AC305 PRINCIPLES OF TAXATION Course Description and Scope This course is designed to provide the students with a working knowledge of the concepts, principles and applications of both Income Tax and Goods and Services Tax laws in Singapore. The emphasis of the course is on the taxation of business income, with the company as a model. The course will familarise the students with important tax concepts such as tax jurisdiction, residence, source of income, revenue versus capital receipts, deductibility of expenditure, availability of losses, relief from double taxation, distribution of business profits and the effect of Goods and Services Tax on businesses. Students are then taught specialized rules that apply to other categories of income and tax entities. At the end of the course, students are expected to understand the role taxes play in motivating people and institutions to engage in certain transactions or activities, and be able to generate tax information and use such information for business and financial decision making. Where relevant, the course will also deal with how the principles embodied in the Acts are varied by the practice of the Inland Revenue Authority of Singapore. The mathematical aspect of the taxes is important only insofar as, and to the extent, they illustrate the application of the principles. Wherever possible, opportunities for tax planning at a basic level will be discussed. The primary objectives of the course are to: Help students understand the structure of the Singapore tax system, interpret tax statutes and analyse tax cases; and Provide a framework for students to understand the importance of taxation in decision making process by businesses and individuals. In relation to Income Tax, the course is designed such that the primary focus will be on the taxation of companies including taxation issues of cross border trade and investments. The course will then deal with the taxation issues for individuals including employment and selfemployment income and reliefs for non-resident individuals. In relation to Goods and Services Tax (GST), the course will emphasis on the impact of GST on businesses and the circumstances under which a supply of goods or services is chargeable with GST. AC305/ATan/April 2001 AC305/Page 1
PROPOSED LECTURE SCHEDULE Week No. Topics Readings INTRODUCTION (2 hours) 1 1 LEGISLATIVE FRAMEWORK 1.1 History and legislative framework 1.2 Nature of tax 1.3 Sources of tax law 1.4 Interpretation of statutes and tax cases 2 BASIC TAX CONCEPTS 2.1 Types of taxpayers 2.2 Tax jurisdiction 2.3 Year of assessment and basis period 2.4 Residence 2.5 Source and territorial basis 2.6 Preceding year basis of assessment 2.7 Rates of tax 3 IMPORTANCE OF TAX IN DECISION MAKING AND INTRODUCTION TO ANTI-AVOIDANCE PROVISIONS TAXATION OF COMPANIES (14 hours) 2, 3, 4 4 INCOME 4.1 Jurisdiction to tax 4.2 Distinction between income and capital 4.3 Heads of income and source rules 4.4 Exemptions 5 DEDUCTIONS 5.1 Distinction between revenue and capital expenditure 5.2 Allowable expenses 5.3 Prohibited expenses 5.4 Special deductions 5.5 Further deductions 6 DONATIONS 5 7 WEAR AND TEAR ALLOWANCES 7.1 Industrial building & structure 7.2 Plant & machinery 7.3 Approved know-how and patents 7.4 Related party transfers 8 INVESTMENT ALLOWANCES CCH Ch 1 CCH: Ch 2 STW: Ch 1 ITA: S.2, 10, 35 CCH: 20 STW: 17 ITA: S.33 CCH: Ch 4, 6 STW: Ch 3 SCH ITA: S.10, 10F, 12(1), 12(4), 12(6), 12(7), 13, 35 CCH: Ch 7 STW: Ch 4 ITA: S.14, 14B, 14D, 14E, 14G, 14H, 15(1), 15(2), 15(3) CCH: Ch 8 STW: Ch 5 ITA: S.16-22, 24 CCH: Ch 19 STW: Ch 15 EEIA: S.66-74 AC305/ATan/April 2001 AC305/Page 2
Week No. Topics Readings 6 9 DETERMINATION OF INCOME TAX LIABILITY 9.1 New corporate tax regime 9.2 Relief for unabsorbed losses and capital allowances CCH: Ch 2, 9 STW: Ch 9 ITA: S. 23, 35(3), 37(2)(b)- (d), 37(2B) 10 DISTRIBUTION OF CORPORATE PROFITS 7 11 RELIEF FROM DOUBLE TAXATION 11.1 The meaning of received in Singapore 11.2 Double taxation agreements and treaty relief 11.3 Unilateral tax relief 11.4 Section 13E exempt dividends 8 12 TAXATION OF FOREIGN COMPANIES 12.1 Concept of Permanent Establishment 12.2 Deeming provisions 12.3 Withholding tax, approved foreign loans, section 13(4) exemption 12.4 Appointment of agents 9 RECESS TAXATION OF INDIVIDUALS (3 hours) 10, 11 13 TAXATION OF INDIVIDUALS 13.1 Residency 13.2 Self-employment 13.3 Employment income 13.4 Joint and separate assessment 13.5 Personal reliefs 13.6 CPF 13.7 Procreation rebates 13.8 Singaporean working overseas 13.9 Foreign employees working in Singapore CCH: Ch 10 STW: Ch 9 ITA: S. 44 CCH: Ch 14 STW: Ch 10 SEL2, SEL3 ITA: S.10(15), 13E, 48-50A CCH: Ch 13 STW :Ch 11 ITA: S.2, 12, 13, 43(1B) 45, 45A, 45B, 45D, 53, 56, 57 EEIA: S.57-60 CCH: Ch 5, 12 STW: Ch 6, 7, 8 ITA: S. 2, 10, 10C, 12(4), 13(5) & (6), 39, 40, 40B, 41-42A, 51 TAX ADMINISTRATION (1 hour) 11 14 ADMINISTRATION 14.1 Returns, assessments and appeals 14.2 Collection, recovery and repayment of tax 14.3 Offences and penalties 14.4 Powers of CIT CCH: Ch 17 STW: Ch 2 ITA: S.5-9, 63-106. AC305/ATan/April 2001 AC305/Page 3
Week No. Topics Readings GOODS & SERVICES TAX (2 hours) 12 15 GOODS AND SERVICES TAX 15.1 Scope of GST 15.2 Types of supplies 15.3 Definition of input and output taxes 15.4 Operation of the credit mechanism 15.5 Registration CCH: Ch 21 STW: Ch 19 GST: S.2, 3, 7-22, 24, 41 GST (General) Regulations 13 16 REVIEW FINAL Statutes ITA : Income Tax Act, Cap. 134, Revised Edition 1999 Income Tax (Amendment) Act 2000 (No. 24/2000) EEIA : Economic Expansion Incentives (Relief from Income Tax) Act, Cap. 86, Revised Edition 1996 Economic Expansion Incentives (Relief from Income Tax) (Amendment) Act 1996 (No. 36/1996) Economic Expansion Incentives (Relief from Income Tax) (Amendment) Act 1998 (No. 4/1998) GST : The Goods and Services Tax Act (Revised Ed. 1997) The Goods and Services Tax (Amendment) Act 1999 The Goods and Services Tax (Amendment) Act 2000 The Goods and Services Tax (General) Regulations (Revised Ed 1994) The Goods and Services Tax (General) (Amendment No.2) Regulations 1999 Basic Text Call No. CCH : Singapore Master Tax Guide Handbook HJ4772.S617 CCH Asia Pte Ltd, 2001 STW Singapore Tax Workbook HJ2950.67.S617 CCH Asia Pte Ltd, 2000 AC305/ATan/April 2001 AC305/Page 4
Other References COMPASS : Publications by Inland Revenue Authority of Singapore (IRAS) Call No. phj4772.i65 SCH : Soon Choo Hock SOA203 Taxation of Trade and Business Income SEL1 : Chapter 6 : Taxation of Business K1005.4S56L496 Legal Aspects of Doing Business in Singapore SOA 629 SEL2 : Michael Velten SOA 763 The Use of Holding Company Structures in Singapore SEL3 : Gurbachan Singh and Rema Shreedharan SOA 764 Singapore Extends Net TAX : Taxation & Levies Practice Guidelines rhf5616.s56s617 ICPAS Members Handbook Vol II Methods of Instruction Lectures : 2 hours per week Tutorials : 2 hours per week Lectures commence in Week 1 and end in Week 13 Tutorials commence in Week 2 and end in Week 14 Tutorials require application of theoretical knowledge from lectures, texts and reading. Students will have to complete the assigned readings prior to attending the tutorials so as to be able to contribute to the class discussion in a meaningful way. Course Assessment Class participation : 10% Quizzes : 15% Written assignment : 15% Final examination (open-book) : 60% Total 100% To earn marks for class participation, students are expected to actively participate in class. A consistently high standard of class participation and understanding of the subject is necessary for a good grade. Marks will not be awarded for mere presence in the class. The quizzes aim to assess on a timely basis the individual student s understanding of the topics and will be administered during the semester. The written assignment will be held in Week 10. More details will be given at the first lecture. AC305/ATan/April 2001 AC305/Page 5
The final examination of 3-hour duration will be an open-book examination. It will test students understanding of tax concepts and principles as well as the applications of both Income Tax and Goods and Services Tax laws covered in the course. Teaching Staff Staff Office Room No DID E-mail Address A/P Angela Tan * B3A-24 790-5719 apnchua@ntu.edu.sg A/P Moira Khaw B1C-116 790-4966 apgtan@ntu.edu.sg A/P (Adj) Lee Fook Hong B2A-15 790-5666 A/P (Adj) Sum Yee Loong - - Asst/P Poh Eng Hin O1C-85 790-6035 aehpoh@ntu.edu.sg Asst/P Tan How Teck B1A-11 790-4635 atanht@ntu.edu.sg * Course Co-ordinator AC305/ATan/April 2001 AC305/Page 6