Tax Reporting for Profits Tax (Sole Proprietorship & Partnership)

Supply details of the first and second sole-proprietorship businesses in the space provided in BIR60 and provide those particulars of the other businesses in the same format on a separate sheet.

Separate accounts and computations should be submitted for each business if its gross income exceeded $2,000,000.

This means ALL TYPES OF INCOME and should include sale of capital assets and any other non-taxable income, whether or not derived from the principal business activity.

This means all income arising from your principal business activities. Items that arise incidentally or are exceptional in nature should be excluded (for example, profits from the sale of capital assets).

Generally refers to the difference between turnover and cost of sales. If you are not engaged in the trading of goods and commodities and no such figure exists in the accounts, insert "0" in the Box.

Generally refers to the difference between income and expenses/deductions.

You may obtain a pro forma tax computation to make the necessary adjustment. A separate computation should be prepared for each business. If you have more than one business, make sufficient copies of the pro forma before preparing the computations.

Enter the total amount of approved charitable donations made during the year.

(i)

Mandatory contributions to Mandatory Provident Fund Scheme

Enter the amount of mandatory contributions paid by you to a mandatory provident fund scheme as a self-employed person.

"Yes" box if the business is chargeable at two-tiered rates and the business does not have connected entities. If the business has connected entities, but no other connected entity elects two-tiered rates, you are also required to complete Section 6 of the Appendix.

If your business have transactions for/with non-residents during the year, put a 'tick' in the 'Yes' Box and complete Section 7 of the Appendix to BIR60.

"Yes" box if the business has claimed deduction for expenditure on research and development/environmental protection facilities/intellectual properties and complete Section 8 of the Appendix.

Even if your business has been dormant during the year, you are still required to complete items (1) and (2) and enter '0' in items (3) to (9) under Part 5 of BIR60.

We may estimate the amount of assessable profits and issue a notice of assessment demanding you to pay Profits Tax. To avoid the issue of an estimated assessment, even if your sole proprietorship business had ceased, was inactive or operating in losses for the year concerned, you should still complete all the Boxes in Part 5 of BIR60 and should not leave them blank. You may enter '0' where applicable.

We will impose penalty on omission / understatement of profits and on incorrect return. In computing penalties, where Part 5 of BIR60 is left blank (resulting in omissions), the amount of the ultimately assessed profits will be taken to be the amount of profits undercharged.

• So long as the gross income of your sole proprietorship business does not exceed $2,000,000, you are not required to attach any financial statements to your tax return. Otherwise, you must submit accounts.
• Even if your business is a Small Business, you must prepare the accounts, complete the tax return in accordance with the accounts prepared, and retain the accounts and documents as we may ask you to submit them later for review or other tax purposes.

• You have to submit a set of certified accounts - Balance Sheet and the Trading and Profits & Loss Accounts.
• You should also submit a tax computation with supporting schedules, showing how the declared amount of Assessable Profits/(Adjusted Losses) is arrived at.

• Completion and Filing of Tax Return - Individuals (BIR60)

How to Complete BIR52

See

• Advice on Completion of Profits Tax Returns

• if a sole proprietorship business were changed to a partnership business (by admitting a partner),

  we will issue a Profits Tax Return (BIR52) in the name of the partnership for the year of change and for subsequent years.

• if a partnership business were changed to a sole proprietorship business (by retirement of all other partners),

  we will stop to issue a Profits Tax Return (BIR52) in the name of the partnership as from the year after the year of change.

• If you closed your first accounts after 31 March 2024, probably there would be no assessable profits for the year of assessment 2023/24.

You commenced business on 1 October 2023 and your first account will be closed on 30 June 2024.

No accounts will be prepared during the year ended 31 March 2024 and there will be no assessable profits for the year of assessment 2023/24.

• However, if you closed your first accounts on or before 31 March 2024 and you have assessable profits, you will have to pay Profits Tax or Provisional Profits Tax on those assessable profits. Further, you have to consider if you need to report for chargeability. See Notification of Chargeability for details.

• You should notify us in writing of the cessation of your business within 1 month.

Your business ceased on 18 April 2024.

You should inform us on or before 17 May 2024.

• You should prepare a set of accounts from the last accounting date to the date of cessation and declare the assessable profits/(adjusted losses) in the tax return for 2023/24.

Your last accounting was prepared up to 31 December 2022 and your business ceased on 29 February 2024.

You should prepare cessation accounts covering the period from 1 January 2023 to 29 February 2024, declare the assessable profits/(adjusted losses) in the tax return for 2023/24 and retain the business records for at least 7 years.

• You should submit IR56F 1 month prior to the cessation of employment of your employees. See Employers for details.

• Peter's business should be regarded as ceased on the date of his death.

• The executor should prepare accounts from the last accounting date up to date of death and declare the assessable profits/(adjusted losses) in the tax return for 2023/24.

• The executor should retain the business records for at least 7 years.

• Where there is a successor to the business, the successor will be treated as a new proprietor operating a new business by the same business name. The new proprietor must make a new business registration promptly.

• Mary is still required to report the assessable profits/(adjusted losses) of her sole proprietorship business in her BIR60 until, if applicable, the business is ceased/sold.