Tax and Accounting Year

In Singapore, income tax is charged on a preceding-year basis. This means that the income from any source for any year of assessment is measured by the income from that source in the preceding year. In this regard, the concepts of the year of assessment and the basis period for a year of assessment need to be understood.

The year of assessment is the year in which income tax on the assessable income derived in the preceding year is calculated and charged. Each year of assessment or statutory tax year begins on 1 January and ends on 31 December.

The basis period for a year of assessment is the period of income relevant to the year of assessment. The basis period for any year of assessment is the calendar year preceding that year of assessment.

Companies are allowed to adopt a different financial year other than a calendar year. A different basis period applies to businesses whose accounts are made up to a date other than 31 December. This means that the basis period for such businesses for any year of assessment is the financial or accounting period that ended in the preceding year.