Tax Obligations of a Tuition Centre / Agency Operator

Transcription

2/29/2012
Tax Obligations
of a
Tuition Centre /
Agency Operator
29th February 2012
Presentation Topics at a Glance
Obligation as a self-employed individual
Keeping proper records
Filing Income Tax Returns
Avoiding common errors
Seeking assistance
Penalties
Voluntary disclosure
Copyright @ IRAS 2012. All Rights Reserved
2
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2/29/2012
Obligation
as a
Self-Employed
Individual
3
Who are the self-employed?
Sole proprietors of registered
businesses and persons exercising
profession or vocation
Partner of a partnership business
(normal partnership, limited liability
partnership, limited partnership)
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Obligation as a Self-Employed Individual
Comply with
income tax
law
Report a
complete &
accurate set
of business
income
Keep proper
records &
accounts for 5
years
File form B /
P on time
Register for GST if you meet the registration criteria
5
Obligation as a self-employed individual
Medisave Contributions
As a Selfemployed
Earn a yearly net trade
income of more than $6,000
• Net trade income refers to
your gross trade income
less all allowable business
expenses, capital
allowances and trade losses
as determined by IRAS
As a Singapore citizen
or Singapore permanent
resident
IRAS will issue
a Notice of
Computation
(NOC) to
inform you of
your medisave
contributions
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Keeping
Proper
Records
7
Keeping Proper Records
Source
Documents
Any other
records
related to
business
Types
of
Records
Bank
Statements
Accounting
Records &
Schedules
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As a tuition
centre/agency
operator,
what are the
types of
records I need
to maintain?
Revenue /
Fees
collection
Purchases
/Expenses
Assets &
Stock
Business records
9
Revenue / Fees Collection
Records of
the tuition
fees /
commission
from tuition Receipt book
fees collected;
Sale of
books/test
papers etc
Invoices
issued
Returned
goods
Goods taken
for private
use
Customer’s / Refunds made
to customers
student’s
/ students
records
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Purchases /
Expenses
To obtain invoices/receipts when
paying for purchase/expenses.
Good practise to arrange such
payment through the business
bank account.
Cash receipts to be retained
even though the amount is
small.
When receipt is not issued, to
prepare payment voucher with
acknowledgement.
To provide description if
receipt does not indicate items
bought.
To also maintain
purchase/expense record book
with details.
For GST registered
businesses, to maintain
proper tax invoices as
required.
To refer to GST e-tax guide.
11
Assets
Need to prepare a fixed asset
schedule at the time the asset
is purchased or when the
business is started.
Please refer to sample Fixed
Asset Schedule – Appendix 6
of the Guide.
The asset cost is capital in
nature & not tax deductible.
However, you may claim
capital allowances as well as
the Productivity & Innovation
Credit (PIC).
Stocks
Refers to anything purchased
for the purpose of sale such as
educational / assessment
books.
Encouraged to carry out a
physical stock count at the end
of the accounting year.
To refer to sample stock list at
Appendix 7.
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To maintain separate bank
accounts for business &
private purpose.
The business bank account
should be used solely for
business purpose.
To retain the bank statements
/ passbook of your business
bank accounts.
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Manual
Records
Electronic
Records
Recording of your
business transactions
in a physical form
Through the use of a
computer and/or
accounting software
Such transactions to
be supported by
source documents
Source documents must
be kept to substantiate
the business transactions
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Good Record keeping practice is an important
part of your business
Better internal control of your business
An essential source of evidence to detect
business losses, internal fraud & theft
Reduces cost & effort during collation of
information
Under the Income Tax Act, you are required to keep the business
records for at least 5 years with effect from 1 Jan 2007
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Source Documents
Record Type
Item No
1
2
INCOME RECORDS
(Records of each
sales transaction)
3
4
5
6
7
8
BUSINESS EXPENSE
RECORDS
(Records of each
business expense
transaction)
PURCHASE
RECORDS
(Records of each
purchase transaction)
OTHER RECORDS
(FOR GST
PURPOSES)
Documents Required
Category of taxpayers for Record Keeping
Requirements
GST-Registered
Non-GST Registered
Businesses
Businesses
Serially numbered receipts issued or cash register tapes or
invoices issued
Tax invoice/simplified tax invoice issued
Rental Agreement signed by both landlord and tenant
Books to record goods taken for private usage
Credit notes for returned goods
Documents relating to exports
Evidence that payment have been received (e.g. bank
statement)
Invoice received or Receipt received
9
Payment made to individuals/companies for services
rendered and the relevant contracts/agreements on the
provision of services
10
Payment vouchers for staff remuneration
11
Employer’s CPF contributions
12
Payment evidence (e.g. bank statement)
13
Tax invoices received, Invoices received or Receipt
received
14
Documents relating to imports
15
Payment evidence (e.g. bank statement)
16
Business goods which were put to non-business use
17
Disposals of business goods, whether or not for a
consideration
18
Removal of goods from customs-licensed warehouse
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ACCOUNTING RECORDS AND SCHEDULES
Record Type
Item No
Documents Required
Category of taxpayers for Record Keeping
Requirements
GST-Registered
Non-GST Registered
Businesses
Businesses
1
2
Stock List
Sales Record Book/ Sales Listing
3
Purchase Record Book/ Purchase Listing
4
General Ledgers
5
Balance Sheet, Profit and Loss Statement
6
GST account summary of input and output tax,
including GST refunded to tourists
BANK
STATEMENT
7
Bank statements; with separate bank accounts for
personal and business purposes
(Recommended)
Record Type
Item No
GST-Registered
Businesses
Non-GST Registered
Businesses
ACCOUNTING
RECORDS AND
SCHEDULES
ACCOUNTING
RECORDS AND
SCHEDULES
Documents Recommended
1
Detailed schedules of Public Transport expenses
2
Detailed schedules of Travelling expenses
3
Detailed schedules of Entertainment expenses
4
5
Fixed asset Schedules
Records of Capital Allowances
Note: The “required records” are mandatory records that businesses must keep for tax purposes. The “recommended
records” are records that the businesses are advised to keep as good practices, and these should be available, or able to
reproduce upon request by the Comptroller of Income Tax or/ GST
17
Set up good filing system for your
paperwork from the start of your
business
Make sure records can be
understood by anyone
Obtain the necessary source
documents at time of transaction
Enter transactions accurately &
regularly to keep records up to
date
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• These information can be found in our
website
• Visit our website at www.iras.gov.sg
• Follow the link : Home > About IRAS >
Taxpayer Compliance > Record
Keeping Essentials for Businesses
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Filing
Income
Tax Returns
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You will need to report your Tuition business
income in a summarized 2 or 4-line statement in
your Form B or Form P
21
For a partnership :
The precedent partner has to report the business income in the
Form P. He/She is also required to inform all the partners of their
share of income from the partnership;
The precedent partner is:
- Partner who, among all the partners present in Singapore, is the
first named in the partnership agreement.
- If there is no partnership agreement, the precedent partner is a
partner who is agreed upon and appointed by the other partners
to be the precedent partner.
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For a Partner:
Check with precedent partner on share of income
from partnership
Report share of partnership income under
“Partnership” in the “Trade, Business, Profession or
Vocation” section of Form B
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REVENUE
< or = $100,000
REVENUE
< $500 000
REVENUE
> or = $500,000
4-line Statement
2-line Statement
1st line - Revenue
2nd line Gross Profit/Loss
1st line – Revenue
3rd line - Allowable
Business Expenses
2nd line – Adjusted
Profit/Loss
4th line - Adjusted
Profit/Loss
4-Line Statement
+
Submit certified
Statement of
Accounts
(i.e. Trading, Profit &
Loss Account and
Balance Sheet )
To be signed by the
sole-proprietor /
precedent partner
certifying that
accounts are true and
correct
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The 4-Line Statement
1. Revenue
Total payments/fees/commissions received or receivable for
services provided before deducting any expenses.
2. Gross Profit / Loss
For a service business like tuition centre, this is the same as
Revenue. Should a tuition centre sells assessment/
teaching books or materials, the gross profit / loss is
Revenue less Cost of Goods Sold.
3. Allowable
Expenses incurred in the course of business.
Business Expenses
4. Adjusted Profit/
Loss
Gross Profit – Allowable Business Expenses
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Allowable Expenses
Must be
related to
your
business
Must be
incurred
during the
production of
income
ALLOWABLE
EXPENSES
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Upkeep of
business
premises &
equipment
Employee’s
salary, bonus &
allowances
Business related
overseas
travelling
expenses
Advertising,
printing &
stationery
Business
entertainment
Public transport
usage
Allowable
Business
Expenses
(common
examples)
Rental paid for
business
premises
Capital
allowances on
fixed assets
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Disallowable Expense
Capital in
nature
Personal
and private
in nature
DISALLOWABLE
EXPENSES
Pre –
Commencement
expenses
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2/29/2012
Food &
household
expenses
Entertainment
expenses for
family &
friends
Repayment of
loan taken for
business
purpose
Cost of fixed
assets
purchased
Registration
fee for
business
Personal medical
fees, income tax &
insurance of
SP/Partner
Maintenance
cost of private
cars
Disallowable
Expenses
(common
examples)
Pre-commencement
expense
Renovation of
business
premise
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Enhancement to Concession for
Enterprise Development
Expenses incurred before the start of business operation
are not allowable as they are not incurred in the production
of income.
Introduction of Concessionary treatment:
With the current concession, revenue expenses incurred
one accounting year before the *deemed Date of
Commencement (DOC) are deductible.
* The first day of the accounting year in which a business earns its first dollar of
business receipt. This is different from the date of incorporation of business.
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2011 Enhancement to Concession
•
•
•
Revenue expenses incurred in one accounting year before the deemed Date of
Commencement are deductible
Expenses treated as incurred on the deemed date of commencement
Deductible against business income derived during basis period in which the
business derives its first dollar of business receipt
With effect from Year of Assessment 2012
31
Example:
Mr Lim registered a tuition centre on 1 Dec 2009 to carry on a
business. Its accounting year ends on 31 Dec. The business
earned its first dollar of business receipt on 5 Feb 2011. It incurred
revenue expenses such as rental expenses, utilities, etc on:
(i) 15 Dec 2009
(ii) 1 March 2010
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Enhancement to Concession for Enterprise Development
With Effect from Year of Assessment 2012
Revenue expenses incurred 15 Dec 2009 / 1 Mar 2010
Deemed DOC
i) 15 Dec 2009
01 Jan 2010
01 Jan 2011
ii) 01 Mar 2010
Not deductible as the
period does not fall
within the concession
criteria
First dollar
earned
5 Feb 2011
31 Dec 2011
Revenue expenses deductible without
concession
Revenue expenses deductible with the
2011 enhancement; Hence, revenue
expenses incurred on 1 Mar 2010 is
deductible.
33
More details on this concession can be found in our
website by following this pathway :
www.iras.gov.sg < For companies < Preparing tax
computation < What can be deducted < Business
expenses < Tax treatment of specific expenses <
Expenses incurred prior to commencement of
business>.
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Avoiding
Common Errors
35
Common Errors to Avoid
Incorrect categorization of income
Nature of error made
Correct way of reporting
Self-employed income
incorrectly reported
under “Employment” or
“Other Income”
To declare 2 or 4-line
statement under “Trade”
if you are carrying on a
trade, business,
profession or vocation
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Understatement of income
Collections were used to
pay for the purchases or
expenses
(both private and
personal)
& were not recorded
Report gross revenue
collection
in full & as far as
possible, to pay for
expenses via cheque
37
Case Study
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Case Study
Ms Janet is a junior college student who enrolled in
RH Tuition Centre for “A Maths” in June 2011. The
period of tuition is from June 2011 to May 2012 .
She paid the full amount upon
enrolment :
Registration fee $25
Books + materials $75
June 2011 to Dec 2011 -$720;
Jan 2012 to May 2012 - $540
Total amount paid $1,360
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Case Study
The question isThow would Ms Wong, the soleproprietor of RH Tuition Centre update her record for
Year of Assessment 2012 in respect of Janet’s tuition
fees received?
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Case Study
STATEMENT OF ACCOUNTS
NAME OF BUSINESS:
BUSINESS ADDRESS :
FOR PERIOD
RH Tuition Centre
32 Jln Angklong, Singapore 121432
FROM
01012011 to
31122011
(enter date in dd-mm-yy)
$
75
745
Revenue from sale of books/materials - A
Service Fees received (Turnover) - B
$
of fees
collection
for the year
ended 31
Dec 2011) –
Recognition
of income
since the
registration,
enrolment,
materials &
lesson has
been
utilised.
Less: Cost of Goods sold - C
Gross Profit (C) = A+B-C
Less: Allowable Business Expenses
(please ensure that you do not claim non-allowable expenses)
Rental Charges
Advertising promotion
Insurance
CPF Contributions
Salaries & wages
Other Running Expenses
(please indicate the nature and break down below)
i)
ii)
iii)
iv)
Total Allowable Business Expenses
Adjusted Profit
SUMMARY
4-line Statement
$
Turnover
Gross Profit
Allowable Business Expenses
Adjusted Profit/Loss
To record
$820 in
here (part
Name of taxpayer:
Signature :
Contact Number :
41
Case Study
RH Tuition Centre
Balance Sheet for the Year Ending 31.12.2011
ASSETS
Current Assets
Cash
Accounts Receivable
Inventory
Prepaid Expenses
Total Current Assets
Fixed Assets
Land, Buildings
Furniture & Fixtures
Equipment
Total Fixed Assets
Total Assets
LIABILITIES
Current Liabilities
Accounts Payable
Taxes Payable
Accurals
Deferred Income
Total Current Liabilities
Long Term liabilities
Mortgages Payable
Equipment
Total Long Term Liabilities
TOTAL LIABILITIES
To record
balance
amount of
$540 in here
OWNER'S NET WORTH
42
Total Liabilities and Net Worth
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Incorrect claims of personal and private expenses
Private and domestic
expenses were claimed
as business expenses
To claim only expenses
incurred for your
business
43
Claiming estimated expenses
Estimated amounts are
being recorded for both
revenue & expense
amount
Estimated amounts are
inadequate and not
acceptable for Income
Tax purposes; To claim
expenses based on
actual amounts.
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Claiming private motor vehicle expenses
Expenses in respect of These expenses are not
private-plated cars (E or
deductible even if it is
S-plate cars) are being
incurred for business
purposes
claimed
45
Seeking
Assistance
46
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2/29/2012
To check on the Return Status:
Service Details Where
Check if You
Need To File
1) @ myTax Portal - Select "e-File Form B/B1"
using your SingPass or IRAS PIN
2) via SMS service - Filetax <space> Entity ID
(NRIC or FIN) to 9116 4900 (1 Mar to 30 Jun 2012)
Online Help
@IRAS website
Post your question to "Ask IRAS" and get answers to your tax
query.
http://www.iras.gov.sg/askiras/CustomerPages/IRAS/askiras.aspx
47
To check on the Return Status:
Service Details
When
Where
E-Filing Helpline
(Form B & Form
B1)
1 March to 18 Apr 2012
1800 252 5011
E-Filing Helpline
for Form P
20 Feb to 18 Apr 2012
Mon – Fri : 8am – 5pm
1800 352 4727
Email Us
Tax Enquiries
[email protected]
myTax Mail (a secure email system)
Log into my Tax Mail using
Singpass or IRAS PIN
https://mytaxmail.iras.gov.sg
Mon – Fri : 8am – 5pm
Sat : 8am – 1pm
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2/29/2012
You may seek assistance from:
Service Details
Contact
Self help (Record keeping guide)
http://www.iras.gov.sg > For sole-proprietors / self
employed > Keeping proper records and accounts >
Basic Record Keeping Guide for Small businesses
Email
[email protected]
Income Tax Integrated Phone Service
1800 356 8300
Goods & Services Tax Integrated Phone
Service
1800 356 8633
Taxpayer Services Centre
1st Storey, Revenue House
55 Newton Road, Singapore 307987
(Located opposite Novena MRT Station)
Operating Hours:
8am to 5pm (Mon to Fri)
8am to 1pm (Sat)
49
Service Details
When
Where
IRAS
e-Filing Services
Centres (External)
12 March to 18 April 2012
Community Centres / Clubs
Bedok CC
850 New Upper Changi Road, S(467352)
(Nearest MRT Station : Bedok)
Community Centres / Clubs
Mon to Fri 11am to 7pm
Sat
9am to 2pm
CPF Service Centres
Mon to Fri 8am to 5pm
Sat
8am to 1pm
CPF Main Office
Closed on Saturdays
Chong Pang CC
21 Yishun Ring Road, S(768677)
(Nearest MRT Station : Yishun)
CPF Main Office
79 Robinson Road S(068897)
(Nearest MRT Station : Tanjong Pagar)
CPF Tampines
1 Tampines Central 5, S(529058)
(Nearest MRT Station : Tampines)
CPF Woodlands
900 South Woodlands Drive, Woodlands Civic Centre, S(730900)
(Nearest MRT Station : Woodlands)
CPF Bishan
3 Bishan Place, S(579838)
(Nearest MRT Station : Bishan)
CPF Jurong
21 Jurong Gateway Road, S(608546)
(Nearest MRT Station : Jurong East)
50
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2/29/2012
Service Details
When
Where
Volunteer e-Filing Service centres
24 Mar to 15 Apr
2012
Community
Clubs
CitizenConnect centres (Community Club) where
volunteers will help in e-Filing. Bring along :
Sat and Sun
2pm to 6pm
1) Your Tax Reference Number (i.e. NRIC / FIN
number)
2) Your SingPass or IRAS PIN
3) All documents and income details relevant for
your filing, (i.e.)
a) IR8A Form (from your employer)
b) For Child Relief Claims - Birth Certificate
no. / NRIC number
c) For Parent/Grandparent Caregiver Relief
Claims – NRIC no. of Parents / Parents-in-law
51
Community Club
Address
Bukit Batok East
Changi Simei
Chua Chu Kang
Eunos
Fuchun
Gek Poh Ville
Kallang
Kim Seng
Marine Parade
Pasir Ris East
Sengkang
Tampines East
The Frontier
The Serangoon
Thomson
Toa Payoh Central
Ulu Pandan
West Coast
Woodlands
Yew Tee
Yio Chu Kang
Zhenghua
23 Bukit Batok East Ave 4, S(659841)
10 Simei Street 2, S (529915)
35 Teck Whye Aveneue, S(688892)
180 Bedok Reservoir Road, S (479220)
1 Woodlands Street 31, S (738581)
1 Jurong West St. 74, S (649149)
45 Boon Keng Road, S (339771)
570 Havelock Road, S (169640)
278 Marine Parade Road, S (449282)
1 Pasir Ris Drive 4 #01-08, S (519457)
2 Sengkang Square, #01-01 Sengkang Community Hub, S (545025)
10 Tampines street 23, S (529341)
60 Jurong West central 3 #01-01, S (648346)
10, Serangoon North Ave 2, S (555877)
194 Upper Thomson Road, S (574339)
93 Toa Payoh Central, S (319194)
170 Ghim Moh Road #01-01, S (279621)
2 Clementi West street 2, S (129605)
1 Woodlands Street 81, S (738526)
20 Chua Chu Kang Street 52 #01-01, S (689286)
50 Ang Mo Kio Street 61, S (569163)
1 Segar Road, S (677638)
52
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2/29/2012
Filing a Return
To click
here
53
Filing a Return
Declare your selfemployed
income here
54
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2/29/2012
Filing a Return
To click
here
55
Filing a Return
Partner : To declare your share of partnership income
56
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2/29/2012
Filing a Return
57
Penalties
58
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2/29/2012
Penalties
Liable to:
No proper
record
keeping
A fine up to $1,000
and in default of
payment to
imprisonment for a
term up to 6 months
Records cannot be discarded
once Notice of Assessment is
received
Need to retain records for 5
years whether or not an
assessment was finalized
The Comptroller may request
documents in the course of
audit
59
Penalties
A fine up to $1,000 and in
default of payment
imprisonment for a term up to 6
months
Non –
submission of
income tax
return
Not submitted after conviction,
a further penalty of $50 for
each day return is outstanding
Penalties can amount to two
times the tax undercharged if
returns outstanding for 2 years
or more
60
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2/29/2012
Penalties
Penalties amount to
two times tax
undercharged, for errors
made due to negligence
or without reasonable
excuse
Furnishing an
incorrect return
Serious cases of
omissions or errors may
result in prosecution
61
Penalties
Penalty of 3 times
the amount of tax
evaded and fine up
to $10,000; OR
Tax evasion
Willfully
evades,
or assists
others to
evade
Imprisonment for a
term up to 3 years ;
OR
Fine and
imprisonment
62
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2/29/2012
Voluntary
Disclosure
63
Voluntary Disclosure
The IRAS Voluntary Disclosure Program help
taxpayers to come forward to disclose errors or
omissions made
Timely voluntary disclosures
made within a grace period
of 1 year from statutory filing
date
Voluntary
disclosures made
after grace period
Waiver of penalty
Reduced penalty of
5% p.a. for Income
Tax
64
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2/29/2012
For cases
already under
IRAS's query,
audit or
investigation,
taxpayers'
disclosure must
NOT be under
the scope of
query, audit or
investigation
Cooperation
received from
taxpayers to
correct
mistakes
made in the
past returns
Disclosures
must be made
BEFORE IRAS’s
commencement
of audit /
investigation or
letter of query
relating to his
assessment
Qualifying
Conditions
65
www.iras.gov.sg > About
IRAS > Taxpayer
Compliance > IRAS
program
Tel : 6351 3121
/ 6351 3122
Fax : 6351 4358
Email:
[email protected]
66
33
2/29/2012
THANK YOU
All policies presented at IRAS presentation on 29 Feb 2012 are
correct to the best of the speaker’s knowledge as at the date of
presentation.
However, IRAS reserves all rights to make changes in any of its
policies at any time and without further notification.
67
34

Tax Obligations of a Tuition Centre / Agency Operator

Transcription

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