Tax deduction purpose evidence should explain what the company bought, why it related to the business and how the amount was supported. A bank payment or expense account label does not establish that a deduction is allowable. Ask the tax preparer to review the facts and applicable conditions before the claim is finalised.

Accounting records, calculator and glasses on a desk
Illustrative photograph by Cht Gsml.

Reconstruct the genuine transaction

Gather the invoice, receipt, agreement, payment evidence and contemporaneous correspondence. Identify the supplier, item or service, relevant period and business activity. Record what is known and what remains uncertain.

A later explanation should carry its actual preparation date. Do not invent a meeting, attendee, customer visit or purpose to fill a gap in the file.

Separate purpose from deductibility

IRAS applies conditions to company business-expense deductions, including their connection with producing income. Other restrictions or distinctions can still matter even where management regards a purchase as commercially useful.

Give the preparer enough detail to review private elements, capital items or other relevant issues. Do not turn an internal approval to spend into a statement that the tax claim is automatically valid.

Example: a vague supplier description

An invoice says project support without identifying the work. Ask the responsible employee for the genuine agreement, deliverables or correspondence showing the service. Keep any supplier clarification with the original invoice rather than rewriting its description internally.

If the business purpose cannot be supported, leave the tax treatment open for the reviewer. A tidy ledger is not evidence that a missing fact has been established.

Preserve the reviewed position

Retain the explanation, supporting references and accepted tax treatment with the computation. Keep unresolved items on a query list with an owner. This supports a defensible review without promising that a reconstructed note cures every evidential or deductibility problem.

Related practical guidance

For the surrounding records and responsibilities, see bookkeeping basics, company records to keep, bookkeeping and accounting.

Official guidance: IRAS official guidance.

Help with your company records

For accounting, bookkeeping and related compliance support, contact Raffles Corporate Services at [email protected] or WhatsApp +65 8501 7133. Tell us which records or process need attention so we can discuss the relevant next steps.