Accounting For Founders

Budget 2020: A One-Page Executive Summary

There has been a lot of buzz around Singapore's national budget for 2020, especially in a time where many businesses are reeling from the economic impacts of COVID-19. Here's what's on the table!

Short term relief

  • Corporate Income Tax Rebate of 25% of tax payable for YA2020.

    • Cap of $15,000 for each company applies.
  • Rental Waivers for Commercial Tenants in Government-owned / managed facilities

    • Eligible tenants/lessees may include providers of commercial accommodation, retail, F&B, recreation, entertainment, healthcare, and more.
  • No GST increase till beyond 2021. But will still be raised to 9% by 2025.

Jobs: Retention and Progression

  • Employers will receive an 8% cash grant on the gross monthly wages of each Singaporean and PR employee for the months of October to December 2019

    • A monthly wage cap of $3,600 per employee applies.
    • No action needed. The grant is computed based on CPF contribution data. 
    • Employers can expect the JSS payment from IRAS by 31 July 2020.

Preparing for better days: Up-skilling and Refurbishments

  • One-off SkillsFuture top-up

    • Singaporeans aged ≥ 25 to get a top-up** of $500 from 1st Oct 2020.
    • Singaporeans aged 40-60 will receive an additional $500 top-up** 
    • **Top-ups will expire in 5 years.
  • New SkillsFuture Enterprise Credit scheme to defray up to 90% of out-of-pocket costs of business transformation, job redesign and skills training.

    • A cap of $10,000 per company applies.
    • More than 35,000 firms, mostly SMEs, are expected to benefit.
  • Enhanced Enterprise Financing Scheme – SME Working Capital Loan (EFS-WCL) 

    • Maximum loan quantum increased from $300,000 to $600,000.
    • Government’s risk-share enhanced to up to 80%
    • Applicable for SMEs borrowing from Participating Financial Institutions.
    • Starts in March 2020, and is available for one year till March 2021.

Enhanced Corporate Tax Treatments 

  • Companies paying their Corporate Income Tax via GIRO can automatically enjoy an additional two months of interest-free instalments when they file their Estimated Chargeable Income (ECI) within 3 months from their Financial Year End. This applies to companies that:

    • File their ECI from 19 February 2020 to 31 December 2020;
    • Filed their ECI before 19 February 2020, and have ongoing instalment payments to be made in March 2020.
  • Up to $100,000 of the unabsorbed capital allowances and trade losses for YA2020 to be carried back up to three immediate preceding YAs, instead of one preceding YA;
  • Option to accelerate the write-off of acquisition costs for plant and machinery in FY2020 (i.e. incurred for YA2021) over two years
  • Option to accelerate the deduction of costs incurred on renovation and refurbishment in FY2020 (i.e. incurred for YA2021) in one year.

Other details

  • On the whole, the measures are meant to encourage up-skilling and refurbishment in most industry sectors.
  • Sustainability & Climate Change - Singapore to phase out internal combustion engine vehicles by 2040
  • Added support for Deep-tech startups

    • Additional S$300 million under the Startup SG Equity co-investment scheme
    • Specifically: Pharmbio and medtech, advanced manufacturing, agri-food tech

While the measures and packages presented are not as generous as businesses could've hoped, the government has certainly stepped up and the support will go a long way in helping businesses survive the harsh market conditions. 

Jack Ma has given some great top-level advice on making the most of the COVID-19 situation, and The Straits Times has provided pretty extensive coverage around Singapore Budget 2020.

But if you'd like more candid recommendations from our accounting team, why not join us for a free webinar + Q&A session?

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