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Which of Your Business Expenses Are Deductible?

Every savy business man knows that lowering taxes of your business is one of the secret tricks to managing your business. There are plenty of ways to lower your taxes and deductible business expenses is one of them. This article will cover briefly on each deductible expense with an example.

Are business expenses completely deductible?

Business expenses are the costs of running a business that you have paid. Contributions to the CPF, salaries, renovations, and advertising are a few examples.

However, this doesn’t mean that all business expenses are deductible. Deductible business expenses are those that are “wholly and entirely incurred in the generating of income.

Whereas Non-Deductible expenses are expenses that; are not incurred in the generation of income, is a contingent liability, is not revenue and is prohibited from deductibility from the income tax act.

Examples of Non-Deductible expenses are Personal expenses (Entertainment or travel not related to running the business) and capital expenses (Incorporation of business or purchase of fixed assets).

List of deductible expenses:

Type Of ExpenseDeductible Expenses
[Incorporation]– Accounting Fees
– Administrative Expenses
– Director’s Fees
– Research and development expenses.
[Business Maintanence]– Legal and professional fees incurred in trade and revenue transactions.
– Motor vehicle expenses – including upkeep, maintenance, plus running and financing costs of goods / commercial vehicles.
– Office upkeep expenses.
– Postage expenses.
– Printing and stationery costs.
– Renovation costs.
– Costs incurred in the rental of business premises.
– Costs incurred in the registration of trademarks, patents, and designs.
– Secretarial fees.
– Statutory and Regulatory expenses.
– Telephone bills
– Water and electricity costs.
[Business Marketing or Ventures]– Advertisement costs.
– Entertainment expenses.
– Exhibition expenses.
– Intellectual property (IP) licensing expenditure.
– Costs for periodicals and newspapers.
– Transport and travel costs for business assignments.
[Wages and Remuneration]– Auditors’ remuneration.
– Ad-hoc contributions to employees’ Medisave accounts.
– Directors’ remuneration costs.
– Employee’s income tax paid by the employer.
– Medical expenses.
– Retrenchment payments, including contractual retrenchment payments, ex-gratia retrenchment payments, and outplacement support costs – as long as there’s no complete business cessation.
– Staff remunerations, including bonuses, salaries, and allowances.
– Staff training expenses.
– Staff welfare and benefits expenses.
– Employees’ wages.
[CPF, Skill Development Levy, Foreign Worker Levy, others]– Statutory CPF contributions.
– Cash spend in topping-up of Employees’ CPF Minimum Sums.
– Voluntary cash contributions to self-employed persons’ Medisave Account.
[Taxes]– Digital taxes imposed through turnover taxes (not income taxes).
– Property tax expenses.
– Tax fees, including the service fees that you pay a tax agent.
[Schemes]– Employee Equity-Based Remuneration (EEBR) Scheme payments.
– Employment Assistance Payment (EAP).
– Supplementary Retirement Scheme (SRS) contributions.
[Finance]– Exchange loss (trade and revenue in nature).
– Interest expenses.
– Interest incurred on loans intended for re-financing previous loans or borrowings.
– Provision for bad and doubtful debts.
[Insurance]– Payments for Insurance premiums.
– Insurance costs for underwriting bad trade debts.
[Stocks]– Provision for obsolete stocks.
– Stock obsolescence.

Want to know more details on each of these deductible expenses? Contact us today to help you better your business finance.