What are Tax Losses and Can I Carry Back Singapore Tax Losses?

Tax losses occur when a company's allowable deductions exceed its taxable income in a given Year of Assessment (YA). At Apexia Corporate Advisory, we help businesses leverage tax loss relief schemes, such as the Loss Carry-Back Relief, to optimize tax planning and cash flow management.

What are Tax Losses?

Tax losses refer to unutilized deductions, such as:

• Unutilized trade losses incurred during the basis period for the YA.
• Unutilized capital allowances for the same period.

These losses can be carried forward, transferred under the Group Relief scheme, or carried back to offset against prior-year taxable profits.

What is the Loss Carry-Back Relief?

The Loss Carry-Back Relief allows companies to carry back current-year unutilized trade losses and capital allowances to offset against the assessable income of a prior YA, thereby reducing their tax liability. This scheme provides businesses with immediate tax relief and improves cash flow during challenging periods.

Eligibility Criteria

To qualify for the Loss Carry-Back Relief, companies must meet the following conditions:

• The company must have incurred unutilized trade losses or capital allowances in the current YA.
• The company must have assessable income in the immediate preceding YA to offset the losses.
• The company must be incorporated in Singapore and be a tax resident in Singapore.

How Much Can Be Carried Back?

Under the Loss Carry-Back Relief, companies can carry back up to SGD 100,000 of current-year unutilized trade losses and capital allowances. The offset is limited to the assessable income of the preceding YA.

Temporary Enhanced Carry-Back Relief

To support businesses during economic downturns, the government introduced a temporary enhanced carry-back relief for YAs 2020 and 2021. This allows companies to carry back up to three YAs of assessable income, subject to conditions. Companies must elect for this relief when filing their Corporate Income Tax Return (Form C-S/ Form C).

How to Claim the Loss Carry-Back Relief

To claim the Loss Carry-Back Relief, businesses must:

• Elect for the relief in their Corporate Income Tax Return (Form C-S/ Form C).
• Submit the completed Carry-Back Relief System (CARS) Form if applying for the temporary enhanced relief.
• Provide supporting documentation, such as financial statements and computations of unutilized losses.

Documentation Requirements

To support your claim, maintain the following records:

• Details of unutilized trade losses and capital allowances
• Assessable income computations for the preceding YAs
• Financial statements and tax computations

How Apexia Corporate Advisory Can Help

At Apexia, we provide comprehensive support for businesses looking to optimize their tax position through the Loss Carry-Back Relief. Our services include:

• Assessing eligibility for tax loss relief schemes
• Preparing and submitting accurate claims to IRAS
• Ensuring compliance with Singapore's tax regulations
• Providing strategic tax planning advice to improve cash flow

With our expertise, your business can navigate tax challenges effectively while maximizing available reliefs.