Can Legal Fees Be Deducted From Taxes – Medical expenses incurred by employees are tax deductible as long as they are limited to 1% of the employee’s total compensation earned during the year. See Example 1 (PDF, 56 KB) to see how the medical expense limit applies.
If your company makes ad-hoc contributions to its employees’ MediSave accounts through the CPF Board’s MediSave Additional Contribution Scheme (subject to a limit of $2,730
Can Legal Fees Be Deducted From Taxes
Per employee per year), will also enjoy the additional tax deduction beyond the limit of 1% on the amount of MediSave ad-hoc contributions made, up to the upper limit of tax deduction for medical expenses of 2%. This is even if the company does not adopt any of the portable medical benefits arrangements. See Example 2 (PDF, 56 KB) for an illustration of the tax deduction allowed in this scenario.
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If the medical expenses (including user premiums) do not exceed 1% of the employees’ total compensation during the relevant base period, the full amount of the medical expenses is deductible.
If medical expenses (including rider premiums) exceed 1% of total employee compensation during the applicable base period, any excess amount not related to rider premiums is deductible up to a further 1% of the total remuneration of the employees for the corresponding base period.
Effective January 1, 2018, the limit has been increased from $1,500 to $2,730 per employee per year. This is to encourage companies to make more contributions to their employees’ MediSave accounts for their medical needs.
To arrive at “total employee compensation” for the purpose of calculating the medical expense limit, your company does not need to reduce the amount of compensation by the amount of payments it receives from the government (such as wage credit, employment, special employment). Credit, Payroll, Absenteeism and Government Paid Child Care/Maternity/Paternity Leave).
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A company incurred $100,000 in employee salaries, allowances, bonuses and CPF contributions and received $5,000 from the government for government-paid maternity leave for its affected employees.
Medical expenses in excess of the maximum allowable amount (ie 1% or 2% of the employees’ total remuneration) are treated as income and taxed at the Corporation Tax rate in force when the company obtains business income exempt from tax or subject to tax at a concessionary rate (for example, pioneering companies, companies that are granted certain incentives).
Motor vehicle expenses incurred on goods and commercial vehicles such as vans, trucks and buses are tax deductible. Some examples of motor vehicle expenses are repairs, maintenance, parking fees and gas expenses.
No deduction is allowed for motor vehicle expenses incurred on private cars (eg S-plate cars) and commercial cars (eg Q-plate and RU cars registered on or after 1 ‘April 1998). This applies to expenses incurred directly or expenses paid as reimbursement, even if the cars are used for business purposes.
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Private cars (e.g. S-plate cars) and business cars (e.g. Q- and RU-plate cars registered on or after 1 April 1998)
Expenses derived from transportation services are payments for services to travel from one place to another without the passenger having any control or possession of the car.
Payments for transport services for commercial purposes are tax deductible. On the other hand, the expenses derived from the rental of a private car and the operation or maintenance of a private rental car are not tax deductible, unless the company has the activity of car rental or driving training .
The tax deduction can be claimed on qualifying costs incurred in the registration of patents, trademarks, designs and plant varieties (collectively referred to as “qualified intellectual property rights” or “IP”) up to the year of assessment (YA) 2025 under section 14A of the Income-tax Act, 1947.
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Your company does not need to submit any supporting documents in its Income Tax Return to claim the tax deduction. However, supporting documents must be retained and produced upon request.
The tax deduction applies to the costs incurred by a company to register the IP for its trade or business if both the legal and economic ownership of the IP belong to the company.
Economic ownership means that the economic benefits of the exploitation of the intellectual property accrue to the business entity.
Official fees refer to payments made to the Singapore Patent Registry, Trademark Registry, Design Registry or Plant Variety Registry or an equivalent registry outside Singapore for:
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Professional fees refer to fees incurred in connection with the registration of a patent, trademark, design and/or plant variety, including fees payable to a person acting as an agent for:
The costs of prior art searches and translation costs where intellectual property offices abroad require documentation or specifications to be submitted in their native language are also tax deductible.
Registration fees incurred from 1 June 2003 to the last day of the base period for the year 2028
To encourage companies to register and protect their IPs, the tax deduction for qualifying IP registration costs has been enhanced from 100% to 200% for the first $100,000 of qualifying IP registration costs incurred by each YA from YA 2019 to YA 2023
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[NEW!] As announced in Budget 2023, under the Business Innovation Scheme (EIS), to encourage more businesses to create and protect their innovations, a business can qualify for additional tax relief from 300% for up to $400,000 of eligible IP. registration costs incurred for each YA from YA 2024 to YA 2028. For qualifying IP registration costs incurred in excess of $100,000 for each YA from YA 2019 to YA 2023 or $400,000 for each YA from from YA 2024 to YA 2028, your company can claim 100% tax deduction.
From 2011 to 2018, expenses incurred in registering intellectual property can benefit from the benefits of the Productivity and Innovation Credit (PIC) scheme.
[NEW!] In lieu of tax deductions and/or credits, eligible businesses may elect to convert up to $100,000 of total allowable expenditure on all eligible activities under the EIS for each YA into cash at a conversion rate of 20%. The tax-free cash payment is capped at $20,000 per year from 2024 through 2028.
For eligible IP registration costs, the option to convert qualifying expenditure into a cash payment is per registration, subject to a limit of $100,000 of qualifying expenditure across all eligible activities for each YA. A company must convert the total registration costs incurred in connection with a single IP registration application into cash, subject to the limit. Registration costs that exceed the limit are forfeited and cannot be deducted from business income.
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Where a tax deduction has been claimed for costs incurred to register qualifying intellectual property rights, you may be subject to catch-up adjustments if your business sells, transfers or assigns all or part of those intellectual property rights. intellectual:
Income received from the sale, assignment or transfer of rights is considered income and taxed in the year of disposal. The amount taxed is limited to the deduction of 100% of the basis previously allowed.
If your company was previously granted PIC benefits, 100% enhanced tax credit from 2019 to 2023 or 300% enhanced tax credit/cash payment from 2024 to 2028 for qualifying registration costs, these benefits are subject to recovery if the rights are resolved within 1 year from the date of application.
Generally, reinstatement costs (ie costs incurred to restore the premises to their original condition prior to vacating at the end of the lease) are not tax deductible as they are considered expenses of capital not authorized under section 15(1)(c) of the Revenue. Taxation Act 1947. This is because these expenses are usually incurred in relation to business premises that are unoccupied and are no longer being used for income.
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According to paragraph 16 of IFRS 16, the cost of an item of property, plant and equipment includes the initial estimate of the costs of dismantling and removing the item and restoring the location where the item is located, the obligation for the which an entity incurs either when the element is acquired or as a result of having used it during a certain period for purposes other than that of producing stocks during that period.
Watch our eLearning video to learn about the tax deductibility of expenditure on renovation or rehabilitation (R&R) works.
Tax deduction can be claimed for qualifying R&R expenditure incurred under section 14N of the Income Tax Act 1947. This expenditure does not qualify for capital allowances as it does not is incurred for the supply of “plant or machinery”.
Section 14N deduction is given to a company carrying on a trade, business or profession. Investment holding companies do not qualify for the Section 14N deduction as they do not carry on any trade or business for tax purposes.
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The following items can benefit from the Section 14N deduction, provided they do not affect the structure of the business premises:
Renovation costs affecting the structure of commercial premises that do not qualify for a Section 14N deduction may qualify for land intensification allowance, subject to approval by the Singapore Economic Development Board (EDB) or the Building and Construction Authority (BCA).
R&Reexpenses that apply to the tax deduction as a
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