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Singapore Explains Capital Gains Tax Policy

by Mary Swire, Lowtax.net, Hong Kong
03 March, 2014

Following comments from a taxpayer that Singapore's tax rules on property traders lack clarity, the Inland Revenue Authority of Singapore (IRAS) has explained how it determines the taxability of capital gains from the disposal of properties.

IRAS pointed out that, while Singapore does not have a capital gains tax, gains from the disposal of property are considered as taxable income in certain circumstances. After IRAS has studied the specific facts of such cases, it uses the "Badges of Trade" yardstick to determine whether the gains are income in nature.

This yardstick includes certain factors considered in their totality: the intention when purchasing the property; the length of the property holding period; the frequency and volume of similar transactions by the same taxpayer; improvements made to the property to better attract buyers; and the financing arrangements of the property purchase.

IRAS stressed that it is only right for taxpayers to pay their fair share of taxes should the facts and circumstances show that the gains made by a taxpayer from selling his property are trading gains or revenue in nature.

The agency also confirmed that it reviews property-related transactions (especially those with short holding periods), as well as rental income information, to ensure that such income has been properly declared and taxed accordingly. It reminded taxpayers to declare all income correctly when filing their income tax returns.

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