Expenses that are deductible from taxable income are called deductible business expenses. These expenses are exclusively incurred during the production of the income. The other conditions that business expenses must meet to become deductible are:
- They are not contingent liabilities.
- Income Tax Act does not prohibit their deduction.
- They must also be revenue in nature and not capital.
Some examples of the deductible expenses are:
Deductible expenses
- Accounting fee
- Bad debts (trade debtors)
- Bookkeeping services
- Business premises rentals
- Charges of bank
- Commission
- CPF, SDL, Foreign Workers Levy
- Directors’ pay and remuneration
- Electricity and water
- Entertainment
- Exchange loss (nature must be trade and revenue)
- Exhibition expenses
- Expenses associated with motor vehicles (goods and commercial vehicles like lorry, bus, and van)
- Expenses related to the administration of the company
- Expenses related to interest
- Impairment loss on trade debts
- Insurance like workmen compensation and fire insurance
- Maintenance and repairs
- Marketing and advertisement
- Medical expenses (up to 1%/2% of the total pay)
- Newspapers & periodicals
- Office upkeep
- Postage
- Professional and legal fees (transactions related to trade and revenue)
- Provision for specific obsolete stocks
- Remuneration of auditors
- Remuneration of staff (salary, allowances, and bonus)
- Restoration costs (according to tenancy agreement)
- Research and development
- Secretarial pay
- Staff welfare/benefits
- Stationery items and printing
- Stock obsolescence
- Tax fees (tax agent’s service fee)
- Tax on property
- Telephone
- Training of staff
- Transport (goods or commercial vehicles and public transport)
- Traveling
- Workers’ Wages
