Year of Assessment (YA)

Summary: A tax year.

In Singapore, the Inland Revenue Authority of Singapore (IRAS) defines the Year of Assessment (YA) as the period when income tax is calculated, finalised, and paid. This is usually based on the chargeable income from the previous year.

 

Who Gets to Choose the Year of Assessment (YA)?

It’s your company’s call! You can pick the financial year-end (FYE) that determines your YA based on what suits you best. Mind you, most companies tend to wrap up their financial year on December 31.

Here’s an interesting note: if your company’s fiscal year runs over 12 months, it has to be split and reported as two taxing years on your income tax return.

Let’s say, for instance, your company was set up on August 1, 2020, with the fiscal year concluding on December 31, 2021.

When it comes time to complete your Singapore tax return for the fiscal period from August 1, 2020, to December 31, 2021, you have to report your company’s income for these two taxation years:

For the tax year 2021, you’ll need to report the income for the fiscal period extending from August 1, 2020, to December 31, 2020.

For the tax year 2022, you’ll cover the fiscal period beginning on January 1, 2021, and ending on December 31, 2021.

If you need to change your FYE, it’s no big deal. You can update BizFile+, and IRAS will automatically get the nudge when you make changes to the Accounting and Corporate Regulatory Authority (ACRA) records.

 

No Confusion, No Delay

Misunderstanding or misinterpreting the term “Year of Assessment” can cause quite a headache. If the YA isn’t defined correctly, you might end up filing your taxes late, which tends to mess up the smooth running of your accounting department. Plus, you don’t want to be slapped with penalties from IRAS, right? So, getting this right is pretty important.