What business expenses can sole proprietors deduct for income tax in Singapore?

Sole proprietors in Singapore can deduct expenses that are wholly and exclusively incurred in the production of income when computing their taxable trade income. Here are the main categories of deductible expenses:

Commonly deductible expenses:

• Rental of business premises: Office rent, co-working space fees.
• Employee salaries and CPF contributions: Wages, bonuses, and employer CPF contributions for staff.
• Utilities and telecommunications: Electricity, water, internet, and phone bills for business premises.
• Office supplies and stationery: Paper, printer ink, software subscriptions.
• Professional fees: Accounting, legal, and consultancy fees related to business operations.
• Transport and travel: Business-related transport costs (not personal commuting). Overseas business travel including airfare and accommodation.
• Marketing and advertising: Website hosting, online ads, printed materials, trade fair costs.
• Insurance: Business insurance premiums (not personal insurance).
• Bad debts: Debts that are proven irrecoverable and were previously included as income.
• Depreciation (Capital Allowances): Claim wear and tear on fixed assets like computers, machinery, and office furniture.

Expenses that are NOT deductible:

• Personal and domestic expenses: Food, clothing, personal transport.
• Capital expenditure: Cost of acquiring fixed assets (claim capital allowances instead).
• Fines and penalties: Parking fines, regulatory penalties.
• Private car expenses: Costs related to private vehicles (S-plated), even if used for business.
• Entertainment expenses: Not deductible unless they qualify under specific IRAS provisions.

Home office expenses: If you operate your business from home, you can claim a reasonable proportion of home expenses (rent, utilities, internet) based on the area used for business relative to the total home area.

Keep all receipts and invoices for at least 5 years as IRAS may request supporting documents during audits.