How long should a Singapore business keep its tax records?

Companies: five years from the relevant Year of Assessment

IRAS's record-keeping guidance for companies says companies must keep records for at least five years from the relevant Year of Assessment. The records it lists include source documents, accounting records and schedules, and bank statements, along with other records of business transactions. Companies must also be able to explain all transactions relating to income, business expenses and purchases.

The important detail is the starting point. The five years run from the Year of Assessment, not from the end of the financial year, and in Singapore the Year of Assessment is the year after the financial year it relates to. IRAS gives worked examples. For a company with a December financial year end, the records for 1 January to 31 December 2022 relate to Year of Assessment 2023, and IRAS says they must be kept until 31 December 2027.

Other rules may set their own periods for the same documents. Company law, for example, has its own requirements for accounting records, counted in its own way. Do not assume one period covers everything. Your company secretary or adviser can map out which rules apply to which records.

What happens if records are not kept

IRAS states that failure to comply with record-keeping requirements is an offence. Its company guidance says IRAS may estimate revenue, disallow expense claims, capital allowances or goods and services tax input tax claims, and impose penalties of up to S$5,000, with imprisonment of up to six months if the penalty is not paid.

The less dramatic consequence is more common. If IRAS raises a query about a year that falls within the period and you cannot find the supporting documents, you may not be able to substantiate a claim, even if it was entirely correct.

Keeping records useful, not just kept

Meeting a retention period is only half the job. The other half is being able to produce the right document quickly when IRAS, an auditor or a buyer asks for it. Five years of receipts in a cupboard, or scattered across personal inboxes, technically exist but are hard to use.

• Keep each year's records together, organised by type, with a simple index.
• Note the date each set may be disposed of, based on the longest rule that applies.
• Make sure scanned copies are legible and complete, including both sides of documents.
• Keep records in a place your business controls, not in a former employee's account.
• When the period ends, dispose of records deliberately and keep a note of what was disposed of and when. Holding personal data longer than you need it has its own risks under the PDPA.