LLP status and the third edition
The third edition dated 30 January 2026 explains LLP income tax and consolidates earlier guides. An LLP is a separate legal person under the LLP Act but is tax-transparent: the partners, not the LLP, are taxed on allocated income. Individuals use their personal rates and companies the corporate rate. Similar foreign LLPs deriving Singapore income receive the same treatment. Limited partnerships have a separate guide for their differences.
The deduction ceiling applies to other income
A partner’s LLP capital allowances (CA), industrial building allowances (IBA) and trade losses can offset other-source income only within the relevant deduction restriction. Current relevant deductions plus all past relevant deductions cannot exceed contributed capital. Other-source income includes the same LLP’s non-trade income, such as interest. Donations are outside this capital restriction. Deductions against future trade income of the same LLP are distinguished from deductions against other sources.
S$25,000 capital example
Company A has S$25,000 capital. YA 2024 allowances of S$18,000 and losses of S$3,000 use S$21,000 of the ceiling, leaving chargeable income of S$9,000 from S$30,000 other-source income. In YA 2025 only S$4,000 additional allowances can offset its S$18,000 other income. Chargeable income is S$14,000, while S$7,000 allowances and S$8,000 losses are carried forward subject to the applicable tests. The ceiling is cumulative, not renewed annually.
What counts as contributed capital
Capital comprises cash or in-kind contributions not directly or indirectly returned, plus the partner’s entitlement to past accounting profits left in the LLP. Loans advanced to the LLP do not count as capital. A promise to contribute later does not count until paid. In-kind contributions and services are valued at open-market value and documented in the partnership agreement. The retained-profit component follows accounting profit, not merely taxable profit.
Valuation evidence
An independent valuation report must accompany the income-tax return for the contribution year where the contribution is real property, shares or securities, or intellectual property exceeding S$500,000. Other in-kind contributions require a valuation report when requested by the Comptroller. Market-value support matters because the contributed-capital figure controls deductions against other income.
Withdrawals and deemed income
Withdrawing contributed capital or retained past profits, whether as a distribution or loan to the partner, reduces capital. Where past relevant deductions exceed reduced capital at the end of the basis period, the excess becomes taxable deemed income under section 10(1)(g). The same amount becomes deemed LLP trade loss, usable against that LLP’s profits and then carried forward if necessary. Reduce the past-deduction balance by the deemed-income amount for later ceiling calculations.
Carry-forward tests
Carry-forward CA and IBA require continuation of the same trade, business or profession; leaving the LLP forfeits those unused allowances. A corporate partner also needs the shareholding test for carried-forward allowances and losses: at least 50% must remain with the same persons on the comparison dates. Compare the last day of the allowance YA, or loss-incurrence calendar year, with the first day of the claim YA. Donations can be carried forward for up to five YAs without business continuity, but corporate partners still need the shareholding test.
Transfers and one-year carry-back
Current unused allowances, losses and donations may be transferred to qualifying related companies under group relief or to a spouse, subject to the statutory requirements and the capital restriction where applicable. Current allowances and losses may be carried back against the partner’s, or an individual partner’s spouse’s, immediately preceding YA assessable income after the specified existing deductions. Donations cannot be carried back. Carry-back remains subject to the relevant deduction restriction and the applicable business and shareholding conditions.
Moving an existing business into an LLP
An individual transferor must become a partner of the new LLP continuing the business to retain unused allowances. A corporate transferor must remain as a partner and satisfy the shareholding test; dissolution forfeits its allowances. Individual losses have no additional specific conversion condition, while company losses require the shareholding test. Donations retain their five-YA limit. A special exception forfeits allowances for a non-corporate transferor from a partnership business commenced before 1 January 1969, because section 35A(4) deems cessation.
Admission, retirement and departure
A partner change does not automatically stop every remaining partner’s business. Remaining partners can use old allowances against LLP income and then other income if the same business continues, with the capital restriction on the latter. Departing partners forfeit allowances but can retain unused losses against other income, subject to corporate shareholding conditions. Donations remain available for the remaining five-YA period, with the corporate shareholding condition.
Tax ownership and deemed asset sales
For allowance purposes, LLP business assets are treated as owned by its partners. Retirement transfers the departing partner’s entire share. Moving assets between LLPs or partnerships is a full transfer for a partner absent from the buyer, but a partial transfer where that partner continues in the buyer. A move to the same individual’s sole proprietorship leaves that individual’s own share unchanged; a move to another sole proprietor or company is a sale. A company selling to an LLP makes a full transfer, even where its shareholders become LLP partners.
Normal sale and section 24 election
A full sale normally produces seller balancing allowance or charge and buyer allowances based on purchase price. Eligible common-control parties can elect section 24(3) to transfer at tax written-down value, with no seller allowance or balancing adjustment for the sale YA and buyer allowances on that carried-over value. The guide explains that this election cannot apply to specified industrial-building transactions on or after 23 February 2010. Asset identity and eligibility must therefore be checked before choosing rollover.
Partial transfers and express refusal
For the specified partial transfers involving an individual, partnership or LLP, parties can elect rollover; absent an election, the Comptroller deems section 24(3) elected for administrative convenience. Express refusal instead triggers treatment as a sale to all remaining and new partners at open-market value, with old-partner balancing calculations and new-partner allowances. The summary table uses the higher of selling price and market value for the seller, capped at original cost. Deemed rollover is not the same as ignoring the transaction.
Deduction order and common assets
Annex 1 first applies earlier and current allowances against the same trade, with earlier YAs first. Aggregate remaining source incomes, apply excess allowances proportionately to other trade income and then non-trade income, and consider eligible transfers or carry-back before carry-forward. Losses follow, earlier same-trade losses first and then other sources; donations follow the remaining income with earlier donations first. Common assets serving taxable and exempt income require reasonable allowance apportionment generally matching the expense-allocation basis.
Thomas: increasing capital restores room
Annex 2 gives Thomas a 60% share and capital of S$50,000, S$50,000 and S$60,000. His first S$29,400 deductions are fully available. The next year permits S$20,600 more, leaving S$3,400 allowances and S$3,000 losses. In YA 2025, S$18,000 LLP profit absorbs allowances without the other-income restriction. S$9,400 further allowances and S$600 loss then use the additional S$10,000 capital room, leaving S$2,400 losses carried forward.
Sharon: falling capital causes clawback
Sharon’s 40% share has capital falling from S$40,000 to S$30,000 and then S$25,000. After S$19,600 initial deductions, only S$10,400 more is available in the second year. Past deductions of S$30,000 then exceed S$25,000 capital by S$5,000: that becomes taxable deemed income and matching LLP loss. The loss reduces S$12,000 LLP profit to S$7,000 before allowances; no further other-source deduction room remains, leaving S$14,600 allowances and S$2,000 losses carried forward.
Three asset-transfer illustrations
Annex 4 uses a S$30,000 asset with S$20,000 remaining tax value. With an overlapping partner and deemed rollover, the new LLP claims S$10,000 annually for two years, allocated 40%, 30%, 15% and 15%. A wholly different buyer paying S$15,000 produces S$5,000 seller balancing allowance, split 80:20, and buyer allowances of S$5,000 annually for three years. The company-to-LLP example contrasts an elected S$20,000 rollover against the S$15,000 price treatment, with buyer shares of 80:20.
Investment LLPs and section 10D
Section 10D applies where the LLP carries on investment-making. Annex 5 allocates 90% to Goodrich and 10% to Brodrick; Brodrick’s promised S$50,000 capital is not counted beyond his actual S$2,000. In YA 2024, excess CA after each partner’s rental share cannot offset other income or carry forward under section 10D. In YA 2025 CA first reduces rental income; remaining IBA is then restricted for other-source deductions, with Brodrick able to use only S$2,000. The section 10D restriction therefore operates alongside, rather than being replaced by, the capital ceiling.
Assigned interests, liquidation and residence
Assigning economic rights without ceasing to be a partner does not remove the original partner’s liability on LLP income. The assignee’s taxation depends on the arrangement, for example service income where rights remunerate services. During winding-up, partners remain assessed and the liquidator handles LLP tax compliance. IRAS does not certify treaty residence for the LLP itself, but a Singapore-resident partner may request a certificate in that partner’s own name.
Manager, annual return and supporting accounts
The manager can be an employee rather than a partner and is not automatically the precedent partner. Where no partner is personally present in Singapore, the manager takes the precedent partner’s return-filing role. The annual LLP return reports income and partners’ capital contributions. Below S$500,000 revenue, report revenue, gross profit, allowable expenses and adjusted profit or loss without submitting financial statements; at S$500,000 or above, submit statements certified by the precedent partner. Proper books remain required at every turnover level.
Official source
This article independently explains the substantive contents of the official PDF, including the relevant conditions, procedures and annexes. The linked document remains the authoritative source for its original wording, and later changes should be checked separately.
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