Frequent Mistakes Partners Make When Filing Income
The following are some of the most common mistakes made by partners in filing their income statements before the Inland Revenue Authority of Singapore (IRAS), as well as corrective processes for each of them.
Mistake: A partner declares a partner’s income as employment or sole proprietorship income in Form B/B1
Solution: Under the ‘Trade, Business, Profession, or Vocation’ section and ‘Partnership’ sub-section of a partner’s income tax return, he or she should report his or her individual share of profits or losses as well as remuneration from the partnership if this partner is self-employed. Remuneration may take the form of salary, bonus, CPF, and other benefits. When e-Filing, meanwhile, one must declare income as `partner’s salary, bonus, & CPF’ under the same section and subsection. In the case of paper filing, one has to complete item 1b(4) on Page 2 of Form B, as well as item 3 on Page 2 and item 1 on `Trade, Business, Profession, or Vocation’ on Appendix 1, all under form B1.
Mistake: A partner is unable to declare his or her share of the income from the partnership in Form B, or else declaring just an estimate because his or her own share of the partnership income is unknown to him or her.
Solution: The partner must obtain information on his share of the partnership income from the precedent partner. He or she is expected to declare such in Form B.
Mistake: A partner does not file his or her Form B because the precedent partner has already submitted the Form P for the partnership.
Solution: The partner is obliged to file the Form B because this will declare his or her own share of the partnership income as well as other income from other sources if available.
Mistake: A partner declares his or her Partnership Rent income under Other income.
Solution: The partner must declare this under the `Partnership’ section. When e-Filing, the partner must declare this as `Partner’s Other Income’ under the `Trade, Business, Profession, or Vocation’ section, `Partnership’ subsection, item 3. When paper filing, on the other hand, the partner needs to complete item 1b(7), Page 2, of Form B; and item 3 (`Other Income’), Page 2, Form B1; and item 1, `Trade, Business, Profession or Vocation,’ Appendix 1.