Example: Calculation of ECI for YA 2020
Your company’s Profit and Loss statement for financial year 2019 (Year of Assessment 2020) is as follows:
| Sales | $80,000 |
| Less: Cost of goods sold | $(35,000) |
| Gross Profit | $45,000 |
| Other Income: | |
| Rental Income | $1,200 |
| Less: Expenses | |
| Advertisement | $(790) |
| CPF | $(2,300) |
| Depreciation | $(300) |
| Directors’ fees | $(9,000) |
| Printing and Stationery | $(290) |
| Property Tax (rental property) | $(300) |
| Salaries | $(24,000) |
| Secretarial Fees | $(310) |
| Transport ($200 was incurred on car SJX 123) | $(780) |
| Travelling Expenses | $(560) |
| Water & Electricity | $(925) |
| Net Profit before Tax | $6,645 |
The company also purchased a new private car (SJX 123), a computer for $1,200 and a filing cabinet for $300 in YA 2020. There were no unutilised capital allowances brought forward from the previous YA.
The calculation of the company’s ECI is as follows:
| Net profit before Tax | $6,645 |
| Less: Separate Source Income | |
| Rental Income | $(1,200) |
| Add: Disallowable Expenses | |
| Depreciation | $300 |
| Property Tax (Rental Property) | $300 |
| Transport (S-plated car) | $200 |
| Adjusted profit before Capital Allowances | $6,245 |
| Less: Capital Allowances for YA 2020 1 | |
| 100% Write-Off for Low-Value Asset – Filing Cabinet | $(300) |
| 100% Write-Off in One Year for Computer | $(1,200) |
| Adjusted profit after Capital Allowances | $4,745 |
| Add: Separate Source Income | |
| Rental income (net of Property Tax for rental income) | $900 |
| Estimated Chargeable Income (before exempt amount) | $5,645 |
When e-Filing the ECI, the company can report its revenue as “$80,000” and ECI figure as “$5,645” under the 17% tax rate category. If the company also qualifies for the Tax Exemption Scheme for New Start-Up Companies, the company has to indicate accordingly in the relevant box of the ECI return. For more information, please refer to the File Estimated Chargeable Income (ECI) (PDF, 1.13MB) user guide.
You may also refer to Note 12 of the Explanatory Notes for ECI for YA 2020 (PDF, 189KB) for more examples on how to calculate the ECI.
