7-Year Record Keeping for EIS Cash Payout Claims

by | Apr 25, 2024 | Accounting, Goods and Services Tax, Income Tax, Tech News

The Inland Revenue Authority of Singapore (IRAS) has issued significant updates to its record-keeping requirements, notably mandating a 7-year retention period for documents supporting Enterprise Innovation Scheme (EIS) Cash Payout claims. The updates, published on 23 April 2024, affect several key e-Tax Guides covering Accounting, Reporting, GST, and Income Tax compliance.

Key Updates

  1. 7-Year Retention for EIS Claims: Businesses claiming the EIS Cash Payout must now retain all records related to the qualifying expenditure for 7 years. This period is calculated from the end of the relevant Year of Assessment (YA) corresponding to the basis period when the expenditure was incurred. This requirement, stipulated under Section 37R of the Income Tax Act 1947 (ITA), is now explicitly included across the relevant guides.
  2. Enhanced Requirements for Small Businesses: The Simplified Record Keeping Requirements for Small Businesses guide now includes a crucial stipulation:
    • Small businesses must retain source documents (e.g., contracts, correspondence) that cannot be feasibly converted into a listing or register.
    • IRAS has supplemented this with two new examples to clarify the qualifying conditions for utilizing the small business concessions.
  3. Increased Penalties for Non-Compliance: The maximum fine for failing to meet statutory record-keeping obligations under both the ITA (Section 94) and the Goods and Services Tax Act (Section 46) has been uniformly updated to $5,000 across the Record Keeping Guide for GST-Registered Businesses and the Record Keeping Guide for Non-GST Registered Businesses.
  4. Clarifications for GST-Registered Businesses: The Record Keeping Guide for GST-Registered Businesses provides further clarity on two points:
    • Businesses must retain books recording stock/inventory taken for private consumption.
    • Import permit dates and numbers must be clearly reflected in purchase listings.

Affected e-Tax Guides

The updated requirements are detailed in the following IRAS e-Tax Guides, all revised on 23 April 2024:

  • Record Keeping Guide for GST-Registered Businesses
  • Record Keeping Guide for Non-GST Registered Businesses
  • Simplified Record Keeping Requirements for Small Businesses

Businesses are advised to review the updated guides immediately and implement the necessary processes to ensure adherence to the enhanced record-keeping standards, particularly concerning EIS claims and source document retention for small entities.

Source: IRAS, 23 April 2024.