Dormant companies must submit their income tax returns unless a waiver is granted.
1. To File Income Tax Return
A dormant company is a company that ceased trading, does not generate an income from investments, dividends, rental income from real properties or income from any fixed deposits during the basis period.
Dormant companies are not allowed to claim a deduction of its expenses and capital allowances in the basis period (for the current year of assessment) as the companies did not carry on business during that particular period.
However, losses unutilized brought forward from a previous year of assessment can be used as deductions against income for the subsequent year of assessment if the shareholding test is satisfied.
Dormant companies can claim for donations which were made to an approved Institution of Public Character (IPC) or the donations are made to the Singapore government to benefit the local community.
Unutilized donations which arise from a particular year of assessment can be carried forward to the next year of assessment (up to five years). This is subject to the company passing the shareholder test.
Dormant companies have to submit their income tax return unless they have been granted a waiver of the income tax return submission.
Dormant companies can still be asked to send their financial statements to the ACRA for their annual return filing.
2. Application for waiver of income tax return
Dormant companies which satisfy the following qualifying conditions to qualify can put in an application to IRAS requesting to waive their obligations to file their income tax returns.
This process is called the “Waiver to submit income tax return”. This waiver is not applicable to the foreign companies or a Singapore branch registered with the ACRA.
The qualifying conditions are:
1. The company must be dormant and has previously submitted either income tax form, tax computations, financial statements up to the business cessation date;
2. The company does not own investments (e.g. real properties, shares, fixed deposits). Should the company owns any investments, it must not receive any form of income from these investments;
3. The company must de-register for GST if it was previously a GST-registered business; and
4. The company does not have any intentions to resume trade in the next two years.
3. Processing time for a waiver application
IRAS will send notification in writing two months following the date the waiver application is received by IRAS.
After the application is approved, the company will not receive an income tax form in future.
4. Recommencing Business
When a dormant company starts to earn an income and re-commences trade, the company is required to inform IRAS within a month from the date it earns/receives an income.
This can be done by submitting the relevant income tax form “Request for Income Tax Return (Form C-S/C) and a Notification of New Financial Year End”.
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