Please attemp the question I have attached and I have guideline for the answers.For question 3,difference between tax evasion and avoiddance can be found in seminar 2 slides.Tax avoidance mean the coy see tax as a priority over business operation,25 for avoidance and evasion,1a the five objectives can be found in the seminar 1 slide,1b need to research,s;ide have 7 roles which among the 7,4 of them are tradiotional roles,1c to retrieve the chart from IRAS,2A-IN SEMINAR 2 SLIDES in VDP section,2b -case study discussed ealier in our convo,3a-slide 25 of seminar 2 evasion,slide 28 is advoidance.I have attached the leactuer notes for your reference.The assignment need referencing.

ACC213 Introduction to Income Tax ___________________________________________________________________________ Question 1 Retrieve the \"Inland Revenue Authority of Singapore Annual Report 2013/2014\" from https://www.iras.gov.sg/IRASHome/uploadedfiles/IRASHOME/Publications/AR13_About%20Us.pdf. Refer to \"Our Revenue Collection\" on pages 19 to 20 to answer the following questions: (a) Identify and discuss the Singapore government's five (5) objectives in setting tax policies. (21 marks) (b) Identify and discuss the four (4) traditional roles of taxation in Singapore. (11 marks) (c) Identify the various types of tax which makes up more than 65% of the total government operating revenue and more than 80% of the total tax collection by IRAS in FY2013/14. All relevant supporting tabulations or computations must be shown. (12 marks) Question 2 Search the IRAS website and identify the most recent update to The Voluntary Disclosure Programme (\"VDP\") e-Tax Guide. Familiarise with it and use it to answer the following parts of this question. (a) Describe the importance of tax compliance and its enforcement strategy with respect to The VDP. (19 marks) (b) Study the three cases tabulated below. Discuss if they qualify as voluntary disclosures under The VDP. Make all the necessary assumptions for your answers. (16 marks) Case 1 Taxpayer files a GST F7 to disclose output tax errors for the quarter ended 31 December 2014 while the taxpayer's sales and output tax for the same period are being audited by IRAS. Case 2 Taxpayer files a GST F7 to disclose input tax errors for the quarter ended 31 December 2014 while the taxpayer's purchases and input tax for the quarters ended 30 June 2014 and 30 September 2014 are being audited by IRAS. Case 3 Taxpayer files a GST F7 to disclose input tax errors for the quarter ended 30 June 2014 that were not uncovered during a previous audit by IRAS in December 2014. Question 3 Retrieve the article titled \"Caterpillar avoided $2.4 billion in taxes: Levin\" from http://www.marketwatch.com/story/caterpillar-avoided-24-billion-in-taxes-levin-2014-03-31 and answer the followings: (a) Differentiate tax evasion from tax avoidance. (11 marks) (b) If Caterpillar Inc. were a Singapore company and the tax differentials between Switzerland and Singapore were the same as mentioned in the article, discuss whether Caterpillar would be deemed to have evaded tax, avoided tax or no wrong-doing. (10 marks) ---- END OF ASSIGNMENT ---- ACC213 INTRODUCTION TO INCOME TAX STUDY GUIDE (5CU) Course Development Team Head of Programme : A/P Chan Yoke Kai Course Developer(s) : Goh Seng Kuan Production : Educational Technology & Production Team Curriculum Administration Team 2016 SIM University. All rights reserved. No part of this material may be reproduced in any form or by any means without permission in writing from the Educational Technology & Production, SIM University. Educational Technology & Production SIM University 461 Clementi Road Singapore 599491 Release V1.1 CONTENTS COURSE GUIDE 1. Welcome .............................................................................................................1 2. Course Description and Aims .........................................................................1 3. Learning Outcomes .......................................................................................... 3 4. Learning Material ............................................................................................. 3 5. Assessment Overview ...................................................................................... 5 6. Course Schedule ................................................................................................ 6 7. Learning Mode ..................................................................................................6 STUDY UNIT 1 The Singapore Tax System Learning Outcomes ......................................................................................... SU1-1 Overview ........................................................................................................... SU1-1 Chapter 1 Singapore Tax System & Policy ................................................... SU1-2 Chapter 2 Legislative Framework for Taxation......................................... SU1-10 Summary ......................................................................................................... SU1-13 Reference ......................................................................................................... SU1-14 STUDY UNIT 2 Income Tax Compliance & Administration Learning Outcomes ......................................................................................... SU2-1 Overview ........................................................................................................... SU2-1 Chapter 3 Tax Compliance in Singapore ...................................................... SU2-2 Chapter 4 Key Income Tax Concepts .......................................................... SU2-30 Summary ......................................................................................................... SU2-37 References ....................................................................................................... SU2-38 STUDY UNIT 3 Taxation of Individuals & Businesses Learning Outcomes ......................................................................................... SU3-1 Overview ........................................................................................................... SU3-1 Chapter 5 Taxation of Individuals................................................................. SU3-3 Chapter 6 Taxation of Foreign Employees and Non-Resident Indivduals. .......................................................................................................................... SU3-17 Summary ......................................................................................................... SU3-26 Reference ......................................................................................................... SU3-27 STUDY UNIT 4 Goods & Services Tax ("GST") System, Compliance and Administration in Singapore Learning Outcomes ......................................................................................... SU4-1 Overview ........................................................................................................... SU4-1 Chapter 7 Goods and Services Tax Concepts and Rules ............................ SU4-3 Chapter 8 Goods and Services Tax Assessment and Compliance .......... SU4-10 Summary ......................................................................................................... SU4-23 Reference ......................................................................................................... SU4-25 STUDY UNIT 5 GST Supplies, Inputs & Schemes Learning Outcomes ......................................................................................... SU5-1 Overview ........................................................................................................... SU5-1 Chapter 9 Goods and Services Tax Supplies and Output Tax Payable ... SU5-3 Chapter 10 Goods and Services Tax Credits and Reliefs, and Input Tax Recoverable ..................................................................................................... SU5-13 Summary ......................................................................................................... SU5-20 Reference ......................................................................................................... SU5-22 STUDY UNIT 6 Accounting for GST & Stamp Duty Learning Outcomes ......................................................................................... SU6-1 Overview ........................................................................................................... SU6-1 Chapter 11 Other Goods and Services Tax Issues ....................................... SU6-3 Chapter 12 Stamp Duty................................................................................. SU6-15 Summary ......................................................................................................... SU6-25 Reference ......................................................................................................... SU6-26 COURSE GUIDE ACC213 COURSE GUIDE 1. Welcome (Access video via iStudyGuide) Welcome to the course ACC213 Introduction to Income Tax, a 5 credit unit (CU) course. This Study Guide will be your personal learning resource to take you through the course learning journey. The guide is divided into two main sections - the Course Guide and Study Units. The Course Guide describes the structure for the entire course and provides you with an overview of the Study Units. It serves as a roadmap of the different learning components within the course. This Course Guide contains important information regarding the course learning outcomes, learning materials and resources, assessment breakdown and additional course information. 2. Course Description and Aims ACC213 Introduction to Income Tax aims to provide students with a broad overview of the Income Tax and the Goods and Services Tax (\"GST\") systems in Singapore. Students will be introduced to tax formulation policies and how tax policies function as part of Singapore's fiscal policy. It is also imperative to understand the legislative framework governing the tax systems and its implementation in Singapore via tax compliance and administration procedures. Thereafter, the module introduces essential tax concepts to students before focusing on the respective tax treatments for an individual, a business and specific business transactions. This module concludes with an introduction of Stamp Duty to students. During the course, students will be examined on their understanding of tax concepts as well as the application of these concepts. Moreover, students will be advised to familiarise themselves with the various sections of the Income Tax Act and the GST Act. The aforementioned is imperative for students to acquire the required practical skills to address various tax issues in business and personal situations. 1 ACC213 COURSE GUIDE Course Structure This course is a 5-credit unit course presented over 6 weeks. There are six Study Units in this course. The following provides an overview of each Study Unit. Study Unit 1 - The Singapore Tax System This unit provides an overview of the fiscal policy and tax system of Singapore and explains the objectives and processes in formulating tax policies, and elaborates on the legislative framework governing the Singapore tax system. Study Unit 2 - Income Tax Compliance and Administration This unit focuses on income tax compliance and administration obligations and procedures in Singapore, and tax concepts that all taxpayers must understand in order to fulfill their tax obligations. Study Unit 3 - Taxation of Individuals and Businesses This unit covers the taxation of individuals and sole proprietorships in Singapore. Study Unit 4 - GST System, Compliance and Administration in Singapore This unit focuses on the rationale for GST implementation and its overall framework, GST concepts and rules as illustrated in the GST Act (Cap 117A), and the administration and compliance obligations of businesses pertaining to the registration for and implementation of GST. Study Unit 5 - GST Supplies, Inputs and Schemes This unit covers the concepts and rules governing the various types of GST supplies and input tax credits, and common GST schemes which offer GST credits or reliefs to a GST-registered business. Study Unit 6 - Accounting for GST and Stamp Duty This unit provides an overview of accounting for GST in various business scenarios and an overview of Stamp Duty in Singapore. 2 ACC213 COURSE GUIDE 3. Learning Outcomes Knowledge & Understanding (Theory Component) By the end of this course, you should be able to: Show how the Singapore tax system operates Describe the legislative framework of income tax Explain income tax compliance and administration in Singapore Explain key income tax concepts applicable for ascertaining tax liability of a tax entity Compute an individual's income tax liability Apply the concept and rules of tax residency and differentiate the tax treatments between resident and non-residents Show how the GST system works Illustrate the assessment process and compliance issues related to GST in Singapore Examine the rules and illustrate the accounting for GST supplies Examine the rules and illustrate the accounting for claiming input GST and GST reliefs Illustrate the treatment of common GST scenarios and foreign currency denominated transactions Identify the circumstances where stamp duty has to be paid Key Skills (Practical Component) By the end of this course, you should be able to: Develop the essential knowledge and interpersonal skills to work effectively in a team. Demonstrate written proficiency. 3 ACC213 COURSE GUIDE 4. Learning Material The following is a list of the required learning materials to complete this course. Required Textbook Authors Last name, First name Title Year Publisher The Essential Guide to Income Cher Hui, Lim Tax in Singapore, published August 2014. 2014 CCH Asia Pte Ltd ISBN:9789814446235 Other recommended study material (Optional) The following learning materials may be required to complete the learning activities: Reference Textbook Authors Last name, First name TAN How Teck, & OEI Jimmy Title Year Singapore Master Tax Guide Handbook, 32nd Edition 2013/2014 ISBN:9789814359788 Websites: Inland Revenue Authority of Singapore: https://www.iras.gov.sg Singapore Statutes Online: http://statutes.agc.gov.sg 4 Publisher CCH Asia Pte Ltd ACC213 COURSE GUIDE 5. Assessment Overview The overall assessment weighting for this course is as follows: Assessment Description Weight Allocation Assignment 1 Individual-Based Assignment 20% Assignment 2 Group-Based Assignment 30% Examination Closed book exam 50% TOTAL 100% The following section provides important information regarding Assessments. Continuous Assessment: There will be continuous assessment in the form of two tutor-marked assignments (TMAs). In total, this continuous assessment will constitute 50 percent of overall student assessment for this course. The two assignments are compulsory and are non-substitutable. These assignments will test the understanding and application of tax concepts and knowledge. It is imperative that you read through your Assignment questions and submission instructions before embarking on your Assignment. Examination: The final (2-hour) written exam will constitute the other 50 percent of overall student assessment and will test the ability to apply tax related concepts, knowledge and strategies from the perspectives of tax practitioners and the tax authority. All topics covered in the course outline will be examinable. Passing Mark: To successfully pass the course, you must obtain a minimum passing mark of 40 percent for each of the two TMA components. That is, students must obtain at least a mark of 40 percent for the combined assessments and also at least a mark of 40 percent for the final exam. For detailed information on the Course grading policy, please refer to The Student Handbook ('Award of Grades' section under Assessment 5 ACC213 COURSE GUIDE and Examination Regulations). The Student Handbook is available from the Student Portal. Non-graded Learning Activities: Activities for the purpose of self-learning are present in each study unit. These learning activities are meant to enable you to assess your understanding and achievement of the learning outcomes. The type of activities can be in the form of Quiz, Review Questions, Application-Based Questions or similar. You are expected to complete the suggested activities either independently and/or in groups. 6. Course Schedule To help monitor your study progress, you should pay special attention to your Course Schedule. It contains study unit related activities including Assignments, Self-assessments, and Examinations. Please refer to the Course Timetable in the Student Portal for the updated Course Schedule. Note: You should always make it a point to check the Student Portal for any announcements and latest updates. 7. Learning Mode The learning process for this course is structured along the following lines of learning: (a) Self-study guided by the study guide units. Independent study will require at least 3 hours per week. The self-study materials are made available to students before the term starts. (b) Working on assignments, either individually or in groups. (c) Face to face classroom seminar sessions where a facilitator facilitates each seminar session (3 hours each session, 6 sessions in total). iStudyGuide You may be viewing the iStudyGuide version, which is the mobile version of the Study Guide. The iStudyGuide is developed to enhance your learning experience with interactive learning activities and engaging multimedia. Depending on the 6 ACC213 COURSE GUIDE reader you are using to view the iStudyGuide, you will be able to personalise your learning with digital bookmarks, note-taking and highlight sections of the guide. For technical resources on the iStudyGuide, please refer to http://www.unisim.edu.sg/mobile/faq.html#4_4. Interaction with Instructor and Fellow Students Although flexible learning - learning at your own pace, space and time - is a hallmark at UniSIM, you are encouraged to engage your instructor and fellow students in online discussion forums. Sharing of ideas through meaningful debates will help broaden your learning and crystallise your thinking. Academic Integrity As a student of UniSIM, it is expected that you adhere to the academic standards stipulated in The Student Handbook, which contains important information regarding academic policies, academic integrity and course administration. It is necessary that you read and understand the information stipulated in the Student Handbook, prior to embarking on the course. 7 STUDY UNIT 1 THE SINGAPORE TAX SYSTEM ACC213 STUDY UNIT 1 Learning Outcomes By the end of this unit, you should be able to: 1. Describe the relationship between fiscal policy and taxation, 2. Explain the overview of the Singapore tax system, 3. Discuss the Singapore government's objectives in setting tax policies, 4. Identify the various types of tax which make up a significant portion of the Singapore government's operating revenue, 5. Discuss the role of taxation in Singapore, 6. Identify the tax resources available in Singapore - tax statutes, subsidiary legislation and all other regulations applicable to tax practitioners in their course of work, and 7. Apply available tax resources. Overview The effectiveness of a country's tax system has a great impact on its government's fiscal spending (on areas such as defence, education, health care, national development, public housing, etc.) and hence, influencing the country's economic and social development as well. Singapore's tax system and policies are formulated by observing closely the key economic and social needs of the country. The tax system in Singapore is governed within a legislative framework. Chapter 1 provides an overview of the fiscal policy and tax system of Singapore and explains the objectives and processes in formulating tax policies. Chapter 2 elaborates on the legislative framework governing the Singapore tax system and helps students to identify and familiarise themselves with the tax resources available in Singapore. SU1-1 ACC213 STUDY UNIT 1 Chapter 1 Singapore Tax System and Policy 1.1 Overview of Singapore Tax System and Policy The government incurs various types of expenditure annually and funding is required to assist the government to discharge its functions, maintain competitiveness and develop a more robust nation with a vibrant economy that is also attractive to foreign investment. Generally, the government spends in key areas such as defence, education, national development, health care, public housing, and developing and maintaining major economic infrastructure and services. The government gets funding for these expenditures from government revenues, internal and external borrowings, and increasing the money supply (i.e. monetary and fiscal policies). The government uses monetary policy to influence the economy by way of controlling the supply of money to impact interest rates with the objective of growth and stabilisation of the economy. In Singapore, the Monetary Authority of Singapore (\"MAS\") manages the country's monetary policy, with the objective of maintaining price stability for sustained economic growth. In a small and open economy like Singapore where imports and exports amount to greater than twice its Gross Domestic Product (\"GDP\"), exchange rate management has proven to be the most effective method for controlling inflation. This is the reason behind the focus on exchange rate management in Singapore's monetary policy since the early 1980s. Fiscal policy, on the other hand, is related to government borrowings, expenditures and taxation. In Singapore, the Ministry of Finance (\"MOF\") manages the country's fiscal policy, with the objective of promoting long-term sustainable economic growth. Access the website of the Singapore Government Securities http://www.sgs.gov.sg and read on \"Monetary Policy\" and \"Fiscal Policy\". What is the purpose of having fiscal policies in Singapore? SU1-2 ACC213 STUDY UNIT 1 1.2 Fiscal Policy and its Components Fiscal policy comprises the following three major components and is implemented mainly through the government budget: a. Government revenue policy, b. Government expenditure policy, and c. Debt management policy. Debt management policy deals with the government's management of public debt while government revenue and expenditure policies deal with the funding of government expenditure and the application of these funds for public projects and programmes, and the delivery of essential public goods and services (such as education, health care, infrastructure and housing) for the country. Government revenue policy directly influences a country's tax policy and system. In Singapore, the MOF decides on the country's fiscal policies, involving the interrelationship between government revenue and expenditure during the budgetary process. During the annual budgeting process, tax policies are reviewed as part of the overall strategies for stimulating economic growth and development. Tax changes are part of the budgetary process where the various government ministries and departments submit their proposals for tax changes to the MOF. The MOF will evaluate the proposals and seek the Minister's approval for the proposals it supports. Approved proposals are then incorporated into the annual budget (for the fiscal year 1st April to 31st March of the following year). Fiscal policy uses government expenditure and revenue collection to influence the economy by varying the level and composition of taxation and government outlays. Such variation resulting in budgetary surpluses/deficits can have deflationary/expansionary effects on the economy. In order to ensure stable, noninflationary long-term economic growth, the Singapore government is guided by the following objectives in its conduct of government budgetary policy: To promote and support sustained, non-inflationary economic growth, To maintain a balanced budget (i.e. to finance total operating and development expenditures from operating revenue over the course of the fiscal year), and SU1-3 ACC213 STUDY UNIT 1 To focus on government expenditure for delivering essential public goods and services (e.g. education, health care, infrastructure, housing, environment protection programmes). Yet, underlying the above objectives is the recognition that market forces drive the economy, financial prudence must be exercised to avert economic shocks and emphasis on human and infrastructure investment is essential for enhancing competitiveness; as such, the Singapore government has avoided actively using fiscal policy to manage the economy unnecessarily. Amongst all, the government has adopted fair tax policies and prudent expenditure programmes, resulting in healthy budget surpluses over the years. This translates into a high savings rate and high investment levels without the need to incur foreign debt. High domestic savings have largely contributed to Singapore's high level of foreign reserves, which have served to boost investor confidence and provided a buffer against economic contingencies. How is taxation related to fiscal policies of Singapore? 1.3 Tax Policy Tax policy is an integral part of government revenue policy. In formulating the revenue and tax policy in Singapore, the government is guided by the following objectives: To Raise Revenue This is the traditional aim of tax policy. Tax revenue is a substantial source of funding for government operations and expenditure. To Promote Economic and Social Goals Tax has been used to influence behaviour towards desirable social and economic goals. For instance, to encourage skills upgrading and innovation, the government introduced the Productivity and Innovation Credit (\"PIC\") incentive in the 2010 Budget to grant 250% tax deduction (subsequently increased to 400% in the 2011 Budget) for qualifying innovation and productivity-related business expenditure. SU1-4 ACC213 STUDY UNIT 1 To Enhance the Macroeconomic Stability of Singapore Ensuring fiscal policy is in line with the sustained growth of a stable economy and making prudent use of government revenue for expenditure is instrumental in achieving a reasonable surplus annually for building investors' confidence. Budgetary surpluses can be used for purchase of assets and infrastructure investments to reap long-term benefits. To Maintain an Internationally Competitive Tax Structure and Encourage Entrepreneurship This is through the use of tax schemes and policies that encourage entrepreneurship and tax rates that are kept competitive for both corporations and individuals. Keeping corporate tax rate competitive helps maintain Singapore's competitiveness in terms of attracting foreign investments. Keeping individual tax rates low will encourage people to be diligent and enterprising. With a favourable tax structure, business enterprises are encouraged to grow and reinvest in Singapore and the economy will reap long-term benefits in return (e.g. low unemployment rate and transfer of knowledge and expertise). To Build a Broad Tax Base Please refer to Section 1.4 for details. Based on your understanding of the Singapore tax system, state examples of how the government has fulfilled its objectives in the course of formulating tax policies in Singapore. 1.4 Government Operating Revenue Access the Inland Revenue Authority of Singapore www.iras.gov.sg and read on \"About IRAS: About Us\". SU1-5 (\"IRAS\") website ACC213 STUDY UNIT 1 There are three main sources of government operating revenue, namely (I) tax revenue, (II) fees and charges, and (III) other receipts. Tax revenue accounts for 72.9% of total government operating revenue for the fiscal year 2013/2014. Tax revenue is derived from the various taxes imposed by the government, which are as follows: Income Tax Income tax is chargeable on income of individuals and corporations. Goods and Services Tax Goods and Services Tax (\"GST\") is a tax on consumption. The tax is paid when money is spent on goods or services, including imports. To increase the resilience of taxes as a source of government revenue, GST was introduced in 1994. The balanced mix of tax on income and consumption reduces the vulnerability of revenue intake to adverse economic conditions and strengthens the resilience of Singapore's fiscal position. Property Tax Property tax is imposed on owners of properties based on the expected rental values of the properties. Motor Vehicle Taxes These are taxes, other than import duties, imposed on motor vehicles to curb car ownership and road congestion. Import (Custom) and Excise Duties Singapore is a free port and has relatively few excise and import duties. Excise duties are imposed mainly on tobacco, petroleum products and liquors, whereas import duties are imposed on motor vehicles, tobacco, petroleum products and liquors. Betting Taxes These are duties on private lotteries, betting and sweepstakes. Casino Tax This is imposed on the casinos' gross gaming revenue. SU1-6 ACC213 STUDY UNIT 1 Stamp Duties This is imposed on commercial and legal documents relating to stock and shares, and immovable property. Other Taxes The other two main taxes are foreign worker levy and airport passenger service charge. The former is imposed to regulate the employment of foreign workers in Singapore. Access the Inland Revenue Authority of Singapore (\"IRAS\") website www.iras.gov.sg and read on \"About IRAS: About Us - Taxes in Singapore - Taxes and Nation Building\". Based on your understanding of the Singapore's economy and tax system, suggest ways to further diversify Singapore's tax base. 1.5 Role of Taxation Taxation is a tool used by the government to encourage or deter certain activities and therefore tax policies have an effect on the economy and its development. The role of taxation (and its tax policies) may be summarised as follows:Government Funding and Redistribution of Wealth Traditionally, tax is used to generate government revenue and increase its tax base to fund public goods and services. Tax is also a way in which profits from the private sector may be transferred to the government for public utilisation such as investments in public infrastructure and social welfare programmes. SU1-7 ACC213 STUDY UNIT 1 Promotion of Economic and Social Goals Tax policies are structured in a manner to influence behaviour towards desired economic and social goals. Therefore, it is important that they are coherent and appropriate for attaining these goals. Below are some examples: To maintain global competitiveness and attractiveness as a business hub, Singapore keeps its corporate and individual tax rates at globally competitive levels. To encourage research, learning, productivity and innovation, the Singapore government introduced the Productivity and Innovation Credit (\"PIC\") in the 2010 Budget. PIC allows businesses to claim additional tax deductions for qualifying business expenditures related to research, learning, productivity and innovation. To attract foreign direct investments and reinvestments in Singapore, the government has, over time, introduced various tax incentives to encourage investments in different industries, some of which are geared towards taxpayers' needs. Furthermore, certain foreign incomes received in Singapore are tax-exempt, subject to qualifying conditions. To encourage procreation, tax rebates are given to taxpayers with up to four children. To iron out inequalities in wealth, individual tax rates are structured in progressive tiers based on income levels. Correction of Market Failures Occasionally, tax policy may be a tool for correcting market failures. For example, during the Sub-Prime Crisis in 2008, a bonus tax was proposed in the United Kingdom in order for the government to obtain funds to bail out the troubled banks and financial institutions. In addition, taxation helps to reduce the effect of the economic multiplier and thus can help to dampen the cyclical fluctuations on the economy. An Alternative Avenue to Finance Government Expenditures Taxation is an alternative way to finance government expenditures instead of using monetary policy or domestic and foreign borrowings, which may have unfavourable effects on the economy such as inflation or poor global public debt rating respectively, in the long run. SU1-8 ACC213 STUDY UNIT 1 Access the link below and briefly review the Budget Measures for 2015 http://www.singaporebudget.gov.sg/budget_2015/budgetmeasures.aspx. State the main areas of the government's focus in Budget 2015. Singapore tax system and policy (Access video via iStudyGuide) SU1-9 ACC213 STUDY UNIT 1 Chapter 2 Legislative Framework for Taxation 2.1 Overview of Legislative Framework for Taxation The legislative framework for taxation in Singapore is made up of main tax statutes, subsidiary legislation, e-Tax guides/press statements and case laws. The nature and application of each are highlighted in the following subsections. 2.2 Main Tax Statutes The main tax statutes governing the different taxes imposed in Singapore are: Income Tax Act (\"ITA\"), Goods and Services Tax (\"GST\") Act, Property Tax Act, Economic Expansion Incentives (Relief from Income Tax) Act (\"EEIA\"), Estate Duty Act, Stamp Duties Act, Casino Control Act, Betting and Sweepstakes Duties Act, and Private Lotteries Act. In Singapore, the ITA (Cap 134, 2014 Revised Edition), first imposed in 1948, is the major statutory instrument used to impose income tax in Singapore. The ITA was first devised and imposed by the British colonial government. Hence, the ITA shares similar historical origins with those of the Commonwealth countries (e.g. Malaysia, Australia, New Zealand and South Africa); as such, tax cases in these countries may be of persuasive effect in the interpretation of the ITA if similar provisions exist. In Singapore, the GST Act (Cap 117A, 2005 Revised Edition), first imposed in 1994, is the sole statutory instrument used to impose consumption taxes on goods and SU1-10 ACC213 STUDY UNIT 1 services in Singapore. The GST Act imposed a 3% tax on consumption in 1994 and thereafter, it increased progressively to the current 7% in 2007. Students are encouraged to make reference to the ITA and GST Act as much as possible. Both the ITA and GST Act can be downloaded from the website of the Attorney-General's Chambers at http://statutes.agc.gov.sg/aol/home.w3p. The Economic Expansion Incentives (Relief from Income Tax) Act (Cap 86, 2005 Revised Edition) provides for tax incentives to attract investors towards certain areas of economic or technological enhancement/development of Singapore. How many parts and sections are contained in the ITA and GST Act and which sections would you expect to be most commonly used by tax practitioners? 2.3 Subsidiary Legislation The following are subsidiary legislations that supplement the main tax statutes: Comprehensive tax treaties, International transport agreements, and Income tax regulations, rules and orders. Comprehensive tax treaties and international transport agreements are signed and ratified by competent authorities of two contracting states to stipulate tax treatments of various types of income received by a resident of one contracting state in the other contracting state. Such arrangements are negotiated, signed and ratified between competent authorities of both contracting states for the purposes of clarifying tax treatments for certain cross-border tax transactions, relieving potential tax burdens and avoiding double taxation. Income tax regulations, rules and orders are supplementary sections to the main tax statutes where further stipulations of certain existing provisions of tax statutes are stated. SU1-11 ACC213 STUDY UNIT 1 Access the IRAS website www.iras.gov.sg - \"Quick Links - International Tax\". To date, how many comprehensive tax treaties have Singapore concluded, signed and ratified? Name a few of these contracting countries and list the common Articles included in all these treaties. 2.4 IRAS e-Tax Guides and Press Statements E-Tax guides and press statements are issued by the IRAS. E-Tax guides are interpretations adopted by the IRAS on specific provisions in the main tax statutes or subsidiary legislation. E-Tax guides can be found on the IRAS website, under \"e-Tax Guides\". These are categorised into \"Income Tax (Companies/Individuals/Others)\Introduction Tutor name Contact details (e.g. email) - Self introduction - ACC213 Introduction to Income Tax January Semester 2016 Objective To provide an overview of Singapore's tax system To introduce Singapore's tax concepts and policies To develop skills for computing income tax for individuals and sole proprietorships To develop skills for accounting and computing goods & services tax To introduce other taxes imposed in Singapore Seminar Flow Study Unit 1 2 3 4 5 6 Topic Singapore's Tax System & Policy Legislative Framework for Taxation Assessment Process & Compliance Issues for Income Tax Key Income Tax Concepts Taxation of Individuals Taxation of Foreign Employees & Non-Resident Individuals Key Goods & Services Tax (\"GST\") Concept and Rules Assessment Process & Compliance Issues for GST GST Supplies & Output Tax Payable GST Credits & Reliefs and Input Tax Recoverable Other GST Issues Stamp Duty Course Delivery Course material E-course guide Recommended text Course presentation Self-study via online learning (Online or CD) 6 face-to-face seminars with 5 flipped classroom sessions Working on an individual & group-based assignment Course Assessment Assessment TMA01 TMA02 Examination TOTAL Description Weight Allocation Individual-based assignment Group-based assignment Computations & short-answer questions 20% 30% 50% 100% Examination Students will be tested on all the topics covered in the seminars and e-Learning materials Students are advised to gain understanding of the subject progressively to avoid cramping at the eleventh hour Students are advised to put in the necessary effort in their individual and group-based assignments, and participate in discussions The examination is a 2-hour paper and all questions are compulsory Students are advised to refer to Blackboard for the examination format Grouping L01 Contains course material, important updates and announcements, and instructions for individual & group-based assignments T01/02/etc. For submission of all assignments and online discussion Communication All questions related to the course are to be posted in the general forum Students are to engage in the topical discussion forum Email (must relate to the course, not include personal matters and use UniSIM's assigned email) TMAs - Individual & Group-based These are tutor-marked assignments and not tutorassisted assignments Each individual and group must attempt the assignments and produce original content for their maximum benefit Tutor will not review the assignment in class with students nor entertain questions leading to required answers Tutor will only clarify questions if necessary Group-based Assignment Students are to form into groups consisting of 3 members All members of the group must be from the same T-group Groups must be formed immediately and nominate a group leader Group leaders must submit the names of all group members to the seminar instructor before the end of the second week Free Rider Any group member who contributes little or nothing to the group assignment is a free-rider There are rules which define acceptable behaviour amongst group members Group members are to alert the seminar instructor of free-riding incidence of any group member Presentation of Assignment Cover page Proper headings & titles Use of commas, numerical separators, currency units, etc. (e.g. S$1,000,000 and not 1000000) Proper formatting & indentation Referencing of all information sources Submission of Assignment Submitted in Word document format To include appropriate cover page, headings & titles for each answered question Excel, html, jpeg, etc. files are NOT to be inserted into the assignment Only \"black\" or \"blue\" font is allowed Referencing must be observed Warning! 10% of total marks are deducted for violations of the above Turn-it-in Turn-it-in is a tool for checking plagiarism or collusion All assignments and coursework by students must be submitted to Turn-it-in for plagiarism detection & grading. No hardcopy submission will be accepted. Referencing - acknowledgement of works and ideas taken from internet, textbooks, articles, etc. must be given Refer to student handbook for further details Singapore Tax System & Policy Study Unit 1 Singapore Tax System & Policy Overview of Singapore Tax System & Policy Government spending: government spends on key areas like education, public housing, national security, healthcare and building & maintaining physical & economic infrastructure & services. Government funding: government obtains funding from public sources of revenue, internal & external borrowings and printing of money (i.e. monetary & fiscal policies) o Monetary policy: influence the economy by controlling the supply of money to impact interest rates o Fiscal policy: relates to government borrowings, expenditures & taxation Singapore Tax System & Policy Fiscal Policy & its components Fiscal policy comprises of the following three main components implemented as part of the Budget o Debt management policy: management of public debt o Government revenue policy: for obtaining funding & how these funds are planned around/for government expenditure o Government expenditure policy: for the delivery of essential public goods & services Singapore Tax System & Policy Features of Singapore's Fiscal Policy Fair tax policies & prudent expenditure programs, resulting in healthy current account surpluses over the years High savings rate & one of the highest investment rates in the world without having to incur foreign debt High domestic savings Singapore's high level of foreign reserves which have serve to increase & maintain investors' confidence and as a buffer against adverse economic shocks Singapore Tax System & Policy Singapore Tax Policies Tax policies form an integral part of the government's revenue policy Main objectives of Singapore tax policies are: o Raising revenue o Promoting of social & economic goals o Enhancing the macroeconomic stability of Singapore's economy o Maintaining an internationally competitive tax structure & encouraging entrepreneurship o Building a broad tax revenue base (examples of common tax revenue are listed in the next slide) Singapore Tax System & Policy Government Operating Revenue Tax revenue o Income tax o Goods & Services tax o Property tax o Stamp duties o Casino tax o Betting tax o Motor vehicles tax o Customs & excise duties Fees & charges Other receipts Singapore Tax System & Policy Role of Taxation To encourage or deter certain activities Has an effect on the economy & its development As a form of government funding As a mechanism for the redistribution of wealth For the promotion of specific social & economic goals For the correction of market failures To fund government expenditure Legislative Framework for Taxation Overview of Singapore's Legislative Framework for Taxation Singapore's legislative framework for taxation is made up of: o Main tax statutues o Subsidiary legislation o E-Tax guides o Press statements o Case laws Legislative Framework for Taxation Main Tax Statutes The main tax statutes governing different taxes that are imposed in Singapore are: o Income Tax Act o Economic Expansion Incentives (Relief from Income Tax) Act o Property Tax Act o Goods & Services Tax Act o Stamp Duties Act o Casino Control Act o Betting & Sweepstake Duties Act o Private Lotteries Act Legislative Framework for Taxation Subsidiary Legislation The following are subsidiary legislations that supplement the main tax statutes: o Comprehensive tax treaties Are signed between the competent authorities of two contracting states Agree on the tax treatments of various types of income in either state Are for the purpose of clarifying tax treatments for certain cross-border tax transactions, relieving potential tax burdens and avoidance of double taxation Legislative Framework for Taxation Subsidiary Legislation (continued) The following are subsidiary legislations that supplement the main tax statutes: o International transport agreements o Income tax regulations, rules & orders Supplement the relevant sections of the various tax statutes Further stipulate, explain or clarify existing provisions of the various tax statutes Legislative Framework for Taxation IRAS E-Tax Guides & Press Statements Issued by the Inland Revenue Authority of Singapore E-tax guides are interpretations adopted by the IRAS on specific provisions in the tax statutes or subsidiary legislation Legislative Framework for Taxation Case Laws The Court is often called upon to rule on the application of the tax statutes Case laws are precedent court decisions that tax practitioners can rely on as an alternative or supplementary source of interpretation to the existing tax legislation Singapore Tax System & Policy Thank you Tax Compliance & Income Tax Concepts Study Unit 2 Tax Compliance in Singapore Tax Compliance Obtaining cooperation of taxpayers to ensure all aspects of tax laws and tax filings are properly enforced and adhered to and its administration is complied with, on a complete and timely basis. Important for implementing a well-structured tax policy. Maximises tax revenue collection for the purpose of resource allocation and meeting investment goals of the economy. Role of the Inland Revenue Authority of Singapore (IRAS) Acts as an agent of the Singapore Government to administer and enforce tax laws as well as to assess and collect tax. Represents Singapore internationally in matters relating to taxation. Tax Compliance in Singapore IRAS believes that: Voluntary tax compliance is the long term sustainable way to achieve effective and efficient tax administration. A large majority of compliant taxpayers has an influence on societal behaviour and creates pressure on the minority of errant taxpayers to become compliant. It can encourage taxpayers to be voluntarily compliant by strategically designing various aspects of IRAS' tax administration. IRAS' four taxpayers profiles (extracted from IRAS' website) are shown on the next slide. Tax Compliance in Singapore Tax Compliance in Singapore IRAS Tax Compliance Strategy Framework Tax compliance entails the complete fulfillment of a taxpayer's obligation, which includes: Preparation and filing of respective tax returns on a timely basis; Provision of complete, correct and accurate information in the tax returns; and Payment of taxes on a timely basis. Tax Compliance in Singapore Enhancing Tax Compliance by: i) Providing services & facilities such as: Tax-filing information provided on the IRAS website; Maintenance of a IRAS hotline; Availability of online tax filing facilities; Availability of e-tax guides on the IRAS website; and Availability of payment schemes such as instalment plans, GIRO payment and default payment scheme for taxpayers to choose the method of tax payment that is most convenient for them. Tax Compliance in Singapore Enhancing Tax Compliance by: ii) Simplification of tax system iii) Two-way public education and consultation such as: Providing sufficient education to taxpayer as a preventive strategy against non-compliance; and Encouraging active involvement of taxpayers in the design of tax policies and regulations. (e.g. inviting feedback from the public in their capacity as taxpayers, tax agents and consultants to provide their views relating to new or existing tax policies). iv) Enforcement, deterrent, offences and penalties (different levels for different groups of taxpayers). Tax Compliance in Singapore Enhancing Tax Compliance by: v) Audit & investigation IRAS adopts a risk-based approach in carrying out compliance actions; and To detect non-compliant cases to form a deterrent to the business itself as well as the other taxpayers (by identifying and prioritising key areas of compliance risks and common mistakes). Tax Compliance in Singapore Enhancing Tax Compliance by: vi) Tax recovery Issuance of demand notesotices to pay; Imposition of late payment penalties and fines; Appointment of agents to collect tax due; Recovery of tax at the source of income; Restriction Order to prevent the taxpayer from leaving Singapore; Seizure of assets; and Bankruptcy or winding up proceedings as the last resort to recover taxes. Tax Compliance in Singapore Voluntary Disclosure Program (VDP) To encourage timely tax filing and payment and to provide a deterrent for those who are deliberately non-compliant. Instead of imposing maximum penalties (up to 200% of tax undercharged for Income Tax and tax unpaid for GST, and up to 20% for Withholding Tax unpaid), penalties are reduced once for first-time voluntary disclosures as follows, subject to the qualifying conditions:Types of Voluntary Disclosures Penalty Treatment Made within grace period of 1 year from statutory filing date Waiver of penalty Made after grace period Reduced penalty of:5% p.a. for Income Tax 5% for GST & Withholding Tax Tax Compliance in Singapore Qualifying Conditions for VDP The voluntary disclosure is only available for one time, encouraging taxpayers to comply on a timely basis. The qualifying conditions of the VDP include all of the following: The taxpayer demonstrates a voluntary disclosure that is timely, The taxpayer demonstrates a voluntary disclosure that is accurate, The taxpayer demonstrates a voluntary disclosure that is complete, The taxpayer demonstrates a voluntary disclosure that is self-initiated, The taxpayer must fully cooperate with IRAS to correct all errors made, and The taxpayer must pay or make arrangements to pay IRAS all additional taxes and penalties. Tax Compliance in Singapore Enhancement to VDP The VDP was further enhanced on 1st January 2013 to include voluntary disclosure of past actions involving willful intent to evade taxes. Taxpayers who come forward and voluntary disclose past actions involving willful intent to evade taxes may be accorded the treatment of having their offences compounded at a reduced penalty rate of 200%, instead of being prosecuted. Tax Administration in Singapore In Singapore, taxation is administered and enforced by the Inland Revenue Authority of Singapore (IRAS). The Commissioner of Inland Revenue is the Chief Executive Officer of the IRAS. The Commissioner's statutory appointments include that of: Comptroller of Income Tax; Comptroller of Goods and Services Tax; Comptroller of Property Tax; Commissioner of Stamp Duties; and Commissioner of Estate Duties. Section 4(3) of the Income Tax Act confers on the Comptroller extensive powers and responsibility for assessment and collection of income tax. Tax Administration in Singapore Types of Tax Returns Tax Returns are used to gather taxpayers' information for assessing their tax liabilities for the year. Types of Tax Returns include: Form B: Individuals with business income Form B1: Other individuals Form M: Non-resident individuals Form P: Partnerships Form P1: Clubs, associations, management corporations, etc. Form P2: Charities Form T: Trusts Form C : Companies Form C-S : Companies Tax Administration in Singapore Tax filing obligations Preceding year basis - i.e. An individual's income for the financial year ended 31 December 2015 will be assessed to tax during the year 2016 (i.e. Year of Assessment 2016). For all taxpayers, other than companies, tax returns have to be submitted to the IRAS by 15th April of the tax year. If a taxpayer does not file his/her tax return by 15th April (for paper returns) or 18th April (for eFiling), IRAS will pursue the overdue tax return as follows: Issue an estimated Notice of Assessment (\"NOA\") and the taxpayer must pay the tax amount based on IRAS' estimated NOA within 30 days, Impose a penalty for not filing, Summon the taxpayer to Court where the penalty can be twice the amount assessed by IRAS, and Issue a Warrant of Arrest. Tax Administration in Singapore Other tax obligations Dividend and interest income received from approved banks and financial institution by individuals are exempt from tax and need not be declared in the individual's tax return. Donations to approved institutions of public character need not be declared as the Comptroller already has this information. An individual, who is chargeable for tax but has yet to receive a tax return form, has the obligation under the ITA to notify the Comptroller and obtain the required form for completion and submission. If a tax return form is not received by 31st March of any tax year, the onus is on the taxpayer to inform the Comptroller within 14 days. Tax Administration in Singapore Errors in tax returns When IRAS detects errors or omissions in a tax return, penalties will be imposed on the taxpayer. IRAS will look into individual circumstances in deciding the penalty amount, including reasons for the discrepancy, how the taxpayer has complied in the past and his/her commitment to compliance in the future. Depending on individual circumstances, a taxpayer convicted under Section 95 of the Income Tax Act (\"ITA\") may be imposed with a penalty ranging from 0% to 200% of the amount of tax undercharged. A fine up to $5,000 or an imprisonment up to three years may also be imposed. Tax Administration in Singapore Tax payment obligations Unless on IRAS' GIRO Payment Scheme, taxpayers have 1 month from the date of the NOA to pay their taxes. When payment is not received by the due date, a 5% penalty and subsequently a 1% additional penalty can be imposed on the unpaid taxes. The taxpayer will receive a Demand Note to pay the overdue taxes and penalties immediately. A taxpayer whose GIRO installment plan is cancelled will also have a 5% penalty imposed immediately on the overdue taxes. IRAS will issue a letter to inform the taxpayer that the GIRO plan is cancelled. Tax Administration in Singapore Tax payment obligations (cont'd) The taxpayer needs to inform IRAS verbally (by calling +65 6356 7012) if he/she wants to join the IRAS GIRO Payment scheme or a review of the GIRO payment plan. Extension of time to pay taxes is granted only under extenuating circumstances such as temporary loss of job. The taxpayer still needs to pay the tax as shown on the NOA by the payment due date despite objection to the tax assessment, if any. If tax remains unpaid by due date, IRAS can enforce the following: Issue a Demand Note with imposition of penalty; or Effect other enforcement actions such as appointing the taxpayer's bank to pay over monies from his/her bank to IRAS. Tax Administration in Singapore Types of assessment The Comptroller reviews the tax returns submitted and is empowered to raise notices of assessment. There are five types of assessments: Original assessment Additional assessment Amended assessment Advance assessment Protective assessment Tax Administration in Singapore Time limit for assessment Under the law, the Comptroller can issue assessments to the company within the following timeframes: YA2007 and earlier - Six years after the respective YA YA2008 onwards - Four years after the respective YA E.g. Time-bar year for YA 2004 is 31 December 2010. In the case of fraud, however, the Comptroller is allowed by law to raise assessment without being subject to the above time limit to recover any loss in tax revenue. Tax Administration in Singapore Objection & appeal process An objection against the notice of assessment raised by the Comptroller should be lodged within 60 days from the date of the notice. Payment for tax liabilities under the notice of assessment has to be paid within 30 days from the due date of the assessment notice, despite an objection being lodged, unless the taxpayer requests for a stand-over of the tax collection. An appeal against the Comptroller's decision on a taxpayer's tax liabilities can be lodged only if the Comptroller issues a Notice of Refusal to Amend (\"NRA\") to the taxpayer. With a NRA, the taxpayer can lodge a Notice of Appeal (\"NA\") with the Clerk to Board of Review within 30 days from the date of NRA, followed by a Petition of Appeal stating the detailed grounds of appeal within 30 days from the NA. The Board's decision, after its review, is final. Nonetheless, if the tax dispute is a question of law or a mix of law and fact, the Board's decision can still be challenged in the High Court and, if necessary, in the Court of Appeal. Tax Administration in Singapore Error & mistake relief Should an objection not be lodged within 60 days from the date of notice, the notice of assessment becomes final and conclusive, unless the taxpayer invokes Section 93A of the ITA to request the YA to be reopened. The Comptroller may reconsider the case only if he agrees that there was a genuine error in the return, made by the taxpayer, for the purpose of assessment. Tax Administration in Singapore Advance Ruling System Legislated from 1 January 2006. A written interpretation of how a certain provision of the Income Tax Act or GST Act applies to a specific taxpayer and a proposed arrangement. Binds the Comptroller to apply those statutory provisions in the manner set out in the ruling issued. For advanced rulings on provisions of the ITA, an application for advanced ruling should be submitted at least 2 months or 1 month (for normal and express advanced rulings respectively) before the date of the proposed arrangement. For advanced rulings on provisions of the GST Act, an application for advanced ruling should be submitted at least 1 month or 10 days (for normal and express advanced rulings respectively) before the GST filing deadline of the relevant GST return. Tax Evasion Tax Evasion (Income tax) The deliberate act of a taxpayer to deceive the Comptroller or omit any amount of taxable income from his tax return by illegitimate means. Common methods of income tax evasion identified by the IRAS includes:o Reporting lower or omission of taxable income; o Claiming tax deduction for private or prohibited expenses; o Falsifying tax returns and accounts; o Providing inaccurate or/and incomplete information to obtain undue tax credits and refunds; o Entering into sham transactions with the intention to deceive; and o Abusing IRAS' schemes such as the tax exemption scheme for companies and the Productivity and Innovation Credit. Tax Evasion Tax Evasion (GST) Common methods of GST evasion identified by the IRAS includes:o Omitting output tax charged on local taxable supplies; o Claiming input tax on fictitious purchases; and o Claiming tourist refunds when not entitled to. Tax evasion is illegal and if convicted, is treated as a criminal offence. Sections 96 and 96A of the ITA provide for penalties for different levels of fraud and willful income tax evasion, including one who assists another in committing income tax evasion. Section 62 of the GST Act provide for penalties for willful GST evasion, including one who assists another in committing GST evasion. Tax Evasion Tax Evasion (Public vigilance) An individual who is aware of a taxpayer who has evaded tax in Singapore or have information about fraudulent tax-related activities can provide information to IRAS via email to ifd@iras.gov.sg or a personal visit to IRAS during office hours. IRAS guarantees the confidentiality of the informant. IRAS will review all the information provided and will initiate investigation if its review indicates a likelihood of tax evasion or fraud. Hence, it is important for the informant to provide IRAS with critical information. IRAS may reward the informant if the information or/and documents he/she provided have led to the recovery of tax that would otherwise have been lost. The reward is computed at 15% on tax recovered and capped at $100,000. Tax Avoidance Provisions within the Singapore ITA renders some tax avoidance schemes as ineffective. Section 33 of the ITA is the general antiavoidance provision, while there are also various other anti-avoidance provisions in the ITA. Under the current Section 33, the Comptroller is granted extensive powers to challenge/disregard/make variations to any transaction or arrangement that:o alter the incidence of any tax which is payable by or which would otherwise have been payable by any person; o relieve any person from any liability to pay tax or to make a return under this Act; or o reduce or avoid any liability imposed or which would otherwise have been imposed on any person by this Act. Tax Avoidance Genuinely commercially justifiable transactions/ arrangements that result in tax savings will not be penalised under Section 33. No penalty is imposed under Section 33. Section 33 will not introduce a tax liability where none existed in the first place. E.g. Foreign interest income from deposits with an offshore bank remains unremitted. Tax Audits Tax audits are conducted by IRAS' officers on the premises of taxpayers to ensure that income liable to tax or GST paid/(refunded) has been properly determined. IRAS's objective in conducting tax audits is not to prove an act of tax evasion but to ensure/educate taxpayers on compliance of the requirements under current tax laws, to review submitted tax returns against taxpayers' records to determine areas of amendments (if any), to determine if books and records kept by the taxpayers are adequate for proper determination of tax liability, and to promptly implement measures/programs to address areas of uncertainty brought to light during the audits. Tax Audits Subsequent to the conduct of tax audits, the IRAS identifies key areas of errors and for improvement, and publishes such information for the benefit of taxpayers with the intention of enhancing the quality and promptness of tax compliance in Singapore. Details related to the expectations of IRAS and taxpayer, procedures and legal provisions for a tax audit can be found in Chapter 3 of the iSG. Tax Investigations Tax investigations are carried out on a taxpayer when preliminary reviews and tax audits present traces of tax evasion. Prior approval has to be granted by the relevant authority for such investigations. The objective of investigation is to detect omitted income and all irregularities in a taxpayer's past and current income tax reporting or detect omitted taxable supplies and all irregularities in a taxpayer's past and current GST reporting. Procedures employed by the Comptroller include specific queries posed to the taxpayer, checks of the taxpayer's books and records, the taxpayer's own disclosures, disclosures by third parties, the reasonableness of a taxpayer's income or taxable supplies based on the industry average, taxpayer's comparative records, taxpayer's net worth estimation and the IRAS's proprietary sources of information. Tax Investigations If tax evasion is detected, the severity of the offence and subsequent penalty will be considered based on the taxpayer's original intention, his cooperation during the course of the investigation, amount of tax undercharged and the results of a negotiated settlement on penalties imposed under the ITA or GST Act. Details related to the expectations of IRAS and taxpayer, procedures and legal provisions for a tax investigation can be found in Chapter 3 of the iSG. Key Income Tax Concepts Income Tax Systems Two general types of tax systems employed by tax jurisdictions all over the world: Worldwide Tax System - where a country taxes its residents on all their income, regardless of whether the source of income is in or outside that country. E.g. US Pure Territorial System - where a country taxes only income sourced from that country and no tax is imposed on income sourced outside that country. E.g. Malaysia Key Income Tax Concepts Singapore's Modified Territorial Tax System Singapore adopts the modified territorial tax system. The charging section, Section 10(1) of the ITA, clearly states that tax shall be imposed in any year of assessment on income \"accruing in or derived from Singapore\" or \"receiving in Singapore from outside Singapore\Taxation of Individuals Study Unit 3 Taxation of Individuals Tax Residency (recap) Tax residency of an individual is determined based on two tests, the qualitative (a Singapore citizen normally residing in Singapore or a Singapore Permanent Resident who establishes Singapore as a permanent home) and the quantitative test [foreigner staying/working (other than being a director of a company) in Singapore for 183 days or more in that calendar year preceding the year of assessment]. Benefits of being a tax resident of Singapore were mentioned in the previous seminar. Taxation of Individuals Tax Residency - other speci