Tax computation is a statement showing the tax adjustments to the accounting profit to arrive at the income that is chargeable to tax. Tax adjustments include non-deductible expenses, non-taxable receipts, further deductions, and capital allowances.
Companies should prepare their tax computations annually before completing Form C-S / C. Only companies filing Form C need to submit their audited/unaudited* financial statements, tax computation, and supporting schedules together with Form C. Companies filing Form C-S are still required to prepare their financial statements, tax computation, and supporting schedules and submit them to IRAS upon request.
Records and Accounts Keeping
Companies are required to keep proper records and accounts of business transactions. Using accounting software helps improve record-keeping and comply with tax obligations. Businesses can also use the information captured in the software to ensure that operations are effective and efficient. The IRAS’ Accounting Software Register lists the accounting software that is able to meet IRAS’ technical requirements and businesses considering using accounting software for record-keeping are encouraged to consider those in this list.
Necessity to Make Tax Adjustments
Your company’s chargeable income may be different from the net profit/loss shown in its financial statements.
This is because some of your company’s expenses may not be deductible for tax purposes. Similarly, some of the income received by your company may not be taxable, or it may not be taxed separately as a non-trade source income.
You may wish to claim capital allowance on your fixed assets or claim unutilized losses/capital allowances/donations brought forward from previous Years of Assessment (YA).