They say you can’t avoid death and taxes, but at least one can be helped with. In this issue, we get Low Shu Lee of Oriel Management Consulting Pte Ltd to lay down the basics of tax issues for companies, and answer reader questions.

What is the filing process like for companies here? – Ray Huang

All companies carrying on a trade or business in Singapore will need to submit their Income Tax Return (Form C) to IRAS annually to report their income, even if the company is making losses. The submission dateline for Form C for Financial Year Ending 2007 is 30 November 2008. Estimated Chargeable Income (ECI) is submitted within three months from the end of its financial year.

A complete set of Income Tax Return would consist of:

1. Form C
2. Audited/Unaudited Accounts
3. Tax Computation
4. Additional Information on Income and Deduction in Part VI to IX of Form C (Form IRIN 301)
5. Exempt Dividend Account (Form IRIN 306)
6. Schedule of Dividends/Interest/Trust Distribution Received and Tax Deducted (Form IRIN 307)
7. Details of Interest-Free/Subsidised Loans to Individual Directors/Shareholders (Form IRIN 312)

What should we remember in order to make sure our accounts are in order? – Li Wei Kim

Every company must maintain proper records of its financial transactions and retain the invoices, vouchers or other supporting documents. Good business records should include:
- A record of receipts and payments, or income and expenditure;
- The source documents to substantiate the entries in your records, such as vouchers, bank statements, invoices, receipts and other relevant papers;
- A record of the assets and liabilities of your business, including listings of your business debtors, creditors and cash/ bank account balances.

1 Five Useful Tips For Healthy Record Keeping:
- Set up a good filing system for your paperwork from the start. This will help you follow up overdue debts and know when your accounts are due to be paid. This will also help you manage your cash flow as well as facilitate locating of files and reconciliation of your business transactions.
- Make sure your records are clear and can be understood by anyone, not just yourself or your accounts personnel.
- Obtain the necessary source documents at the time of a transaction, not later. You will need the source documents to support your claims for tax deduction.
- It is a good habit to cross reference records. For example, record the cheque number on the invoice whenever you make any payment.
- Get into the habit of entering transactions regularly to keep your records up-to-date. Do not leave record keeping until the end of the year because the longer you wait, the more difficult it is to catch up and record the transactions accurately.

Are there any special exemptions and deductions we can use to our advantage? – Eldon Yap

You may refer to the various types of tax incentives available to companies provided in the Singapore Income Tax Act (ITA) and Economic Expansion Incentives Act (EEIA). You should contact a professional tax agent for specific exemptions and incentives pertaining to your industry.

Since YA 2005, a qualifying company can claim for full tax exemption on the first $100,000 of normal chargeable income (excluding Singapore franked dividends) for its first three consecutive YA.
Effective from YA 2008, a further 50% exemption is given on the next $200,000 on a qualifying company's normal chargeable income (excluding Singapore franked dividends). (Refer to Scheme Of Things for more on this exemption)

The exempt amount for each YA is summarised as follows:

Year of Assessment	Exempt Amount for new Start-up Companies
2005 – 2007	First $100,000 @ 100%	= $100,000
2008 onwards	First $100,000 @ 100%	= $100,000
	Next $200,000 @ 50%	= $100,000
	Total $300,000	$200,000

(Questions submitted by 360’s network of peers and contacts)

Oriel is a consulting boutique providing innovative and pragmatic solutions to today's business challenges, to help small businesses develop into tomorrow's business leaders. They have assisted many SME leaders address their business challenges which comprised product/service commercialisation, brand building and management, acquiring and assembling formidable management teams, establishing scalable business systems, and procuring financing from capital providers, with an ultimate goal of delivering long-term sustainable growth in sales, profitability, and cash flow. You are welcome to visit Oriel at www.orielgroup.com