As we reach the midpoint of the financial year, it’s an opportune time for small business owners in Singapore to review their tax strategies and financial position. By implementing smart tax planning measures now, you can optimise your tax situation and set your business up for success in the coming months. Here are key tax planning strategies to consider:
Review your fixed asset purchases for the year. For assets acquired in 2023, you can claim 100% write-off for those costing up to S$5,000 each under the Small Value Assets provision. For costlier assets, consider using the Accelerated Capital Allowance scheme, which allows for full write-off over two years instead of three.
If you’ve incurred expenses for international expansion, such as overseas business development or investment study trips, you may qualify for 200% tax deduction under the DTDi scheme. This scheme has been extended until 31 December 2025.
Identify any bad debts that are unlikely to be recovered. Ensure you’ve taken reasonable steps to recover the debt and properly document these efforts to support your write-off claims.
Consider delaying billing for December services to January if your cash flow allows. Similarly, pay deductible expenses before year-end to claim them in the current year. However, ensure this aligns with your company’s accounting method (cash or accrual basis).
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Donations to approved Institutions of Public Character (IPCs) qualify for a 250% tax deduction. This enhanced tax deduction has been extended until 31 December 2026.
If you’re a sole proprietor or partner, consider making SRS contributions. These are tax-deductible up to $15,300 for Singapore Citizens and Permanent Residents.
Assess if your current business structure is still optimal for tax purposes. Small companies with annual revenue not exceeding $5 million can benefit from the partial tax exemption scheme.
Don’t forget to claim deductions for qualifying renovation and refurbishment expenses under Section 14N of the Income Tax Act. The cap is $300,000 for every relevant 3-year period.
Expenses incurred for employee training are generally tax-deductible. This includes both in-house and external training costs.
Conduct a thorough review of your finances now. Analyze income, expenses, and tax positions year-to-date. This proactive approach helps identify issues early, allowing time to adjust strategies and implement tax-saving measures. Start organising financial documents to streamline your eventual tax filing process.
Remember, tax laws can be complex and change frequently. While these strategies can be beneficial, it’s always advisable to consult with a qualified tax professional to ensure they’re appropriate for your specific business situation.
By implementing these year-end tax planning strategies, you can potentially reduce your tax liability and start the new year on a stronger financial footing. Don’t leave money on the table – start your tax planning today!
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