What can self-employed people in Singapore claim as business expenses?

An expense reduces your tax only if it is an allowable business expense. IRAS sets three tests: the expense must have been incurred, it must relate to your business, and it must be supported by proper records kept for at least 5 years. Anything personal or private fails the second test, however useful it was to your work.

What is the rule IRAS applies?

The expense must be incurred wholly and exclusively in earning your income. You must be able to show why you needed to spend the money to earn it. A receipt shows the amount; the business purpose is what makes it a claim.

Which expenses usually qualify?

• Advertising and marketing costs.
• Public transport taken in the course of business.
• Telephone and utility charges for the business, or the business share of a personal line.
• Rent of business premises, stationery and postage.
• Accountancy fees and interest on money borrowed for the business.
• For commission agents, IRAS lists entertainment, public transport, gifts and telecommunications among allowable expenses.

Which expenses never qualify?

• Private car costs, for E, Q or S-plate cars: repairs, maintenance, parking and petrol. IRAS disallows these even when the car is used for business.
• Travel between your home and your usual place of work.
• Food and entertainment for yourself, family or friends.
• Your own MediSave or CPF contributions, life insurance, medical bills and income tax. (Compulsory MediSave is given relief separately, not as a business expense.)
• Fines and penalties.
• Capital items such as equipment, which are claimed through capital allowances instead of as an expense.

What about laptops and equipment?

Buying equipment is capital expenditure, so it is not an expense in the year you pay. You claim capital allowances on it instead. Computers can be written off in one year, and low-value items of up to S$5,000 each can also be written off in one year, subject to an overall cap per year of assessment.

Can commission agents skip the receipts?

Qualifying commission agents with total gross income of S$50,000 or less can claim 25% of their gross commission as a deemed expense instead of actual expenses. Above S$50,000, only actual expenses can be claimed, and the receipts matter.

What proof should I keep?

For each claim: the receipt or invoice, the date, the amount, and a short note of the business purpose. For a client meal, who you met and why. Keep everything for at least 5 years.