Expense Management

Understanding Deductible and Non-Deductible Business Expenses

19 October 2023
Grof Writer
5 Minutes Read
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With tax season rolling around once again, businesses in Singapore are gearing up to handle their corporate tax duties. In this journey, one essential task stands out: figuring out your chargeable income. You can easily calculate the figure by subtracting non-deductible expenses, taxable income, and capital allowances from your accounting profit. 


As the November 30th filing deadline approaches, grasping the basics of deductible and non-deductible business expenses becomes crucial for crafting well-prepared financial reports. So, let's dive right in! 


What are Deductible Items? 

Deductible business expenses are those 'wholly and exclusively incurred in the production of income'. To be considered a deductible expense, all conditions below must be met: 

  1. Expenses are solely incurred in the production of income 
  2. Expenses are not a contingent liability 
  3. Expenses are revenue, and not capital, in nature 
  4. Expenses are not prohibited from deduction under the Income Tax Act 


Examples of deductible expenses include: 

  • Office up-keeping 
  • Administrative expenses 
  • Employee wages 
  • Cost of goods sold 



What are Non-Deductible Items? 


Non-deductible items are activities you or your employees pay for that do not fulfill the conditions above. This involves personal expenses not related to the running of the business, and capital expenses such as expenses incurred to incorporate a company and purchase of fixed assets. 

Examples of non-deductible expenses include: 

  • Private leisure travel 
  • Private hire car 
  • Fines 


What’s the Difference? 


Now that you understand the examples of these different types of expenses, let’s find out how each impacts your company’s taxable income. Business expenses are costs required to run a business; however, deductible business expenses reduce your company’s taxable income and the amount of tax you need to pay. Using spend management tool can be highly beneficial in managing your business expenses and ensuring optimal tax deductions. 



Free Tool for Efficient Expense Management 


At Grof, we understand the challenges that business owners face when it comes to expense tracking and categorization. This is why Grof’s business account is here to streamline your expense management without any cost to you! 


Our app offers a seamless bill upload feature and a straightforward approval process, making reimbursement faster and providing a centralized record of all transactions. When tax season rolls around, you can easily export statements, simplifying the reconciliation process. 


If you're ready to join us in shaping the future of finance, we're offering a complimentary onboarding session with our experts to guide you through the registration process. Plus, if you're short on time or simply prefer not to deal with the numbers, our experienced team of accountants can handle your tax filing with ease, allowing you to focus on growing your business. 


Reach out to us today for more ways to optimise your business finances! 

Your Ultimate Singapore Incorporation Checklist
Explore crucial dos and don'ts, along with essential tips for a successful company registration when establishing your foothold in Singapore!
Your Ultimate Singapore Incorporation Checklist
Explore crucial dos and don'ts, along with essential tips for a successful company registration when establishing your foothold in Singapore!
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