Scope and historical edition
IRAS published this edition on 30 December 2020; the first edition appeared in November 2007. It addresses self-employed hawkers’ income tax records and reporting, rather than company taxation. The dates, submission thresholds, penalties and contact arrangements below describe this edition and should be distinguished from later rules. Its main obligations are five-year record retention, filing an income tax return, paying assessed tax within one month of the Notice of Assessment and making compulsory MediSave contributions where applicable.
Five-year records and simplified record keeping
Keep accounts supported by invoices, receipts, payment vouchers and statements for five years. Approximate totals without proper records are insufficient, although supporting documents are normally retained rather than sent to IRAS unless requested. The guide permits simplified record keeping only where revenue did not exceed S$200,000 in each of the preceding two financial years, assets were below S$100,000 at the latest year-end, the business was not investment holding or property development, and it was a non-GST-registered sole proprietorship or partnership. Qualifying businesses keep registers and listings without retaining the source documents under that simplified arrangement.
Record gross sales, including cash used for purchases
Put every cash sale through the cash register and retain its internal tapes. Transfer the day’s receipts to a cashbook; attach a written explanation to any tape that differs from the recorded amount. Without a cash register, use a daily sales book. If some takings are spent directly on ingredients or operating costs, record those sums as sales as well as the separate expense: revenue is gross takings before deducting expenditure, not the cash left at closing.
Stall subletting and supporting evidence
Include rent received from subletting the stall in revenue. Keep an agreement signed by both parties stating the tenancy period and rent. For expenses, retain the stall lease or NEA letter and GIRO bank evidence, property tax bills, mortgage bank statements, utility and business telephone bills, taxi receipts or diesel bills, wage vouchers or schedules, employer CPF statements and invoices for business assets. Where a receipt lacks a description, add the transaction details. Where a supplier issues no receipt, record the supplier’s name, date, goods or services and amount paid.
Bank accounts and certified accounts
Use separate business and private bank accounts, restrict the business account to business transactions, and retain statements or passbooks for both. At year-end, turn the records into accounts. A certified set contains a profit and loss statement and a balance sheet signed by the taxpayer to confirm accuracy. The profit and loss statement measures the year’s trading result, while the balance sheet records year-end assets, debts and invested funds. An accountant can prepare these statements, but tax reporting still requires removing non-deductible expenditure.
Assessment year and where income is reported
Income earned in 2020 is assessed in YA 2021. The first accounting period runs from business commencement to 31 December; subsequent periods follow the calendar year. Sole proprietors report trade income in the sole-proprietorship part of Form B. The precedent partner files the partnership’s Form P, while each partner reports their own share in Form B. A partner’s taxable share includes divisible profit or loss together with partnership salary, CPF, interest, rent and other Singapore income. The guide said to contact IRAS through myTax Mail if no return arrived by 15 March, rather than notifying IRAS immediately on opening a stall.
Two-line and four-line reporting
The four-line statement reports revenue, gross profit or loss, allowable business expenses and adjusted profit or loss. Revenue combines gross sales and stall rent; deduct ingredient cost to obtain gross profit, then deduct allowable operating expenses and capital allowances to reach adjusted profit. In this edition, revenue of S$200,000 or less qualified for the two-line version, reporting only revenue and adjusted profit or loss. Revenue below S$500,000 did not require accounts to be submitted unless requested; S$500,000 or more required certified accounts with the individual return.
Allowable running costs
Deduct expenses incurred wholly and exclusively to produce business income. The examples include stall rent, property tax and mortgage interest; business utilities, gas and telephone charges; conservancy and refuse fees; packaging, delivery and transport; assistants’ wages and bonuses, compulsory employer CPF, repairs, accountancy fees and upkeep of business pickups, vans or lorries. Asset purchases are dealt with through capital allowances where eligible rather than as an immediate ordinary expense.
Private and capital expenses that cannot be deducted
The guide excludes the proprietor’s own salary, bonus and CPF or MediSave contributions from business expenses; personal medical bills, income tax, insurance, donations, food, household costs and entertainment for friends or family are also excluded. Other examples are private borrowing interest, initial licence or registration and signboard costs, private-car maintenance, commuting from home, fines, depreciation and the purchase cost of fixed assets. A proprietor’s eligible CPF relief is considered separately from the business expense calculation.
Capital allowances for equipment and vehicles
The guide describes a one-year write-off for computers, fax machines and other automation equipment, plus low-value assets costing no more than S$5,000 each from YA 2013, with the low-value asset claim capped at S$30,000 per YA. Most eligible equipment can instead be written off over three years, excluding motor cars, motorcycles and light goods vehicles from that particular method. For qualifying vehicles using the working-life method, an initial allowance is 20% of cost, followed by annual allowances based on the remaining 80% divided by working life: six years for lorries, trucks and vans, and eight for motorcycles and bicycles. Private cars do not qualify.
Losses and business cessation
Allowable trade losses and capital allowances can offset other income in the same year, including employment, interest, dividend and rental income as applicable. Unused amounts can be carried forward to offset the next year’s income under the guide’s rules. If the business ends, the distinction matters: remaining trade losses may be carried forward, but remaining capital allowances cannot continue to be carried forward after cessation.
MediSave and personal CPF relief
For Singapore citizens and permanent residents, net trade income above S$6,000 annually triggers compulsory MediSave contributions at the prescribed percentage subject to a maximum. Net trade income is gross trade income after allowable expenses, capital allowances and trade losses. IRAS sends a Notice of Computation after assessment, and CPF Board handles payment matters. Personal relief for compulsory and voluntary CPF contributions is limited to the lower of the applicable mandatory-contribution amount based on net business income and the year’s CPF relief cap. It follows the contribution date: a 2020 contribution is considered for YA 2021, with relief normally granted automatically from CPF Board information.
Offences and penalties described in this edition
The guide gives up to S$1,000 for failure to keep records or file a return, with up to six months’ imprisonment in default of payment. An incorrect return without reasonable excuse can attract twice the undercharged tax plus a fine up to S$5,000, imprisonment up to three years, or both. Wilful evasion can attract three times the evaded tax plus up to S$10,000 and three years; serious fraud can attract four times the tax plus up to S$50,000 and five years. These are the penalties stated in the 2020 document, not a claim that every provision remains unchanged.
Voluntary disclosure and resolving errors
The Voluntary Disclosure Programme requires a timely, accurate, complete and self-initiated disclosure, full cooperation to correct errors, and payment or an honoured payment arrangement for additional taxes and penalties. Qualifying disclosures may receive reduced or waived penalties. For past intentional evasion, the guide describes possible composition at a reduced 200% penalty instead of prosecution; failure to qualify may lead to court proceedings. The services section points to secure myTax Mail, online or telephone help and visits by advance appointment; its listed hours and contact details belong to the publication period.
Appendices 1 and 2: sales and payroll registers
Appendix 1 provides a calendar grid with daily entries for each month, monthly totals and an annual grand total, ensuring gross sales are recorded consistently. Appendix 2 records each assistant or helper’s name and identity or work-pass number, wages, employee and employer CPF with totals, Skills Development Levy and Foreign Worker Levy. The payroll template separates these components instead of treating the cash wage as the entire employment cost.
Appendices 3 and 4: monthly expenses and ingredients
Appendix 3 groups monthly ingredient costs separately from running expenses, with rows for rent, property tax, utilities, gas, conservancy, refuse charges, transport, wages, employer CPF and other costs. Annual property tax may be recorded as one amount in the billing month rather than split into monthly portions. Appendix 4 records each ingredient purchase by date, supplier, ingredient description and amount, with a monthly total. It supports purchases even where ordinary supplier receipts are unavailable.
Appendix 5: turning the registers into a tax statement
The final template identifies the business, address and accounting period. It adds gross sales and stall rent to establish revenue, subtracts ingredient cost for gross profit, then lists each allowable running expense and capital allowance to calculate adjusted profit or loss. It includes a space for other expenses with their nature and breakdown, a four-line reporting summary, and the taxpayer’s name and signature. Maintaining the daily and monthly registers makes each figure in this signed annual statement traceable.
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.
Read the official PDF ↗