Basic Format of Tax Computation for an Investment Holding ...

1 Basic Format of Tax Computation for an I nvestment Holding Company (To be used as a guide only) Tax Reference No. : Name of Company : Year of Assessment (Note 1 ) : Basis Period (Note 1 ) : Statutory Expenses: S$ Investment Income: S$ - Audit f ee - Secretarial fee - Accounting fee - Income tax s ervice fee Total statutory expenses Ot her allowable expenses (Note 5 & 7) (restricted to 5% of [B]) Total common expenses .. [A] - Total dividends (Note 2) - Interest - Rent - Other inc ome (Note 3) Total inco me .. [B] Dividends Ot her C ountri es (Note 4) Less: Direct expenses (Note 6 & 7) Share of c ommon expenses [C/B x A] (N ote 8) S$ .. S$ .. [C] S$ .. Interest Less: Direct expenses Share of c ommon expenses .. Rent Less: Direct expenses Int erest expenses Property tax Insurance Repair and maintenance MCST management f ees Ot her expenses (please specify) Share of c ommon expenses.

2 Other i ncome (exclude foreign inc ome not remitted) Less: Direct expenses Share of c ommon expenses Total net Investment income Less: Approved donations (Note 9) .. Chargeable income before deducting exempt amount .. Less: Exempt amount (Note 10 & 11) First $10,000 @ 75% .. Next $290,000 @ 50% .. Chargeable income after deducting exempt amount .. Tax t hereon @ 17% Less: Foreign tax c redit (Note 13) Less: Corporat e income tax rebate (Note 12) Less: Tax deducted at source Net t ax payable/ (repayable) .. EXPLANATORY NOTES Companies which have been incorporated with the object of Holding investments and deriving Investment income are advised to prepare the tax Computation in the manner shown. of Assessment and Basis PeriodIncome is assessed to tax on a preceding year basis. The basis period for a Year ofAssessment (YA) is the financial year ending in the year preceding that YA.

3 The examplesbelow illustrate the concept of YA and basis period:a)If your financial year end is 31 Mar of each year, the basis period for YA 2018 is 1 Apr 2016 to 31 Mar )If your financial year end is 31 Dec of each year, the basis period for YA 2018 is 1 Jan 2017 to 31 Dec DividendsThe amount to be entered is the total dividends, including Singapore exempt dividends,foreign dividends not remitted to Singapore and foreign dividends that qualify for taxexemption. For details on tax exemption for foreign-sourced dividends, please refer to oure-Tax Guide Tax Exemption for Foreign-Sourced Income dated 31 May IncomeThese may include royalties and other foreign-sourced income not remitted to from Other CountriesEnter the taxable amount only. Do not include foreign dividends not remitted to Singaporeand foreign dividends that qualify for tax Allowable ExpensesThese include directors fees, salaries, CPF, office rental, office water and light, generalexpenses, administrative expenses and fund management ExpensesThese are expenses directly incurred to earn the income.

4 Only amount(s) attributable toincome-producing investments are SchedulesAttach supporting schedules showing your basis of arriving at the other allowable expenses(Note 5) and direct expenses (Note 6). of Common ExpensesThe common expenses are to be apportioned in the following manner: Investment Income x Total Common ExpensesTotal Income Share of common expenses attributable to foreign dividend income: Foreign Dividends [C] x Total Common Expenses [A] Total Income [B] EXPLANATORY NOTES DonationsFor donations made to approved Institutions of a Public Character (IPCs) and other approvedrecipients, times the amount of donations made will be given as a to the shareholding test, unutilised donations can be carried forward to offset against income of the company for subsequent years, up to a maximum of 5 years. For example, if the company as at the end of YA 2017 has remaining unutilised donations brought forward from YA 2012, these should be disregarded and not carried forward to YA more information, please refer to (Businesses > Companies >Working out Corporate Income Taxes > Business Expenses > Donations).

5 Tax ExemptionFor the YA 2018, partial tax exemption is given on chargeable income (excluding Singaporefranked dividends) of up to $300,000 as follows:First $10,000 @ 75%Next $290,000 @ 50%For more information, please refer to (Businesses > Companies > Learningthe basics of Corporate Income Tax > Corporate Tax Rates, Corporate Income Tax Rebates,Tax Exemption Schemes and SME Cash Grant). Exemption for New Start- up CompaniesNewly incorporated companies which qualify for tax exemption for new start-up companies, can claim tax exemption on their YA 2018 chargeable income of up to $300,000 as follows:First $100,000 @ 100%Next $200,000 @ 50%Please note that Investment Holding companies incorporated after 25 Feb 2013 are noteligible to claim the tax exemption for new start-up companies. The company will still enjoythe partial tax more information, please refer to (Businesses > Companies > Learningthe basics of Corporate Income Tax > Corporate Tax Rates, Corporate Income Tax Rebates,Tax Exemption Schemes and SME Cash Grant).

6 Income Tax (CIT) rebateAll companies will receive a 40% CIT rebate that is subject to a cap of $15,000 for YA 2018 and 20% CIT rebate that is subject to a cap of $10,000 for YA more information, please refer to (Businesses > Companies > Learningthe basics of Corporate Income Tax > Corporate Tax Rates, Corporate Income Tax Rebates,Tax Exemption Schemes and SME Cash Grant). Tax Credit (FTC)Amount allowable is the lower of the Singapore tax payable on the net foreign income or theforeign tax the FTC pooling system, the amount of FTC allowable is to be restricted to the lower oftotal Singapore tax payable on the foreign income under pooling and the pooled foreign taxespaid on those is not applicable for foreign-sourced dividends that are treated as exempt income inSingapore (Note 4).For more information, please refer to (Businesses > Companies > Working out Corporate Income Taxes > Claiming Reliefs > Foreign Tax Credit).

7 More information on preparing tax Computation for an Investment Holding company is available on (Businesses > Companies > Working out Corporate Income Taxes > Specific Industries > Investment Holding Companies).