Business Expenses

Key requirements

The general test requires expenditure incurred wholly and exclusively to produce income, incurred when the legal liability arises, revenue rather than capital in nature, and not prohibited by law. Payment timing alone does not decide when an expense is incurred. Personal expenditure and many capital costs are not ordinary deductions even if paid by the company. Fixed asset costs may instead qualify for capital allowances. IRAS provides specific treatment for many common costs and separate enhanced deduction schemes, which must be tested on their own conditions. Use the deductibility checker as an aid, then document the business purpose and supporting invoice. Add back non-deductible costs in the tax computation rather than assuming all profit-and-loss expenses reduce tax.