ACCT223 Taxation Course Outline 2014/2015 Term 1 A. Instructor and Contact Information Assoc Prof. Khoo Teng Aun Room 5036, School of Accountancy Singapore Management University 60 Stamford Road Singapore 178900 Tel: (65) 6828-0170 Fax: (65) 6828-0600 Email: takhoo@smu.edu.sg Consultation times in person: Monday and Tuesday 10:30am -11:25am and by appointment at any other times Consultation by email - anytime B. Course Prerequisites Students are presumed to have the basic knowledge in financial accounting i.e. ACCT101, 103 or 111. Knowledge of management accounting, finance, economics and companies and business law would be useful for this course. C. Course Description This course aims to impart knowledge and understanding in the workings and basic principles of income tax and GST in Singapore. D. Learning Goals, Course Objectives and Skill Developments This course develops students understand of and ability to apply tax principles and requirements relevant to individuals and business entities. Students are expected to demonstrate the following technical competencies upon successful completion of this course: 1. Identify tax issues; 2. Understand of tax law and practices; and 3. Compute tax liabilities and/or evaluate tax alternatives to maximize taxpayer s net cash flow. E. Learning Approach The pedagogical approach to this course consists of three major elements: Instructor-facilitated Learning: Explanation, Facilitation, Clarification, Synthesis and Analysis Individual Learning: Preparation, Analysis, Discussion, Understanding and to compare and contrast Collaborative Learning: Teamwork, Class discussion between peers. The role of the instructor is to facilitate, explain and clarify tax concepts. Students are reminded that their individual contribution to learning starts before class. Students should prepare by pre-reading, analysing the materials to be covered before coming to class and actively participate in class discussions. Before class preparation is the key for better and faster understanding of tax concepts and principles. ACCT223 Taxation AY2014/2015 Term 1 Page 1
Collaborative learning elements are developed through your contribution to your classmates learning experiences through teamwork in your group project and/or being willing to contribute to class discussions. Naturally, your individual preparation, analysis and action will determine how much you are able to contribute to collaborative learning. F. Textbook and Other Resources Required Readings Publisher 1 Singapore Tax Workbook Sum Yee Loong 17 th Ed CCH 2 Singapore Income Tax Act CCH / Lawnet 3 Singapore Goods & Services Act CCH / Lawnet 4 Relevant IRAS E-guides IRAS website Others 1 Singapore Master Tax Guide 2014 33 nd Ed CCH 2 Singapore Budget Commentary 2014 Deloitte & Touche 3 Singapore Budget Commentary 2014 Ernst & Young 4 Singapore Budget Commentary 2014 KPMG Singapore 5 Singapore Budget Commentary 2014 PWC Singapore 6 Malaysia and Singapore Tax cases CCH 7 Relevant Tax Cases Lawnet Databases 1 Singapore Master Tax Guide SMU Library Databases 2 Singapore Good and Services Guide SMU Library Databases G. Lesson Plan Class sessions are of 3-hour duration and will include seminars, class discussions and other learning activities. Course materials will be published in SMU elearn (https://elearn.smu.edu.sg). A brief outline of lesson plan is provided below. The detailed course work plan is shown in Annex 1. Basic Tax concepts Taxable and Non-taxable / exempt Income Expenses deductible and non-deductible Capital Allowances, Writing-Down allowances Personal Reliefs & Computation of Individual Tax Taxation of Partnership Taxation of Non-residents Taxation of Companies - Carry Forward Unabsorbed Capital Allowances, Unabsorbed Losses and Unabsorbed Donations and carryback of current Unabsorbed Capital Allowances, Unabsorbed Losses (for companies) Group Relief Tax Administration Goods & Services Tax H. Assessment To pass the course, a student is required to obtain a TOTAL mark of 50% or better. The assessment components are listed below: Participation (13%), Progress Assessments (27%), Group Project (10%) and Final Examination (50%). 1. Class Learning Activities i.e. participation (13%) Students are strongly encouraged to come well prepared and actively participate in class discussions. Students will be graded on an individual basis based on their contributions to the class discussions. In this respect, students should come well prepared for every seminar in this course. A short quiz will be held to evaluate whether students read up beforehand. Refer to Annex 2 for grading guidelines. ACCT223 Taxation AY2014/2015 Term 1 Page 2
2. Progress Assessments (27%) (a) Accounting assignment 3 (b) Quizzes (8 online quizzes, each quiz ½ mark) 4 (c) Test (17 Oct 7pm 9pm) The test will cover up to the topic on individual Open* 20 * with Acts and 1 A4 size cheat sheet to be used double-sided 3. Group Project (10%) A group project will be set relating to a case study. The project to be done in groups of 4 and must be submitted by the Monday 10 Nov 2014. Refer to Annex 3 for additional details on the group project. 4. Final Examination (50%) The final examination will be on 4 Dec 2014 and will last for 3 hours. The exam will consist of essay type and computational questions. ** Open book exam with conditions (i.e. only the following may be used): 1. Income Tax Act; 2. GST Act; 3. 1 A4 size cheat sheet to be used double-sided The Acts may be highlighted and tagged but nothing is to be written on the Acts. There will be a workshop on Saturday 4 October. There will be 2 sessions as follows: morning session starts from 9:30am to 12:30pm and afternoon session starts from 1:30pm to 4:30pm. You need to attend either the morning or afternoon session not both Academic Integrity All acts of academic dishonesty (including, but not limited to plagiarism, cheating, fabrication, facilitation of act of academic dishonesty by others, unauthorised possession of exam questions or tempering with the academic work of other students) are serious offences. All work (whether oral or written) submitted for purposes of assessment must be the student s own work. Penalties for violation of the policy range from zero marks for the component assessment to expulsion, depending on the nature of the offense. When in doubt, students should consult the instructors of the course. Details on the SMU Code of Academic Integrity may be accessed at http://www.smuscd.org/resources.html Prepared by: Khoo Teng Aun, 12 July 2014 Approved by: Associate Dean, Seow Poh Sun, 5 Aug 14 ACCT223 Taxation AY2014/2015 Term 1 Page 3
ANNEX 1 Week Topics ITA Section 1 /2 1 INTRODUCTION 1.1 Historical background and legislative framework 1.2 Types of taxes 1.3 Framework of the course 1.4 Tax jurisdiction 1.5 Territorial and worldwide basis of taxation 1.6 Charging Section 10(1) 1.7 Year of assessment and basis period 2, 35(1) & (4) 1.8 Tax residence 2 1.9 Taxable persons 2 1.10 Accruing in or derived from Singapore (source) / Received in 10(1), 10(25), 12(5) Singapore 1.11 Tax rates resident individual / company Non-resident individual / company Marginal tax rates vs effective tax rates 42(1), 43(1), 40(2) 2 nd Sch Part A 1.12 Full & partial tax exemption 43(6) 1.13 Statutory, Assessable & Chargeable Income 35, 37, 38 1.14 Companies Tax Template 2 /3 2 INCOME 2.1 Income vs capital gains 2.2 Badges of Trade 2.3 Trade, business and profession 10(1)(a) 2.4 Employment vs Profession Benefits-in-kind Stock Options (exclude ERIS) 10(2), (6), (7),(14) 12(5), 13(6) 2.5 Dividends and interest 10(1)(d) 13((1)(zd) 2.6 Rent and royalty 10(1)(f) 2.7 Tax exempt income 13, 13(7A) 4/5 3 DEDUCTIBLE EXPENSES 3.1 Distinction between revenue and capital expenditure 3.2 Prohibited expenses 15 3.3 Tax deductible expenses 14 3.4 Interest expense & borrowing costs 14(1)(a) 3.5 Pre-Commencement expenses / Enterprise Development 14U Concession 3.6 Special deductions Patents, R & D, Renovation and Refurbishment (R &R) 14A, D, DA, Q 3.7 Further deductions 14B, 14E, 14L 3.8 Productivity and Innovation Credit (PIC) related to revenue expenditure 3.9 Cash payout / PIC Bonus / PIC + 37I, 37IA, 37IC 3.10 Donations 37(3) 14A, 14D, 14DA, 14R, 14S, 14T, 14W ACCT223 Taxation AY2014/2015 Term 1 Page 4
Week Topics ITA Section 6 4 CAPITAL ALLOWANCES (CA) / WRITING DOWN ALLOWANCES (WDA) 4.1 Plant & machinery (P & M) Balancing adjustments 19, 19(A) 20 4.2 Replacement of P & M 21 4.3 Related party transfers 24 4.4 PIC related to P& M (CA) and IPR (WDA) 19A & 19B 7 5 INDIVIDUALS & PARTNERSHIPS 5.1 Personal reliefs e.g. CPF, wife, children. parents & SRS etc. 2, 39, 5 th Schedule 5.2 Children of Family rebates 42A 5.3 Determination of Partners' share of divisible and adjusted profits/losses 8 RECESS 9 6 TAXATION OF NON-RESIDENTS 6.1 Deeming Source provisions 12(6)-(7) 6.2 Exclusion to deeming provisions 12(6A)-(7A) 6.3 Withholding tax 45-45GA 6.4 Reliefs for non-residents employees / SRS s40b and s40c 40B & 40C 6.5 Non-resident professional and public entertainers 40A 10 7 TAXATION OF COMPANIES 7.1 One-Tier Corporate Tax System 7.2 Carry forward of unabsorbed capital allowances, losses and donations. / Substantial Shareholders Test (SST) 7.3 Group Relief System 37C 7.4 Carry back of unabsorbed capital allowances and trade losses 37E and Substantial Shareholders Test 23(1), (4), (7) 37(12),(14) 11 8 GOODS & SERVICES TAX GST Act 8.1 Overview & Charging Section 8, 10 8.2 GST Registration 9, 1 st Schedule 8.3 Types of supplies and deemed supply 10, 2 nd & 4 th Schedule 8.4 Time, Place and Value of supply 11-13, 15-18 8.5 Zero-rating for exports and international services 21 8.6 Reimbursements or disbursements 8.6 Accounting Period for GST GST General Reg 52 8.7 Offences & Penalties 58-67 12 9 TAX ADMINISTRATION ITA 9.1 Returns 62, 63 9.2 Assessments 72, 73 9.3 Appeals 76-84 9.4 Collections 85 9.5 Offences and Penalties 87, 94-96A 9.6 Record Keeping 67 9.7 Others 68 13 REVIEW & DISCUSSION OF EXAMS OPTIONAL QUESTIONS ACCT223 Taxation AY2014/2015 Term 1 Page 5
ANNEX 2 Grading Policies on relating to Class Learning Activities (10%) Class learning activities (or Class Participation ) are an integral pedagogical approach in SMU. The importance of class interaction is enshrined in the SMU Mission Statement: Delivering an interactive, participative and technologically-enabled learning experience. It is also one aspect of assessment that often causes discomfort to some students due to its potential ambiguity. This grading policy on class learning activities intends to give you some indication on how you will be assessed. Grading Your Class Learning Activities grade will reflect your assessment of your peers level of Individual Learning (Preparation, Analysis, Action) having a positive impact on Collaborative Learning (Team Work, Discussion and Sharing), and your overall level of professionalism. Thus, ill-prepared blabbering is inappropriate, neither does hijacking the airwaves without due consideration of others. Outstanding Performance (As, about 80-100) Demonstrates excellent preparation; successfully completed all pre-class and post-class quizzes; and consistently exhibits knowledge of assigned content. Brings up questions that need further exploration; consistently offer analysis, synthesis and evaluation of course materials and/or cases; responds very thoughtfully to other students' comments; and usually generate the flow of ideas brought forward in class discussions. Ability to apply, analyse, evaluate and integrate course materials; and shows a willingness to take risk in attempting to answer difficult questions; Demonstrates ongoing very active involvement, with energy and interest in the subject matter. Good Performance (Bs, about 65-79) Demonstrates good preparation; successfully completed majority pre-class and post-class quizzes; and exhibits knowledge of assigned content. Contributes well to class discussions; responds to other students' points; thinks through own points, questions others in a constructive way; and offers arguments on ideas brought forward the majority opinion. Ability to analyse and apply course material; and shows a willingness to attempt to answer questions; Demonstrates on-going involvement, with interest in the subject matter. Average Performance (Cs, about 55-64) Demonstrate some preparation occasionally; attempted some pre-class and post-class quizzes; and exhibit some knowledge of assigned content. Participates in discussion when solicited; shows some knowledge of course materials; offers input, but tends to reiterate the intuitive; reluctant to share information; and sometimes follow the flow of ideas brought forward in class discussions. Attends class regularly; and demonstrates some interest in the subject matter Poor Performance (Ds or Fs, less than 55) Demonstrate very minimal preparation; little or no successful attempts at pre-class and post-class quizzes, and exhibit the big sponge mentality ( You can contribute to MY learning but I won t contribute to YOURS ) Failed to participate even when solicited; shows very minimal knowledge of course materials; offers input but often irrelevant or unrelated; and usually do not follow the flow of ideas brought forward in class discussions. Attend classes but remain passive or disruptive throughout ACCT223 Taxation AY2014/2015 Term 1 Page 6
ANNEX 3 Group Project (10%) preferably not more than 4 persons in a group. The project will be to develop a strategy for resident companies to remit foreign income back to Singapore. Further details will be provided at a later date. Grading Your Group Project grade will reflect my assessment of your level of research, critical analysis and conclusions. Your ability to convey what you have analysed into a meaningful, well-structured, wellpresented report will be evaluated. This is a shared grade amongst the group members, unless there are indications of a non-functioning group where other allocation basis may then be applied as appropriate. Groups having insurmountable conflicts are advised to get in touch with me as soon as possible. Recap of important elements of a desirable group project report: Structure: A cohesive structure that flows logically from one section to another, demonstrating a holistic understanding of the overall purpose of the report rather than piece-meal, point-by-point answers to a series of questions. A proper executive summary that summarises your report, not an executive agenda. An introduction that explains to the intended reader of your scope, agenda, approach, assumptions, etc. Good, clean and consistent formatting, appropriate spacing, consistency of styles, and good English expressions, adherence to grammar and sentence structure. Properly-cited references that demonstrate an attempt to learn beyond the course materials. A valid, coherent conclusion. Analysis: A comprehensive assessment of all relevant information at a level appropriate for the course, based on the prescribed methodology. Exhibit sufficient level and depth of analysis. Appropriate use of summary tables, charts, figures, appendices, etc to illustrate your findings and analysis. Technical proficiencies (calculations) are assumed, unless your report casts doubts of your ability. Your Group Project Report grade will be based on the elements listed above. The grades below are out of 10 points assigned to this component of assessment. A+ [about 90-100] = truly exceptional report exceeding expectation. A and A- [about 80-89] = excellent report, meeting significant majority of the above requirements Bs [about 70-79] about = good effort, meeting most of the above requirements Cs [about 60-69]= commendable attempt, but lacking in many areas Ds/Fs [about 0 to 55] = extremely poor effort ACCT223 Taxation AY2014/2015 Term 1 Page 7