item 3 "Other Income" under section A in page 2 and complete item 1 "Trade, Buiness, Profession or Vocation" in Appendix 1.
11. Claim for self-employed CPF relief
I have contributed CPF as a self-employed person last year, therefore I should indicate the amount contributed in my Form B so as to qualify for the relief.
The correct way to file
CPF relief for a self-employed is allowed automatically based on information received from CPF Board. You need not indicate your claim.
Self-employed CPF relief is allowed if:
- you have an assessable trade income
- you are making the contribution as a self-employed person
- your contribution was made before 31 Dec of the preceding year.