03 Sep 2009

Singapore Assessable Income

by Darren

Under Singapore Tax law the term "income" is not defined. In the case of a trade or business all receipts which are normally related to the "movement of capital or stock" are generally income in nature. Those related to fixed capital are of a capital nature. There are two questions that can be asked to determine income: Does the receipt arise from the carrying on of the trade or business? If a receipt has little relevance with the business or falls outside the scope of its operations it cannot give rise to a gain or profit from the trade. Is it a capital or a revenue receipt? If the receipts are determined to be capital these are not taxed in Sinagpore. Generally, flows from an employment will be treated as income receipts. Receipts in the nature of compensation for wrongful dismissal or relating to loss of office are not considered as flowing from an employment; they do not arise from a source, rather they are received because a source is destroyed. They are therefore not assessable. There are six types of income that are chargeable to tax under Singapore Tax Law:
  • profits or gains of a trade, business, profession or vocation
  • profits or gains from employment
  • dividends, interest and discounts
  • pension, charge or annuity
  • income from property

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