9 March 2015

The Inland Revenue Authority of Singapore (IRAS) has updated its website with new content on the tax treatment of car rental companies.

In the website, IRAS has stated that income generated from car rental activities is to be quarantined, i.e. losses and capital allowances arising from such activities cannot be deducted against other income but the unutilised losses and unutilised capital allowances may be carried forward to be deducted against income derived from the same business of car rental activities in subsequent years of assessment, subject to sections 23(4) and 37(12) of the Income Tax Act.

The requirement to quarantine the income from car rental business will not apply to unutilised losses and unutilised capital allowances relating to YA 1999 and before.

Expenses incurred on private hire cars that are rented out to customers are deductible. Capital allowances may be claimed on the cost of acquiring such private hire cars.

The update was made on 26 February 2015.

For further details, please refer to the IRAS website.

Source: IRAS