The submission and filling of returns to the ACRA (Accounting and Corporate Regulatory Authority) is regarded as an important part of business governance in the country as well as one of the legal requirements for registered firms. Most firms see annual filings of return as another legal responsibility, but it may also play an important role in governing a company that can ultimately result in the business’s sustainability and success.
Understanding Annual Return Filing
According to experts, annual return filing is a legal responsibility for Singaporean companies to keep their data current with the ACRA, ensuring stakeholders get informed about the financial health, business activity, and company composition. The process often involves a few stages, ranging from submission and preparation of financial and accounting statements or simplified XBRL formats to holding an annual meeting. It is not all about ticking boxes. Rather, it is about demonstrating the commitment of a company to good governance and transparency.
What’s required for Filing Returns
Appointed officers of a company are often responsible for filing returns online on ACRA’s filing portal. But you may also enlist the services of a qualified filing agent to help you with the tasks. When filing a return, you will need to provide the following information:
- Financial statements – If your company must file a complete set of financial statements and convert them into simplified XBRL format, you must prepare and validate it before you file the returns.
- Company details – Ensure details, like office address, registered charges, and company type are updated. If any information is incorrect or has changed, ensure you update them.
- Shares – Confirm with your business’s share details, including the amount of paid share capital, issued shared capita, and held shares.
Benefits of Filing Returns
Taxes are often levied from a company’s income once it reaches a particular level. To pay taxes, experts at BoardRoom say that you must file returns annually for various reasons. Here are ways filing returns annually may benefit you:
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Get Government Benefits and Services
In most countries, filing returns is important for accessing government benefits as well as services. For instance, eligibility for some education grants and healthcare subsidies may depend on return filing. Filing returns helps to ensure that businesses and individuals stay compliant with some eligibility requirements and may access benefits and programs, to which they are entitled.
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Demonstrate Accountability
The Singaporean government requires you to file returns before the specified deadline if you make a particular amount of money every year. You will be accountable for paying taxes as calculated. The authority will impose fines for every unpaid taxes. However, if you make less than the required threshold may file returns voluntarily. Filing returns in the country demonstrates your accountability. It as well makes it easier for businesses and people to engage in a subsequent transaction because the authority records all their income after deducting applicable taxes.
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Provide Proof to Loan Lenders
If you are planning to apply for a mortgage in the near future, it will be a great idea to maintain records of filing your returns because your loan lender will want proof of it. You can also consider filing returns of your spouse if you’re looking to apply for a mortgage as the co-borrower. Similarly, credit card firms may want proof that you file returns before they issue a card. Most financial institutions will as well insist on seeing your returns of the last few years before you transact with them.
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Avoid Interests and Penalties
The ACRA will assess failure-to-file penalties when you don’t file returns on the specified date. Penalties of a particular percentage are often assessed every month, which depends on the tax due and interest on underpayments. Interests are also determined quarterly and are based on short-term rates. The authority provides an effective reference tool, which you can use to calculate interest rates and penalties.
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Facilitate Visa Applications
If you plan to apply for a visa for your international trip, the issuer will need proof of income from you. In many cases, you must submit income returns for the past three years. This will help the issuer determine if you qualify for the visa. For instance, if you are intending to visit countries, such as Canada or the US, you will need to submit your annual filing report during the process of verification.
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Claim for Deductions
Filing returns can help you to claim deductions in various ways. These ways include the following:
- Claiming rebates and TDS – You can reclaim TDS (Tax deducted at Source) and different rebates by filing returns annually. If excess tax was deducted from your income or you qualified for tax rebates, filing returns will enable you to claim that amount back.
- Investment-based deduction – The Singaporean government allows deductions on some investments, which may greatly lower the amount of taxes you owe them. Investing in a specified instrument will enable you to recover those deductions as well as minimize your taxable income.
But one thing you need to note is that accessing those opportunities for tax-saving depends on your return filing efforts. Without filing returns, you will forfeit those chances of claiming these rebates and deductions.
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Claim Adjustment from Past Losses
Different losses that an individual or businesses incur can’t be shown for exemptions for calculating tax in subsequent years, especially when it is not recorded in tax returns in that financial year. Those losses often include long-term and short-term capital losses as well as other different kinds of losses. Because you never know when to claim adjustments against your pass losses, it will be best to regularly file returns on time or before the due date.
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Contribute to the Public Service
Income tax returns play an important role when it comes to funding important public services, like defense, healthcare, education, and development of infrastructures. By paying taxes and filing returns annually, businesses and individuals will contribute a lot to the betterment of society, supporting the provision of the public services and goods, which benefits everyone.
The bottom line is that filing returns annually is not just mandatory in Singapore. It is also an important step that ensures you maintain your financial credibility and health while avoiding unnecessary penalties.
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