Budget 2021 should focus on support schemes, workplace transformation: Deloitte

Technology and innovation to remain key factors in Singapore’s future.

Singapore’s Budget 2021 should focus on enhancing and extending job support schemes as well as reskilling and upskilling the workforce, according to accounting firm Deloitte.

Deloitte sees the need to enhance and extend government support schemes to help businesses cope with slow cash flows as consumers continue to be wary of their spending.

The firm has suggested the government extend the Job Support Scheme to support employers in retaining local employees. Though it may be unlikely to continue this support scheme indefinitely, Deloitte suggested targeting the JSS to key industries such as aerospace, aviation, and tourism to help minimise the long-term negative impact on the economy as these industries have a multiplier effect on the overall economy.

In Budget 2020, the carry-back relief system was enhanced where businesses may elect to carry back qualifying deductions for Year of Assessment (YA) 2020 up to three immediate preceding YAs. The cap of $100,000 and qualifying conditions remains unchanged.

Deloitte proposes to further enhance the carry-back relief for YA 2021 by increasing the cap on qualifying deductions allowed to be carried back to $500,000 and increase the number of YAs, in which qualifying deductions are allowed to be carried back, to five immediate preceding YAs.

“Optimising cash flow and efficient management of businesses losses would be key in easing the burden for businesses. The carry-back relief system is a way to help businesses recover the losses incurred by claiming a refund on the tax paid in the previous years,” said Rohan Solapurkar, tax partner at Deloitte Singapore.

A rise in mergers and acquisitions (M&A) is expected in 2021 with the anticipated economic growth. In order to support companies in Singapore that make an effort to grow their businesses through M&A and scale-up, Deloitte proposes to liberalise the conditions around the nature and timing of the consideration for the acquisition of ordinary shares in the target company, or allow discretion to be accorded to the Comptroller of Income Tax to waive such prescriptive conditions if there are valid commercial reasons provided by businesses.

Workplace transformation
The pandemic also gave rise to new strategies in the workplace as well as leveraging technology to enable work-from-home (WFH) arrangements. Deloitte calls for a review of the general reliefs for individuals to better reflect the economic environment and current social needs, including proposed consideration to introduce standardised deductions for employees who work from home in their proposal.

According to Deloitte's global employer services tax leader Sabrina Sia, the pandemic has forced many companies to adopt remote working arrangements as an emergency measure to continue operations. Companies are now looking to make WFH arrangements a permanent option that has the benefit of reducing costs and increasing productivity whilst attracting and retaining talent.

Sia said that to provide greater support for the transition to WFH whilst encouraging individuals to practice the ‘new normal’ working measures, she proposes introducing an option for individuals to claim standardised tax deductions on WFH expenses based on a fixed ratio/ rate like a fixed % of gross employment income or fixed monetary amount multiplied by the number of WFH days.

She added that this will help reduce the administrative burden of having to justify claims of expenses such as incremental usage of electricity and telecommunication costs as a result of the WFH arrangements.