Budget 2021 Corporate Tax Highlights

September 3, 2021

Extension of Job Support Scheme (JSS)

Firms in Tier 1 (Aviation, Aerospace, etc.) and 2 (Food Services, Retail, Marine and Offshore, etc) sectors will have the support of JSS covering wages paid up to September 2021.  

As JSS grants are tax exempt, businesses would do well to track the receipts so that these can be adjusted for in their tax returns.  This especially for cases where the JSS receipts are accounted for as a reduction or a credit to the wages or salaries expense accounts.
 

Extension of Enhanced Carry-back Relief

As announced in Budget 2021, the enhancements have been extended to Year of Assessment (YA) 2021.  Broadly, businesses may subject to conditions, elect to carry back unutilised CAs and trade losses (qualifying deductions) from YA 2021 up to three YAs immediately preceding YA 2021 (i.e. YA 2018, YA 2019 and YA 2020).  Qualifying deductions are capped at S$100,000.

 

In deciding whether to elect for the carry-back relief, businesses should consider matters such as:

    • the benefit of receiving tax refunds arising from the carry back relief;
    • their future projected profitability; and 
    • the fact that there were corporate tax rebates in the prior YAs.  The tax exemption schemes (partial and for new startup companies) in the prior YAs also tend to be more generous relative to the current and possibly future positions.  If this is a consistent trend, future utilization of tax loss items may result in greater tax savings. 

 

Extension of option to accelerate the capital allowance claims on plant and machinery

Extension of option to accelerate the deduction for renovation and refurbishment (R&R) expenses

The option applies to the acquisition of qualifying capital expenditure incurred in the basis period for YA2020 and YA2021. Under this option, businesses can claim 75% of qualifying costs incurred in the first year and the remaining 25% in the second year.  The capital allowances cannot be deferred if this option is elected.

For qualifying R&R expenses incurred in the basis period for YA2020 and YA2021, businesses have the option to claim the R&R deductions in one YA. Qualifying R&R expenses are subject to an expenditure cap of S$300,000 for every relevant 3-year period.
 

Enhancement of the Double Tax Deduction for Internationalization (DTDi) Scheme

The DTDi scheme has been enhanced to cover specified expenses incurred in relation to the participation of approved virtual trade fairs.  This had only applied to physical trade fairs in the past.

The list of qualifying expenses for overseas investment study trips / missions has been expanded to include logistic costs to transport materials / samples used during investment trips / missions subject to Enterprise Singapore’s approval.  

Apart from this, the scope of qualifying activities which do not require prior approval from ESG or STB has been enhanced to cover additional activities (e.g. overseas advertising and promotional campaign, design of packaging for overseas markets etc.) up to the current annual expense cap of S$150,000.

Businesses could consciously identify such qualifying expenses upfront and classify them in specified account codes to allow for ease of claims in their tax returns.