A21: Audit Exemption
Your Company will be considered as an exempt private limited company (for companies with financial year starting prior to 1 July 2015) if you have no corporate shareholders and no more than 20 individual shareholders. No auditing is required for exempt private limited company if its revenue is below S$5 million.
For companies incorporated or with financial year end period starting on or after 1 July 2015, the Company’s account must be audited if the Company has not qualified as a small companies for the immediate past two consecutive financial years.
A company qualifies as a small company if (a) it is a private company in the financial year in question; and (b) it meets at least 2 of 3 following criteria for immediate past two consecutive financial years:
(i) total annual revenue is not more than $10m;
(ii) total assets is not more than $10m;
(iii) no. of employees is not more than 50.
For a company which is part of a group, to qualify to the audit exemption:
(a) the company must qualify as a small company; and
(b) the entire group must be a “small group”
For a group to be a small group, it must meet at least 2 of the 3 quantitative criteria on a consolidated basis for the immediate past two consecutive financial years.
Filing Financial Statements in XBRL
Your company would be required to file its financial statements in XBRL format during the filing of annual return, if your company is:
- An exempt private company (without corporate shareholder) but is insolvent (total assets – total liabilities = negative value)
- A non exempt private company (with corporate shareholder) and has business activities (not dormant) for the financial year
A newly-incorporated company that satisfies certain qualifying conditions can claim for full tax exemption on the first S$100,000 of normal chargeable income for each of its first three consecutive years. A further 50 percent exemption is given on the next S$200,000 of normal chargeable income for each of the first three consecutive years. One of the qualifying conditions is that Your Company must have at least one shareholder is an individual beneficially and directly holding at least 10% of the issued ordinary shares of the company in order to enjoy the Tax exemption scheme for new start-up companies.
Besides, the Company is Prohibited of loans (including corporate guarantee) to persons connected with directors of lending company if there is any corporate shareholder in the Company.
Our concluding recommendation is that individual ownership will allow you to benefit from audit and XBRL exemption or tax exemption or both and will have lesser formality to follow.