07 Jan 2010

Singapore Entertainment Expenses

by Darren

Generally for deductibility the entertainment expense must be incurred in respect of business associates such as customers, clients, legal advisers, auditors, employees and must be related to the production of income and related directly to or associated with the claimant's business. In order to be directly related:

  • Your business must expect to derive some business benefit immediately or at some future time.
  • During the entertainment there must be some form of business discussion or activity relating to your business and these must represent the important aspects of the meeting.

Entertainment activities will include restaurants and bars, social clubs, night clubs, theaters, fishing and hunting trips, vacations.

 

In addition, providing facilities to business clients such as hotel suites, holiday bungalows, transport, food and drinks.

 

These activities if they have an acceptable business relationship will be deductible.

 

The Singapore Comptroller of Taxation is very strict with the requirements of deductibility of entertainment expenses.

The following have been recommended procedures to undertake to ensure you will not be denied the deduction

  • Keep proper records of the direct relationship of the expense to the business, such as, date and place of entertainment, names of persons entertained, amount spent, business discussions that took place etc.
  • Take note of claims in respect of entertainment at social clubs, as there is an element of pleasurable entertaining as opposed to primarily business entertaining at such places.
  • Do not indulge in lavish and extravagant entertainment, the Comptroller will generally resort to serious investigation and probably deny the deduction.
  • Do not destroy records supporting entertainment claims as the Comptroller may review past claims if the present ones appear suspicious.

Comparatively speaking Inland revenue Authority of Singapore is more open to allowing a deduction for entertainment expenses that the Australian Taxation Office.


Next entry: Entertainment Expenses in the United States
Previous entry: Deductibility of Entertainment Expenses - Australia

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