singapore-tax-basis-periodIt is not unusual, in some circumstances, for a taxpayer to have more than one basis period for a particular year of assessment. For assessment purposes, the whole of the income derived from different basis periods must be combined to form the statutory income for the relevant year of assessment.

Example 1 of Basis Period

Tan, a trader, makes up his business accounts to 30 June each year. His profits, for tax purposes, for the year to 30 June 2015 are $19,000. In addition, he receives dividend income, for the first time, of $4,900 on 30 November 2015, fixed deposit interest of $2,500 and rents $4,800 for the calendar year to 31 December 2015.

His statutory income for the assessment year 2016 will be as follows:

Business or trade (basis period – 1.7.14 to 30.6.15)  $19,000
Dividend income (basis period – 1.1.15 to 31.12.15) $4,900
Interest (basis period – 1.1.15 to 31.12.15) $2,500
Rents (basis period – 1.1.15 to 31.12.15) $4,800
Total statutory income $31,200

There are further departures from the preceding year basis and these relate to sources of income which commence and cease on dates other than 1 January and 31 December respectively. When a person commences an employment he is said to have commenced a new source of income. When he ceases the employment permanently, the said source is deemed to have ceased. This applies to all sources of income, ie trades, professions, dividends, rents, etc.

Where commencement and cessation of services take place different basis periods apply although the general principles governing the preceding year basis are not disturbed.

Example 2 of Basis Period

(a) Mr Lee commences employment for the first time on 7 June 2015. Prior to this date he has received income from some shareholdings and fixed deposits. The basis periods that will apply in this case, for the year of assessment 2016, will be:

Employment income – basis : 7.6.15 to 31.12.15

Dividends and interest – basis : 1.1.15 to 31.12.15

(b) If Mr Lee ceases employment permanently on 31 March 2015, ceases derive interest on fixed deposits on 30 September 2015 but continues to derive income from dividends, his 2016 assessment will be as follows:

Employment income – basis : 1.1.15 to 31.3.15

Interest income – basis : 1.1.15 to 30.9.15

Dividend income – basis : 1.1.15 to 31.12.15

It will be noted from the above that for 2016, Mr Lee will have 3 different basis periods for his 2016 statutory income, although the preceding year principle is not disturbed. This means, for 2016 he will be assessed on all the income derived in the preceding year.

(c) A company commenced trading on 1 October 2015 and makes up its accounts annually up to 30 June. It also has income from fixed deposits and shareholdings. The following will be the basis periods:

Year of Assessment Basis Period
2015 NIL
2016 1.10.15 to 31.12.15

(Only for income from dividends and interest)

2017 1.10.15 to 30.6.16 (Trade)

1.1.16 to 31.12.16 (Dividends and interest)

2018 1.7.16 to 30.6.17 (Trade)

1.1.17 to 31.12.17 (Dividends and interest)


(d) If the company in Example (c) was to cease trading permanently in 2017 on 15 November and no income is derived from any source thereafter, the position will be as follow:

Year of Assessment Basis Period
2016 1.10.15 to 31.12.15

(Only for income from dividends and interest)

2017 1.10.15 to 30.6.16 (Trade)

1.1.16 to 31.12.16 (Dividends and interest

2018 1.7.16 to 30.6.17 (Trade)

1.1.17 to 31.12.17 (Dividends and interest)

2019 1.7.17 to 15.11.17 (Trade)

NIL (Dividends and interest)

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