Tax is source of income for the government and it is used for social benefit in a country. It helps the government develop the country and protect the country such as building roads, building, hospital or purchasing weapon, paying salary for police. It also helps everyone more equally between poor and rich group by providing social amenities. Income tax for individuals under for section 10(1) are gains or profits from any employment section [S10(1)b]; dividends, interest or discount [S10(1)d]; any pension, charge or annuity [S10(1)e]; rents, royalties, premiums and any other profits arising from property [S10(1)f]; any other gains or profits of an income nature [S10(2)g]. There are two type of individuals collected the income tax. They are the non-resident and resident. The presidents are Singapore’s citizens, Singapore Permanent Resident (SPR), foreigners who stayed or worked in Singapore 183 or more than 183 days in the year preceding the YA but excludes directors of a company. To calculate the tax of residents, taxation will take the total income less donations, expenses and tax relief (deductions). The tax rate will be from 0% to 20%. They can claim the donations, expenses and tax relief to save tax in Singapore. For example, Mr. Stephen has arrived from Vietnam to work in Singapore from the 1st January 2014 to 31th December 2014 with the income S$30,000 annual. Then he must pay tax for $30,000 same as a resident because he worked in Singapore for 365 days. The non-resident are foreigners who working in Singapore less than 183 days in a year preceding the YA. The non-resident can claim the donations and expenses to save tax in Singapore but they cannot claim tax relief like resident. However if a non-resident only work for 60 days or less in Singapore with short term employment will be not charged the employment income tax except adirector of a company, apublic entertaineror aprofessionalin Singapore. For example, Miss Sheila has arrived from China to work in Singapore to study in Singapore from 15th July to 31th December of year 2014 with the salary S$3,000 per month so her employment income will be exempted because she didn’t work more than 60days. In Singapore, companies must be collected the tax from government accrued in or derived from Singapore or outside because any gain or profit from any business, rental, share, property and anything that can get income (Applied from Singapore income taxation). Different with income, gain of the capital nature is not taxable in Singapore. Tax will be charged for companies when the companies have gains or profits from any trade, business, profession or vocation [S10(1)a]. Sometimes individuals can be considered to be trading in Singapore even they don’t open the business as a company. For example, when the people realize that properties will be increased in future then they will buy and resold quickly. Using “badges of trade’’ to consider when a person in trading. They are six badges of trade and they are subject matter of the realization, length of period ownership, frequency on number of similar transactions by the same person, supplementary work on and in connection with the properties relised, circumstances responsible for the realization, and motivation. The first one is subject matter of the realization that distinction which one normal held as an investment or a subject as a trade. For example, in the caseRutledge v CIR –  14 TC 490, the taxpayer was held that he got profits from trades so they were be taxable. The second is length of period ownership that a short holding period in investing will be closer monitored to see if the property has been acquired with the purpose of dealing and it will be taxable. For example, in the case of Wisdom v Chamberlain 45 TC 92, buying and selling silver ingots around 1 year then the profits will be held dealing profit then be taxable. The third one is frequency on number of similar transactions by the same person. Usually, one person does the similar transactions then it will be a trade then be taxable. For example, in the case of Pickford v Quirke 13 TC 251, the union decided to strip mill of his property and sell it fully, make a profit. It was repeated a lot of times. Then profit from selling was taxable. The fourth one is supplementary work on and in connection with the properties relised. According to Sum Yee Loong, the company in Singapore (resident or non-resident) will be charged at a flat rate 17% from YA2010. New companies in operation will be exempted on first $300,000 of a normal qualified company chargeable income for first three continuous years of assessment with the first $100,000 income charged normally, 100% of income will be exempted from tax. The next $200,000 income charged normally, 50% of income will be exempted from tax. Normal companies already started-up what not qualified like the new companies will be not exempted same as the new companies. On their first $300,000 income will be charged normally: First $10,000 of charge income, 75% of those companies will be exempted from tax. Second $290,000 of charge income, 50% of those companies will be exempted. In Singapore, generally capital gains are not taxable. However, there are some difficulties when distinguishing between revenue receipts and capital receipts. There are some concepts to make the distinction. They are: Fixed capital and circulating capital; Tree and fruit; Receiving compensation for a contract be cancelled; Proceeds received in exchange of a restrictive covenant. First of all of concepts, in the fixed capital and circulating capital concept, land is a fixed capital when a person sells a land to other, the gain from selling that land is the capital gain and it is exempted from tax in Singapore. However, circulating capitals are assets which still can continuously use as circulated in course of business such as stock or raw material are sold. Any receipt is from selling circulating capital will be the revenue capital then it will be taxable. On the other hand, companies do the business such as selling or buying properties when they receipt the receipts from selling properties will be taxable. The second concept is tree and fruit. Receipts from the selling of asset forming part of the fixed structure of the business (tree) will be normally exempted from tax and the gain is made from circulating capital (fruit) will be regarded as a revenue receipt then be taxable. Illustration, a man has a house and he lease out that house then later on he have some money from rental. The third concept is receiving compensation for a contract is cancelled. There are two points in this concept. First point is the compensation payment in lieu of trading receipts. If the contract is normal, the compensation to be paid instead of transaction receipts that maybe create part of the business profit of a taxpayer. Then it will be taxed like a trading receipt. For example, in the case of London & Thames Haven Oil Wharves vs. Attwool (1966) 43 TC 491, damage received the loss of the use of a jetty while repairs were making and the court held that be compensated by the owner is held to be delivered as well as receipts for income loss. The second point is payment received from profit-making apparatus-capital gain as a receipt for a capital nature receipt. For example, a business man in Singapore has signed a contract for a franchise of FPT restaurant then if the contract be cancelled, that business man will receive amount of money and it will be not taxed. The final concept is proceeding received in exchange of a restrictive covenant. When one-time payment of covenant for not doing business particular territory or not using a particular process or patent, it will be considered as a capital nature then it is not taxable. For example, in the higgs v olivier  33TC136, an actor joined to a restrictive covenant that he will not act, produce or direct any firm for 18 months, in return for one-time payment. It was held that it is a capital nature receipt then doesn’t be taxed.
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