2 January 2014
On 31 December 2013, the Inland Revenue Authority of Singapore (IRAS) released a new e-Tax Guide “Simplified Record Keeping Requirements for Small Businesses”.
The e-Tax Guide provides guidance on IRAS’ simplified record keeping (SRK) requirements for small businesses. Small businesses that qualify for SRK will only need to keep business records (e.g. registers and listings) and not source documents such as receipts and invoices from 1 January 2014. However, IRAS may still request for the original business records for verification purposes.
A qualifying small business may choose to meet the SRK requirements at any point where it has met the qualifying conditions. However, it should ensure that it would be able to meet the qualifying conditions in the foreseeable future as there would be significant business costs involved in switching from simplified record keeping requirements to full record keeping requirements. Small businesses which do not foresee that they would be able to maintain their status should continue to meet the full record keeping requirements.
New businesses which have yet to file their first annual income tax return can choose to meet the SRK requirements from the start of their business operations, if they expect to meet the qualifying conditions in the foreseeable future.
Small businesses that choose to meet the SRK requirements do not need to inform IRAS.
Qualifying conditions for SRK
The qualifying conditions for SRK are:
(a) The business’ annual revenue (before factoring in business discounts) must be less than S$100,000 for the past two financial years;
(b) The total gross book value of the business’ fixed and current assets amounted to less than S$100,000 as at the end of the latest financial year;
(c) The business is not in the business of investment holding or property development; and
(d) The business is a sole-proprietorship or partnership that is not GST-registered.
(a) Qualifying small businesses that adopt the SRK requirements should keep the following business records (where applicable):
- Daily Revenue Record;
- Daily Purchases Record;
- Monthly Record of All Business Expenses;
- Details of Daily Transport Expenses; and
- Details of Monthly Staff Remuneration Expenses.
Business records kept for a financial year can be used to prepare the Statement of Accounts and Balance Sheet. Samples of the business records, Statement of Accounts and Balance Sheet are provided in the e-Tax Guide.
In addition, IRAS has published record keeping guidelines and templates for selected industries. If a qualifying small business belongs to one of these industries, it may choose to rely on the industry-specific guidelines and templates instead.
Where a business chooses to enjoy the benefits under the Productivity and Innovation Credit (PIC) Scheme and Wage Credit Scheme (WCS) while adhering to the SRK requirements, it is also required to keep the relevant source documents required under the Schemes.
(b) Qualifying small businesses are required to provide receipts to their customers upon request. This will allow customers who are businesses that do not qualify for SRK to meet their record keeping requirements. However, qualifying small businesses will not need to keep the source documents.
For more information, please refer to the e-Tax Guide which is available on the IRAS website.
Source: Inland Revenue Authority of Singapore