Historical scope and core obligations
Published on 30 December 2020, this guide covers sole proprietors and partners providing hairdressing, beauty, slimming, spa, manicure, pedicure and related services. It requires five-year records, tax filing, payment within one month of assessment and applicable MediSave. Its introduction states a historical rolling-twelve-month GST registration test; this article preserves the document’s identity rather than presenting that old wording or FRS 18 reference as an updated statement of all current rules.
Records and simplified eligibility
Keep bank, revenue, purchase, expense, asset and stock records supported by source documents. Estimates without proper evidence are insufficient. Simplified record keeping requires revenue of S$200,000 or less in each of the prior two years, latest year-end assets below S$100,000, no investment-holding or property-development business, and non-GST-registered sole-proprietorship or partnership status. Qualifying businesses still keep registers and listings, though the simplified system relaxes retention of source documents.
Sales, receipts and customer documentation
Use cash-register tapes, invoices and complete sales records; explain discrepancies in writing. The guide requires serial receipts above S$18,000 goods income or S$12,000 services income, but permits specified complete register, software-invoice or daily-book alternatives. Receipts remain required on request and GST tax-invoice duties remain separate. Credit-sale invoices identify parties, registration number, date, number, description, quantity or service extent, price, discounts and total. Record returns by credit note or separate sales adjustment, and private stock taken for family or friends at selling price in sales.
Treatment packages and training fees
Each package customer should have a card recording identity and address, service description, price, session entitlement and use or acknowledgment. Under the guide’s FRS 18 discussion, recognise package income by sessions used at the balance-sheet date, defer unused sessions, and recognise expired unused treatments when validity ends. Upfront cash or instalments do not by themselves mean all services were delivered. Training receipts record business details, trainee, course, date and fees; training fees and deposits become income once the course begins.
Purchases, commissions and business-bank separation
Prefer a separate business account; otherwise distinguish every private and business transaction. Obtain purchase invoices, annotate incomplete receipts, or prepare a supplier-acknowledged cash voucher and purchase log where no receipt exists. Entertainment needs invoices or receipts, not card slips alone. Keep payroll, CPF and phone evidence. Non-employee trainers, beauticians or masseurs receiving commissions should receive annual or monthly statements listing identity, amount, description and period to support their own reporting.
Assets, stock and certified accounts
For every asset retain purchase and sale dates, costs, proceeds and contracts, including hire-purchase terms. Count stock physically at year-end; closing inventory becomes next year’s opening inventory. Certified accounts comprise a profit and loss statement and balance sheet signed by the proprietor or precedent partner as accurate. The guide allows professional preparation, but tax adjustments still remove private and capital expenses.
Periods, forms and reporting thresholds
Income is assessed the following year: 2020 income was reported for YA 2021. A non-calendar year may apply; the example’s 1 April 2016–31 March 2017 period relates to YA 2018. Sole proprietors use Form B’s trade section, or the specified Form B1 other-income details; the precedent partner files Form P and partners report their own shares including allocated remuneration and other partnership income. The four-line report contains revenue, gross profit, allowable expenses and adjusted profit. This edition says sole-proprietorship revenue below S$200,000 uses two lines, while S$500,000 or more requires certified accounts submitted with the return.
Revenue and cost of goods
Include product sales, service fees and commissions, training fees and utilised package income. For a GST-registered business exclude output GST from revenue and relevant input GST from purchases and expenses. Gross profit is revenue less opening stock plus purchases minus closing stock; a services-only business may have gross profit equal to revenue. The example has S$30,000 revenue, S$10,000 opening stock, S$5,000 purchases and S$7,000 closing stock: cost is S$8,000 and gross profit S$22,000. Adjusted profit subtracts allowable expenses and capital allowances.
Allowable employee and operating expenses
Expenses must be wholly and exclusively income-producing. Examples include employee pay, commission, bonuses, statutory employer CPF, retrenchment benefits, employee insurance, and medical costs within the stated 1% remuneration limit or 2% under qualifying portable or transferable schemes. Rent, utilities, telephone, stationery, postage, advertising, business repairs, public-transport business travel, business borrowing and hire-purchase interest, accounting and trade-debt or lease-renewal legal fees may qualify.
Excluded private and capital items
Do not deduct employer CPF above statutory limits, medical costs above the relevant cap, the proprietor’s own pay, CPF, drawings, medical costs, income tax or private insurance and donations. Private food and entertainment, initial licences and registrations, private-car ERP, fuel and parking, commuting, capital purchases and accounting depreciation are excluded. Renovation costs require a qualifying section 14Q claim rather than automatic deduction. Loan principal, new-lease legal and stamp costs, fines and capital withdrawals are also excluded.
Capital allowances and ordinary purchase example
Computers and automation equipment can qualify for one-year write-off. Low-value assets costing no more than S$5,000 each have a combined S$30,000 per-YA one-year cap. Most other assets can use three years, excluding cars, motorcycles and light goods vehicles of 3,000 kg or less. A S$3,000 air conditioner bought in 2020 produces S$1,000 in each of YA 2021–2023. Working-life vehicles receive 20% initial allowance and remaining 80% across prescribed life, six years for motor vehicles and eight for motorcycles; private cars do not qualify.
Hire-purchase: principal and interest separated
Capital allowances follow eligible principal payments, not hire-purchase interest, which is considered separately as an expense. A S$3,000 computer has S$300 downpayment and S$600 interest across twelve S$275 instalments. Four first-year payments give S$1,200 principal after deducting S$200 interest; eight second-year payments give S$1,800 after S$400 interest. One-year treatment gives allowances S$1,200 in YA 2021 and S$1,800 in YA 2022, fully exhausting cost. The document’s sentence saying no allowance “from YA 2021” after those two years is inconsistent with its table; the amounts show cessation after YA 2022.
Hire-purchase over three years and losses
For the same S$3,000 air conditioner on hire purchase, spread S$1,200 principal over three years at S$400, then S$1,800 at S$600 over the next three-year span. Combined allowances in YA 2021–2024 are S$400, S$1,000, S$1,000 and S$600. Unused losses and allowances can offset other income or carry forward, but capital allowances cease to carry forward when the business ceases. The guide also describes one-YA carry-back of current unused losses and allowances, subject to the separate carry-back rules.
MediSave, penalties and voluntary disclosure
Citizen or PR self-employed persons with net trade income above S$6,000 must contribute MediSave under the applicable capped rates; IRAS assesses and CPF Board handles payments. Personal CPF relief follows actual contribution year and the lower mandatory-income-based amount or relief cap, normally automatically. Historical penalties include up to S$1,000 for records or filing failures; twice undercharged tax plus S$5,000 or three years for incorrect returns; three times evaded tax plus S$10,000 or three years for evasion; and four times plus S$50,000 or five years for serious fraud. VDP needs timely, complete, accurate self-initiated disclosure, cooperation and honoured payment arrangements; intentional evasion may qualify for 200% composition instead of prosecution.
Appendices 1–5: operating evidence
Daily transport and monthly travel registers record date, purpose, destination, mode, person and amount, with travel duration where relevant. Entertainment logs identify guests and business purpose. Payroll records distinguish remuneration, employer CPF, SDL and FWL, excluding owner salaries. The consolidated monthly expenses register connects these categories to annual accounts. Their sample rows do not make private-car or personal costs deductible, and entertainment still needs actual receipts.
Appendices 6–9: assets, inventory and final accounts
The asset schedule records cost, depreciation, net book value, disposal date, price and gain or loss; accounting depreciation is not itself the tax allowance. The stock schedule multiplies units by cost and permits average cost from opening stock and purchases. The profit-and-loss template connects revenue, cost of goods and expense categories, with preparation and certification signatures. The balance sheet distinguishes current and non-current assets and debts, capital, retained profits, current profit and drawings; total assets must equal liabilities plus proprietor’s funds.
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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