Iras simplifies tax treatment for qualifying telecommuting assets

THE Inland Revenue Authority of Singapore (Iras) has rolled out various initiatives to simplify corporate income tax (CIT) filing for companies this year, including a simplified tax treatment for qualifying telecommuting assets.

In a press statement on Thursday, Iras said that the new initiatives can help companies and tax agents further reduce the time they take to file CIT this year.

Amid the ongoing Covid-19 pandemic, Iras noted that many employers have purchased work-related equipment - such as work desks and IT equipment - for employees to work from home.

"In some cases, the employer would reimburse the employee for the purchase of the work-related equipment, with the ownership remaining with the employer," Iras noted. "As these capital assets are for the employer's trade, the employer may claim capital allowance on them."

Current tax treatment requires employers to compute the balancing allowance or charge based on the open market price of the asset, if the asset is subsequently transferred to the employee. However, they may face challenges in determining the open market price of assets at the point of transfer to employees.

Iras has introduced a temporary measure to simplify the current tax treatment. Where the cost of the asset is less than or equal to S$2,500, the open market price is deemed to be zero at the time of transfer. For more expensive assets, a percentage of the original cost would be used to determine the open market price, depending on when the asset is transferred.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

"With this temporary measure, companies can do away with determining the open market price of each work-related asset transferred to employees," Iras said, estimating that an employer with 30 employees could save two hours in preparing its tax computation.

Iras has also partnered with software providers and tax agents to enable seamless filing for tax agents. It noted that this can save time for tax agents, and would also ensure more accurate filings.

The authority has also collaborated with other government agencies - Accounting and Corporate Regulatory Authority and the Government Technology Agency of Singapore - on other initiatives such as syncing of company financial year end details, and the pre-filling of Corppass email addresses for electronic notifications from Iras.

Chow Wai Yee, assistant commissioner of Iras' corporate tax division, said: "We are thankful for the support of our stakeholders, and will continue to work closely with them to explore more partnerships that can further improve tax filing experience and reduce the regulatory burden for companies."