Tan,
Chan & Partners hereby
wishes all valued clients a Happy & Prosperous New Year!
In line with change in pace and legislations, we are launching our 1st edition of e-letters in January 2006 to update our business partners in property management and direct MCST clients of changes relating to accounting, tax, audit and system control. We hope you will find the information relevant and useful. Our web site specially catered for you at www.mcst-aat.com has been updated.We hope you will enjoy reading our e-letters.
In the process of providing our audit and other value added services, we found the following important issues not addressed either due to oversight, ignorance, or wrong interpretation, which we would like to bring your attention to.
1. Property Tax Registration
Many Management Corporations with rental income earned from rental for mini-mart, radio base installation, and/or car park, are subject to property tax if the property in question is not exempted under the property Tax Act. Declaration of income derived from property in Form P1 does not constitute to registration for Property Tax.
Property
Tax Act, Section 6 (6)
All buildings or parts of buildings used exclusively —
(a) as places for public religious worship;
(b) for public schools which are in receipt of grants-in-aid from the Government;
(c) for charitable purposes; and
(d) for purposes conducive to social development in Singapore,
shall be exempted from payment of the tax.
Property
Tax Act, Section 19 (10)
Where any property is let and a premium is charged for the letting of the property,
the owner thereof shall, within 15 days of the receipt of the premium, give
notice in writing to the Chief Assessor.
2. MCST Constitution
Many have mistaken that the Land Titles (Strata) Act have been fully repealed together with the Buildings and Common Property (Maintenance and Management) Act, after the assenting and enactment of the Building Maintenance and Strata Management Act 2004 since it came into operation on 1st April 2005.
This is not entirely the case as Land Titles (Strata) Act is still in effect with only parts of the Act repealed. Management Corporations is still constituted under Section 10A (2) of the Land Titles (Strata) Act.
Building Maintenance and Strata Management Act 2004, Section 24 (1) clearly states the following words of “The management corporation constituted by virtue of the Land Titles (Strata) Act Cap. 158)……”
This explains our stand on our disclosure of “Constituted under The Land Titles (Strata) Act” in our financial reports.
3. Sinking fund
Another common issue that we have observed is that Management Corporations usually charged all income derived from fixed deposits to the Management Fund. The Act specifically mentioned in Section 38(5)(d) that Management Corporation shall pay into its sinking fund interest received on any investments belonging to the sinking fund.
BMSMA
2004, Section 38 (5)
In additions to any moneys transferred under subsection (3)(c), a management
corporation shall pay into its sinking fund
(a) all moneys received by it in respect of contributions determined under
section 39(2);
(b) any amount paid to the management corporation by way of discharge of insurance
claims and not paid to the management fund;
(c) all other amounts received by the management corporation and not paid or
payable into the management fund; and
(d) interest received on any investment belonging to the sinking fund.
4. Income Tax Considerations
Many a time we noticed that no tax provision is made before the accounts are sent to us for audit, waiting for us to provide an audit adjusting entry.
A gentle reminder that the tax services that we provide as stated in our engagement letter specifically mentioned only completion of Form P1 and tax computations for free. Other tax services including enquiries would usually come at a nominal fee. If you have any doubts on tax computation for Management Corporation, please do not hesitate to download a sample from our website.
Chargeable property income is gross income less expenses such as property tax, and a percentage of other relevant expenses subject to IRAS approval. We have noticed that this was not practiced in many cases.
We do provide tax appeal services to help our clients enjoy this relief at an agreed fee. For more information, please do not hesitate to contact us or go to our website for more details.
5. Project Hand Over
We noticed that a lot of information is lost when an estate is handed over from one managing agent to another, resulting in situations of balances held in suspense. These include details of plant and equipment, refundable deposits, etc.
We recommend that a financial review of accounts in detail to be done rather than a standard audit during the handing over process as this course of action would reconcile all questionable issues with the accounts, leaving no doubts that the accounts are properly prepared and well kept.
Tan, Chan & Partners services:
Other than the standard audit process, We would like to take this opportunity to let you know that we provide the following services regards to the MCST enviroment:
- System Review and Evaluating the Internal Control Procedure of MCST
1. That the operation is efficient
2. That the financial and operational information are reliable
3. That the assets are safeguarded
4. That compliance with laws, regulations and contracts are met
- Enbloc
Liquidation
Looking for a liquidator? Look no further...
Tan, Chan & Partners has a long track record in handling many liquidation cases for the past 25 years. We are experienced in this field and our working partners include Rodyk and Davidson, Harry Elias Partnership, Rajah & Tann, Allen & Gledhill, Wee, Tay & Lim, Compass LLC, Genesis Law Corporation, TSMP Law Corporation, who are acting as solicitors for developers such as Novelty, MCLand, Capital Land, Heeton, Tiong Aik etc... Please click here
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Tax Appeal Savings!!! Attention!
Pursuant to Section 11(1) of the Income Tax Act, miscellaneous income earned from Non-SP is subjected to tax based on Part B rates till financial year 2000. For this period, those MCs that fall under this category have been paying excessive tax due to high tax rates. In the budget statement for 2001, the Minister for Finance has announced the rate of tax applicable on the income of a body of persons (MC is one of the type) would be limited to the effective company tax rate, if this was lower than its effective rate of tax determined based on Part B rates. Because of this change, tax burden has been reduced substantially.
Having been the auditors and tax agent for MCSTs in the past 20years, it has come to our attention that most of the MCs which are subjected to tax under Section 11(1) failed to establish a fair and equitable basis to claim deductible expenses. As a result, excessive tax has been paid over the past years. The amount of tax over paid due to ignorance of this issue can range from $100,000 to $500,000.
We have handled many of such cases and they have been very successful. Upon the successful appeal for revised assessment on the ground of equity, IRAS has refunded the excess payment.
We would, therefore, like to take this opportunity to extend our services to all.
Our services consist of two stages. The initial stage is to review the tax history and past years’ financial statements, give a report of our findings and advise the next course of action to be taken. The fee for this exercise ranges from $500 - $2,000 depending on the number of years involved, volume of work and complexity of the MC operation.
The second stage is to work together with the MC to formulate a basis to claim for relevant deductible expenses pertinent to the income. This may take a longer time and fee charged for this stage is subjected to the time spent by the level of staffs involved. Nevertheless, we will still provide an estimated fee. Alternatively, you may have your fee charged based on an agreed percentage of the amount of tax saved.
If you wish to have more understandings on the above preposition, please contact Mr Tan Chin Ren at office Tel: 65337393-129, HP 97513490 or email at tancr@tanchan-cpa.com .
- Review the accounting system to ensure that the system is efficient; propose amendments to strengthen the system capability
- Review of internal control & operating procedure
- Review of MCs that are paying taxes on income from car park and others
- Proposing MA taking over the project to carry out the review of accounts, tax and give recommendation solution and implement rather than standard audit
- The trend of MC software and How to prepare for the future ?
- In house training of accounting and taxation concept, and design templates to improve the routine operation work
- How to interpret financial statements?
For MCST:
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Please let us know the expected date you could finalise the accounts and be ready for audit as jobs are pre-assigned in advance to avoid unncessary delays.
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Please ensure that you have all documents ready for the audit at one location and confirm the place of audit to avoid unncessary time wastage. A list of information needed can be found in our website (under For MCST, Documents/Information Required For MCST Audit)
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Please do understand that we need approximately 14 days to conduct the audit work.
We
value feedback and welcome any enquiries.
You can reach us at Office Tel:+65 6533 7393
- Partner: Mr Tan Chin Ren (Ext.129)
- Customer Service Division: Eileen (Ext.101) / Meiling (Ext.116)
- Operation & HR Manager: Tunling (Ext.113)
- Tax Division:Mr Ace Pang(Ext.121) / Ms Dewi (Ext.117)
- Email : info@tanchan-cpa.com
- Website: www.mcst-aat.com
For your information:
Our web site is built exclusively for our business partners in property management and direct MCST clients only, it requires pass word to access the web site. If you have yet to obtain your password, please register right now. However, if you encounter any difficulty, please contact our customer service executive at 65337393-101 for assistance.
We are a team of dynamic CPA providing full fledge of services to our clients of mixed industries. Full details can be view at our following web sites.
www.tanchan-cpa.com - Audit, taxation, investigation, liquidation & business diagnostic
www.dni-consulting.com - Consulting for China & India Investment and conducting courses
www.dni-secretarial.com - Corporate secretarial, Incorporation of companies etc..
"To
improve is to change, to
be perfect is to change often"
-
Sir Winston Churchhill (1874 - 1965)