Your company’s chargeable income may be different from the net profit/loss shown in its financial statements.

This is because some of your company’s expenses may not be deductible for tax purposes. Similarly, some of the income received by your company may not be taxable, or it may be taxed separately as a non-trade source income.

You may also wish to claim capital allowance on your fixed assets or claim unutilised losses/capital allowances/donations brought forward from previous Years of Assessment (YA).

As a general guide for most companies, you would need to make the following adjustments to your net profit/loss:

1. Deduct income which is not taxable
2. Deduct investment income (e.g. interest, dividend and rental) which is to be assessed separately as non-trade income
3. Add disallowable expenses
4. Add direct expenses relating to the investment income (to be allowed against the respective investment income taxed as non-trade income)
5. Deduct Section 14Q deduction for expenditure incurred on renovation or refurbishment works where applicable
6. Add net investment income such as interest, dividend and rental (after deducting the direct expenses relating to the investment income)
7. Deduct unutilised capital allowances brought forward from previous YA where applicable
8. Deduct capital allowances (including enhanced allowances under the Productivity and Innovation Credit scheme) for the current YA if you wish to claim for capital allowances on fixed assets
9. Deduct unutilised losses brought forward from previous YA where applicable
10. Deduct unutilised donations brought forward from previous YA where applicable
11. Deduct donations made to approved Institutions of a Public Character (IPCs) if any.

You are still required to submit a tax computation even if you do not need to make any adjustment to your net profit/loss, if you are filing Form C.

Example

• All the expenses reflected in your profit/loss statements incurred are deductible for tax purposes;
• All the income reflected in your profit/loss statements are taxable;
• You are not claiming for capital allowances on fixed assets; and
• There are no unutilised losses/capital allowances/donations brought forward from previous YA.

In this case, your tax computation will show disallowable items to be added back as “Nil” and the adjusted profit/loss amount will be the same as the net profit/loss as per your financial statements. You also need to show the chargeable income and the tax payable or the unutilised losses carried forward in your tax computation whichever is applicable.