Beauty and Wellness Educational Talk (English)-2017(updated) · Common Errors & Correct Treatment...

Beauty &

Industry

Beauty &

Wellness

Industry

Common Errors &

Correct Treatment

Offences &

Penalties

Voluntary

Disclosure

Q & A

Tax Obligations

Filing of Income Tax

Returns

Keeping of Proper

Records & Accounts

Case Study

Outline

2

SMILEY’S WELLNESS SPASo….What are my Tax

Obligations ?!

Tax Obligations

MR TAXMAN

You are considered as a self-employed if you are carrying on a:

Trade Business

Profession Vocation

Tax Obligations

4

Self-employed can be in form of:

Self-Employed

Partner

Normal Partnership

Limited Partnership

Limited Liability Partnership

Sole-Proprietor

Tax Obligations

5

You need to file your

Tax Returns

(Form B/P) & make

compulsory

Medisave

contributions

Tax Obligations

6

• If you are self-employed; and

• A Singapore citizen or Singapore Permanent resident; and

• Earn a yearly net trade income of > than $6,000

• IRAS will issue a Notice of Computation (NOC) to inform you of your medisave contributions

Who needs to

make Medisave

Contributions?

Net Trade income refers to your gross trade income less all allowable business

expenses, capital allowances & trade losses as determined by IRAS

Tax Obligations

7

Do I

have to

register

for

GST?

You have to register with IRAS

as a GST- registered person if:

- Your turnover exceeds $1

million or

- You are expecting your

turnover for the next 12

months to exceed $1 million

Penalties may be imposed for failing to comply with Income Tax/GST Law requirements

Tax Obligations

8

Filing of Income Tax

Returns

Filing of Income Tax Returns

9

So, when will

my business

income be

taxed?

Your income will be taxed in

the year following the year

you earned the income.


You should decide on your

accounting period when you

first started your business.

Most accounting periods end

on 31 December each year.10

Report the business income in a summarized 4-

line statement in your Form B/P as follows:

• Turnover

• Gross Profit/Loss

• Allowable Business Expenses

• Adjusted Profit/Loss


11


For Turnover Requirement

= < $100,000 report summarized 2-line statement

(i.e. Turnover and Adjusted profit /loss)

< $500,000 report summarized 4-line statement

(i.e. Turnover, Gross Profit / Loss, Allowable

expenses & Adjusted profit / loss

� However for both of the above instances, you must still prepare the Statement of Accounts and keep proper records of your business transactions

For Turnover Requirement

> = $500,000 must furnish certified Statement of Accounts signed

by you indicating the accounts are true and correct

12

Hmmm…..How am

I going to keep

proper records of

all these?!

Keeping of Proper

Records &

Accounts

13

Keeping of Proper Records & Accounts

Business owners are required to keep proper records and accounts of their business transactions for 5 years with effect from 1 Jan 2007

Records need not be forwarded unless called for verification. Improper records, merely approximate amounts, are not acceptable

Failure to keep proper record will be subject to a fine not exceeding $1,000 and in default of payment to imprisonment for a term not exceeding 6 months

14

Keeping of Proper Records

Hmmm… I

wonder what

kind of business

records do I need

to keep??

A record of receipts and

payments, or income and

expenditure

Source documents substantiate entries

in your records e.g. Vouchers, invoices,

receipts

A record of the assets and liabilities of

your business, including listings of your

business debtors, creditors and

cash/bank account balances


15


Sources of Income

Courses & Training Provided

Customers who sign-up for service packages

Walk-in Customers & Product

Sales


16

Issue serially printed receipts and retain duplicate if gross income a year exceeds:

• $18,000 from the sale of goods;

• $12,000 from providing services

Do not have to issue serially printed receipts if:

- A cash register is used to record all cash sales

- Invoices are issued for all credit sales OR

- All sales are entered into an accounting software


& Accounts SALES

17

In the absence of a cash register or accounting software he can have :

A daily sales record book for all cash and credit sales to

record all his gross takings

Make necessary

adjustments to reflect

correct gross takings

He should record all

takings on a daily basis

I don’t have a cash register or accounting

software….how?!

Keeping of Proper RecordsKeeping of Proper Records & Accounts

18


What are the important details that an invoice should contain?

Registration No. 10521924N

No.32 Jln Angklong

Singapore 121432

Tel No: 61234 123

Fax No: 64561456

INVOICE No.

1012

Date : 01/11/2017

To: Ms Angelina De Cruz

5 Sunset Lane

Singapore 123005

Qty Item DescriptionUnit

PriceDiscount

Line

Total

Total

DiscountSub -

Total

GST

Total

Business

name,

Address, Tel

No. &

Business Reg.

No.

Description

of Services,

Goods &

Price

* For GST-registered business, you need to

issue tax invoices as required by GST legislation

Invoice Date

& Number.

Customer’s

Name &

Address

Any

Discount

Offered &

Total Price

Name :

NRIC :

Address :

Description of the service :

Expiry Date of Package (if any):

No. of Service Date of Service Customer’s

Signature

1

2

3

4

5

6

For Service Packages, a Customer Record Card should be maintained :

CUSTOMER RECORD CARD

(Company’s name)Customer’s Name,

NRIC no., Total

Amount Paid &

Address

Description of

Service & Expiry

Date of package (if

any)

No. of Services

Entitled &

Utilization of

Package (such as

customer’s

signature)


As and when customer utilize the service of the package, the fees applicable to the

service utilized should be recognized as income and reported for tax

Total Amount Paid:

20

• Business Name, Address, Tel.No.

Business Reg No.& Receipt No.

• Receipt Date

• Trainees’ Name

• Course Title / Course dates

• Total Course Fee

Training

&

Courses

Provided


Any fees or deposits paid for the course should be recognized as business income

once the course commences unless the course is cancelled subsequently and a

full refund is made.


21

Case Study

22

Case Study

Hi, I’m Jane.

Welcome to J-Star Nail Art!

Types of Service Packages :Service Price Packages

Classic Manicure $28 $150 for 6 sessions

Classic Pedicure $38 $200 for 6 sessions

Classic Manicure+ Pedicure $60 $330 for 6 sessions

*We also offer training courses in manicure & pedicure for a very special price of $800/-

Hmm….It’s

about time

I get my

nails done.

It’s getting late

for my training…

better go now.

Oh No…I totally

forgot it’s my 3rd

appointment

today!!

Ms Linda A

Simpson

Miss Aminah

Bte Ali

Mrs Dorothy

Chan

10 Nov 2017

A Frequent

Customer of J-

Star Nail Art

Paid $800 &

signed for a

course in

pedicure with J-

Star Nail Art

Paid $330 &

signed up for a

package with J-

Star Nail Art in

2016

10 Nov 2017

25

Ms Linda had her nails done. She

paid $28 and left soon after.

10 Nov 2017

26

10 Nov 2017

Miss Aminah attended the training

given by a senior staff of J-Star Nail Art

27

10 Nov 2017

Mrs Dorothy Chan completed her

3rd session of manicure. She left the

place with a smiling face ☺

28

Let me see….Linda,

Aminah & Dorothy

came here today…

Linda had her

manicure done &

paid $28/-

Dorothy had her 3rd

session of the

package completed

so far…

10 Nov 2017

Aminah has

already paid up

in full for the

course last

month…

The Question is…

How do I record

this transaction??

MS JANE29

Name : Mrs Dorothy Chan

NRIC : S1234567A

Address : 106 Duxton Park #12-345 Singapore 315106

Description of the service : Classic Manicure + Pedicure

Total amount paid : $330

No. of Service Date of Service Customer’s signature

1 24/09/2017 Dorothy Chan



4

5

6

A customer record card should be maintained

CUSTOMER RECORD CARD

(J-Star Nail Art)

30

DAILY GROSS REVENUE / FEES RECORD

Name of Business : J-Star Nail ArtYear: 2017

Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec12345678910 55 55 883111213141516171819202122232425262728293031

Total

Grand Total ($)

31

NAME OF BUSINESS: J-Star Nail Art

BUSINESS ADDRESS : 32 Jln Angklong, Singapore 121432

FOR PERIOD FROM 01012017 to 31122017

(enter date in dd-mm-yy)

$ $Service Fees received (a)

Other Operating revenue (b)

Turnover (c) = (a) + (b)

Less: Direct Cost (d)

Gross Profit (e) = (c) - (d)

Less: Allowable Business Expenses

(please ensure that you do not claim non-allowable expenses)

Rental Charges

Advertising promotion

Insurance

CPF Contributions

Salaries & wages

Other Running Expenses

(please indicate the nature and breakdown below)i)

ii)

iii)

iv)

Total Allowable Business Expenses

Adjusted Profit

SUMMARY

4-line Statement

$

Turnover Name of taxpayer:

Gross Profit Signature :

Allowable Business Expenses Contact Number :

Adjusted Profit/Loss

STATEMENT OF ACCOUNTS

To record

$993 in

here {(i.e.

$28 + $800)

+ (330 / 6 x

3) }

32

J-Star Nail Art

Balance Sheet for the Year Ending 31.12.2017

ASSETS

Current Assets

Cash

Accounts Receivable

Inventory

Prepaid Expenses

Total Current Assets

Fixed Assets

Land, Buildings

Furniture & Fixtures

Equipment

Total Fixed Assets

Total Assets

LIABILITIES

Current Liabilities

Accounts Payable

Taxes Payable

Accurals

Deferred Income

Total Current Liabilities

Long Term liabilities

Mortgages Payable

Equipment

Total Long Term Liabilities

TOTAL LIABILITIES

OWNER'S NET WORTH

Total Liabilities and Net Worth

To record

balance

amount of

$165 in

here

33

Personal vsBusiness Purposes

Business Income

Deposit into Business Bank

Account

Retain the Bank

Statements

Keeping of Proper RecordsKeeping of Proper Records &

Accounts

34

Invoices Received

from Suppliers

Receipts obtained

must show details


• Date

•Name of Supplier or

Service Provider

•Description of Goods

or Services

• Amount


35

Purchases Records

Maintain Purchases Record

Book

To issue payment voucher which shows:

- Full name;

- Identification no.;

- Address of supplier;

- Date & description of goods or services;

- Acknowledgement of receipt by the recipient

Payment Voucher should be Retained


36

Keep proper documentation

Obtain invoices

Common Expenses


•Staff salary &

Employer CPF

contribution

•Rental

•Administrative

expenses


37

Staff Remuneration &

Employer’s CPF

Contribution


Records to keep:

• Details of employees;

• Payment vouchers or

remuneration schedule;

• Date & description of

services;

• CPF statements for your

claims of employer’s CPF

contributions

Form IR8A / Return of

Employee’s remuneration

Log Book for part-time

employees


38


WAH!....So many

bills…how to know

which one is

deductible for income

tax purpose??


Claiming For Expenses

Not to worry…Only

expenses that are

wholly & exclusively

incurred in the

production of the

income are deductible!

39

Allowable Business Expenses

Rental paid for business

premises

Property tax paid for business

Mortgage interest paid for business

premises

UtilitiesTelephone charges for

business

Salary & bonus for

employees

Compulsory employer’s

CPF contribution

Capital allowances on

fixed assets


Some Common

Examples

40

Disallowable Expenses

Your own salary, bonus

& CPF contributions

Your own medical fees, income tax &

insurance

Entertainment expenses for

family & friends

Food & household expenses

Interest on loans obtained for private use

Cost of fixed assets

purchased

Depreciation

Maintenance cost of private

cars


Some Common

Examples

41

Set up a good filing system for your paperwork from the start of your business

Make sure your records can be understood by anyone, not just by you or your accounts staff

Obtain the necessary source documents at the time of a transaction

Get into the habit of entering transactions regularly to keep your records up to date

Enter all transactions accurately into your record books


42

Suggested Templates

for

Record Keeping

43

DAILY GROSS REVENUE / FEES RECORD

Name of Business : Year:

Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec12345678910111213141516171819202122232425262728293031

Total

Grand Total ($)44

MONTHLY SALARY & WAGES RECORD

Name of Business :

Month:

S/n Salary/Wages Employee Employer Total SDL FWL

1

2

3

4

5

6

7

8

9

10

11

12

Total

CPF PayableName of

Employee

NRIC/M'sia

IC/Fin/WP No.

45

BUSINESS EXPENSES RECORD

Name of Business :

Year:

Type of Expense Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Cost of Goods (i.e. your purchases)

Business Expenses

Rental paid for business premise

Property tax paid for business premise

Utilities

Telecommunications

Insurance

Administrative expenses

Salary/Wages

Employer's CPF contributions

Other running expenses:

Total

Total Business Expenses ($)

46

PURCHASES RECORD

Name of Business:

Month:

S.n Name of Supplier Type of Goods Purchased Amount Paid ($)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Monthly Total ($)47

NAME OF BUSINESS:

BUSINESS ADDRESS :

FOR PERIOD FROM to

(enter date in dd-mm-yy)

$ $Service Fees received (a)

Other Operating revenue (b)

Turnover (c) = (a) + (b)

Less: Direct Cost (d)

Gross Profit (e) = (c) - (d)

Less: Allowable Business Expenses

(please ensure that you do not claim non-allowable expenses)

Rental Charges

Advertising promotion

Insurance

CPF Contributions

Salaries & wages

Other Running Expenses

(please indicate the nature and breakdown below)i)

ii)

iii)

iv)

Total Allowable Business Expenses

Adjusted Profit

SUMMARY

4-line Statement

$

Turnover Name of taxpayer:

Gross Profit Signature :

Allowable Business Expenses Contact Number :

Adjusted Profit/Loss

STATEMENT OF ACCOUNTS

48

Mrs Wong -

Sole Proprietor of

Oceanic Beauty &

Spa

Hmm…How do I

account and

record my

business stock?

Where

do I

start?What if the

goods get stolen

or expire?...Can

I claim for it as

an expense??

What are

the

methods

to keep

track?

49

Suggested Templates for Record Keeping

Inventory & Cost of Goods Sold

Different Methods used in arriving at Cost of Goods Sold:

First-In-First-Out Method (FIFO);

Last-In-First-Out Method (LIFO);

Weighted Average Method

50


Inventory Management Template - Yearly

Product Name : Whiteness Face Cream

IN OUT

Date Description Qty

Price per

unit Qty Price per unit Units on Hand

01/01/2017 Opening Stock 5

23/01/2017 Purchases 36 $45 41

28/03/2017 Goods Sold 7 $55 34

21/05/2017 Expired units 2 $45 32

18/06/2017 Utilized for business 12 $45 20

10/07/2017 Purchases 24 $48 44

07/08/2017 Goods Sold 9 $58 35




17/11/2017 Goods Sold 11 $58 10

16/12/2017 Purchases 12 $50 22


31/12/2017 Stolen Units (after physical count) 2 $48 13

31/12/2017 Closing Stock 13

Description Qty Price per Unit Amount

Inventory at 1 Jan 2017 5 $45 225

Total goods

available for sale 72 Refer above 3372

Total 3597

Less:Inventory at 31 Dec 20171 $48 48

12 $50 600 -648

Cost of Goods Sold (FIFO method) (41+23) ($1845+1104) 294951

Physical Inventory Count Sheet (Yearly)

Sheet No. Date :

Performed by:

Inventory No. Item Description Quantity Location

Signature:

52

$ $

Fees received &

sales of product 34,000

Less : Cost of goods sold

Opening stock 3,200

Purchases 5,000

Less : Closing stock (2,800) 5,400

Gross Profit 28,600

Less : Allowable Business Expenses

Rental Charges 7,800

Advertising & promotion 1,500

Salaries & wages 6,000 15,300

Adjusted Profit 13,300

Statement of Account for the year ended 31.12.2017

Includes Cost

of Goods Sold

of $2,949

from

Whiteness

Face Cream

53


Ahhh!!….Am I making

mistakes with my accounts?!

Common Errors & Corrective Treatment

54


What you should avoid What you need to do and Why

Utilized treatment packages

not recognized as sales

• When the service of the package is utilized,

the fees applicable to the service should be

recognized as income and reported for tax.

Understatement of income • Report your gross sales in full

•Takings that are used to pay for your

purchases or expenses must be properly

recorded and included in your reported

income

Claiming expenses based on

estimates

• Claims of expenses against your income must

be based on actual amounts incurred for the

business, with supporting receipts and

invoices.

• Sketchy records, which are merely estimated

amounts, are inadequate and not acceptable

for Income Tax purposes

55

What you should avoid

What you need to do and Why

Making incorrect claims

of private and domestic

expenses

•You can only claim expenses incurred for your

business

•Private and domestic expenses are not

deductible for Income Tax purposes. (e.g.

household expenses, personal insurance, etc)

Claiming private motor

vehicle expense

• Claims of motor vehicle expenses including

petrol, insurance, repair and maintenance,

parking and CBD charges etc. in respect of

private-plated cars (E or S-plate cars) are not

allowable

• These expenses will not be deductible even if

they were incurred for business purposes


56

OFFENCES

PENALTIES

&

57

Offences & Penalties

There is a general misconception that records do not need to be

kept or can be discarded once a Notice of Assessment is received

Records should be retained

for 5 years whether or not an

assessment has been raised

The Comptroller may request

for these documents in the

course of audit or

investigation

For failure to keep proper records, liable on conviction

to a fine not exceeding $1,000 and in default of

payment to imprisonment for a term not exceeding 6

months58

If you fail to furnish the Income

Tax Return, you may be…


Liable on conviction to a fine not exceeding

$1,000 and in default of payment to

imprisonment

59


If you furnished an incorrect

Return …

Penalties can amount to as much as two times

the tax undercharged, where mistakes have been

made through negligence or without reasonable

excuse

Serious cases of omissions or errors may result in

prosecution

60

For cases where a taxpayer willfully

evades, or assists to evade, liable on

conviction to pay a penalty of three

times the amount of tax evaded and to

pay a fine not exceeding $10,000 or to

imprisonment for a term not exceeding

3 years or both fine and imprisonment


61

Mr Taxman

Hmm…

Err…excuse

me…I like to

make a

voluntary

disclosure…

Voluntary Disclosure

62


The IRAS Voluntary Disclosure

Program aims to help taxpayers

ensure their tax matters are in

order by encouraging them to

come forward, in a timely manner,

to disclose errors or omissions

made

Moreover, voluntary disclosure

of past omissions or errors will

attract a much lower penalty!

63


Penalty TreatmentTypes of Voluntary Disclosures

Waiver of penaltyTimely voluntary disclosures made

within a grace period of 1 year from

statutory filing date

Reduced penalty of

5% per annum for

Income Tax

Voluntary disclosures made after grace

period

64


Co-operation received from taxpayers to correct

mistakes made in the past returns

Disclosures must be made BEFORE IRAS’

commencement of audit / investigation or letter

of query relating to his assessment

For cases already under IRAS’s query, audit or

investigation, taxpayer’s disclosure must NOT be

under the scope of query, audit or investigation

65

Mode Contact Information

Website

https://www.iras.gov.sg/IRASHome/About-

Us/Taxes-in-Singapore/Helping-and-

Encouraging-Compliance/IRAS--Voluntary-

Disclosure-Programme/

Email [email protected]

Ok…So how do I contact IRAS for

Voluntary Disclosure?


66

Assistance for Taxpayers

Service Details Contact

Self help (Record keeping guide) https://www.iras.gov.sg/IRASHome/Businesses/S

elf-Employed/Learning-the-basics/Keeping-

Proper-Records-and-Accounts/

Email Email us via myTax mail for added security

https://www.iras.gov.sg/IRASHome/Contact-

Us/Email-us/

Income Tax Integrated Phone

Service

1800 356 8300

Goods & Services Tax Integrated

Phone Service

1800 356 8633

Taxpayer Services Centre 1st Storey, Revenue House

55 Newton Road, Singapore 307987

(Located opposite Novena MRT Station)

Operating Hours:

8am to 5pm (Mon to Fri)

8am to 1pm (Sat)67

Tax

Obligations

File my

Income

Tax

Returns

Need to

keep

proper

records

&

accounts

Form

B/P

Purchases

Expenses

Banking

Sales

Errors &

Mistakes

Improper

Records

Incorrect

Return

Considered

as an

offence

Penalties

may be

imposed

Voluntary

Disclosure

Reduction in

penalty or

even waiver

of penalty

In Summary…

Industry Visits

Do you need someone to take a

look at your record-keeping

procedure & maybe give you some

advise on how to improve on it?

Well…not to worry…I have some

good news for you!

In the next few months, IRAS

wishes to pay a visit to your

business premises

Industry Visits

To understand your

current record

keeping methods

To facilitate you in

filing a correct return

To provide feedback

& assistance in

record keepingWe want to

help you !!

THANK YOU

71

The information presented in the slides aims to provide a better generalunderstanding of taxpayers’ tax obligations and is not intended to comprehensivelyaddress all possible tax issues that may arise. This information is correct as at30/09/2017. While every effort has been made to ensure that this information isconsistent with existing law and practice, should there be any changes, IRASreserves the right to vary its position accordingly.

© 2017 Inland Revenue Authority of Singapore. All rights reserved.

Date post:	17-May-2020
Category:	Documents
Upload:	others
View:	4 times
Download:	0 times

Beauty and Wellness Educational Talk (English)-2017(updated) · Common Errors & Correct Treatment...

Documents