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Contents  

Long Title

Part I PRELIMINARY

Part II ADMINISTRATION

Part III IMPOSITION OF INCOME TAX

Part IV EXEMPTION FROM INCOME TAX

Part V DEDUCTIONS AGAINST INCOME

Part VI CAPITAL ALLOWANCES

Part VII ASCERTAINMENT OF CERTAIN INCOME

Part VIII ASCERTAINMENT OF STATUTORY INCOME

Part IX ASCERTAINMENT OF ASSESSABLE INCOME

Part X ASCERTAINMENT OF CHARGEABLE INCOME AND PERSONAL RELIEFS

Part XI RATES OF TAX

Part XII DEDUCTION OF TAX AT SOURCE

Part XIII ALLOWANCES FOR TAX CHARGED

Part XIV RELIEF AGAINST DOUBLE TAXATION

Part XV PERSONS CHARGEABLE

Husband and wife

Trustees, agents and curators

Part XVI RETURNS

Part XVII ASSESSMENTS AND OBJECTIONS

Part XVIII APPEALS

Part XIX COLLECTION, RECOVERY AND REPAYMENT OF TAX

Part XX OFFENCES AND PENALTIES

Part XXI MISCELLANEOUS

FIRST SCHEDULE Institution, Authority, Person or Fund Exempted

SECOND SCHEDULE Rates of Tax

THIRD SCHEDULE

FOURTH SCHEDULE Name of Bond, Securities, Stock or Fund

FIFTH SCHEDULE Child Relief

SIXTH SCHEDULE Number of Years of Working Life of Asset

SEVENTH SCHEDULE Advance Rulings

Legislative History

Comparative Table

 
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On 22/10/2017, you requested the version in force on 01/09/2007 incorporating all amendments published on or before 19/08/2017.
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PART V
DEDUCTIONS AGAINST INCOME
Deductions allowed
14.
—(1)  For the purpose of ascertaining the income of any person for any period from any source chargeable with tax under this Act (referred to in this Part as the income), there shall be deducted all outgoings and expenses wholly and exclusively incurred during that period by that person in the production of the income, including —
(a)
except as provided in this section, any sum payable by way of interest upon any money borrowed by that person where the Comptroller is satisfied that the interest was payable on capital employed in acquiring the income;
(b)
rent payable by any person in respect of any land or building or part thereof occupied by him for the purpose of acquiring the income;
(c)
any expenses incurred for repair of premises, plant, machinery or fixtures employed in acquiring the income or for the renewal, repair or alteration of any implement, utensil or article so employed:
Provided that no deduction shall be made for the cost of renewal of any plant, machinery or fixture, which is the subject of an allowance under section 19 or 19A; or for the cost of reconstruction or rebuilding of any premises, buildings, structures or works of a permanent nature;
(d)
bad debts incurred in any trade, business, profession or vocation, which have become bad during the period for which the income is being ascertained, and doubtful debts to the extent that they are respectively estimated, to the satisfaction of the Comptroller, to have become bad during that period, notwithstanding that those bad or doubtful debts were due and payable before the commencement of that period:
Provided that —
(i)
all sums recovered during that period on account of amounts previously written off or allowed in respect of bad or doubtful debts, other than debts incurred before the commencement of the basis period for the first year of assessment under this Act, shall for the purposes of this Act be treated as receipts of the trade, business, profession or vocation for that period;
(ii)
the debts in respect of which a deduction is claimed were included as a trading receipt in the income of the year within which they were incurred;
(e)
any sum contributed by an employer to an approved pension or provident fund or society or any pension or provident fund constituted outside Singapore in respect of any of his employees engaged in activities relating to the production of the income of the employer, the contribution of which sum by the employer was obligatory by reason of any contract of employment or of any provision in the rules or constitution of the fund or society:
Provided that in the case of any contribution to the Central Provident Fund or any approved pension or provident fund designated by the Minister under section 39(8) —
(i)
a deduction in respect of any such contribution by an employer in respect of an employee for any period —
(A)
commencing on or after 1st July 1993 and before 1st July 1994 shall not exceed 18 ½%;
(B)
commencing on or after 1st July 1994 and before 1st January 1999 shall not exceed 20%;
(C)
commencing on or after 1st January 1999 and before 1st April 2000 shall not exceed 10%;
(D)
commencing on or after 1st April 2000 and before 1st January 2001 shall not exceed 12%;
(E)
commencing on or after 1st January 2001 shall not exceed 16%,
(F)
commencing on or after 1st October 2003 shall not exceed 13%;
(G)
commencing on or after 1st July 2007 shall not exceed 14%,
of the remuneration paid by the employer to the employee for that period, and “remuneration” in this proviso means that part of an employee’s emoluments by reference to which his employer’s contributions are calculated;
(ii)
where any such fund or society is first established and a special contribution is made thereto by the employer whereby persons in his employment whose employment commenced prior to the establishment of the fund or society may qualify for the benefits thereunder in respect of such prior employment, the Comptroller may, when approving the fund or society, authorise such deductions in respect of that special contribution as he thinks fit;
(iii)
no deduction shall be allowed in respect of any sum contributed by an employer for the period on or after 1st January 1999 to the Central Provident Fund in respect of an employee who holds a professional visit pass or a work pass or who would be required to obtain such a pass if he were to work in Singapore;
(f)
any sum contributed by an employer in any calendar year to the medisave account maintained under the Central Provident Fund Act (Cap. 36) in respect of any of his employees engaged in activities relating to the production of the income of the employer and which is not deemed to be the income of the employee under section 10C(4), subject to a maximum deduction of $1,500 for that year for each employee:
Provided that no deduction shall be allowed in respect of any sum contributed by an employer for the period on or after 1st January 1999 to the medisave account maintained under the Central Provident Fund Act (Cap. 36) in respect of an employee who holds a professional visit pass or a work pass or who would be required to obtain such a pass if he were to work in Singapore;
(g)
zakat, fitrah or any religious dues, payment of which is made under any written law;
(h)
where the income is derived from the working of a mine or other source of mineral deposits of a wasting nature, such deductions in respect of capital expenditure as may be prescribed in rules made under section 7.
[37/75; 7/79; 28/80; 5/83; 7/85; 31/86; 1/90; 23/90; 2/92; 26/93; 11/94; 32/95; 1/98; 32/99; 24/2001; 21/2003]
(2)  Notwithstanding subsection (1), payments made by way of compensation for injuries or death, salaries, wages or similar emoluments or death gratuities to an employee (or his legal representative) who is the husband, wife or child of —
(a)
any employer;
(b)
any partner of the firm in which that employee is employed;
(c)
any individual who by himself or with his spouse or child or all of them have the ability to control, directly or indirectly, the company in which that employee is employed; or
(d)
any individual whose spouse or child or all of them have the ability to control, directly or indirectly, the company in which that employee is employed,
shall be allowed as deductions only to the extent to which, in the opinion of the Comptroller, they are reasonable in amount having regard to the services performed by that employee.
[26/93]
(3)  Notwithstanding subsection (1), where outgoings and expenses falling within that subsection are incurred, whether directly or in the form of reimbursements, in respect of a motor car (whether or not owned by the person incurring the outgoings and expenses) to which this subsection applies, the sum to be allowed as a deduction shall be limited to the amount which bears to such outgoings and expenses the same proportion as $35,000 bear to the capital expenditure incurred by the owner in respect of the motor car, where such capital expenditure exceeds $35,000.
[7/79]
(3A)  Any deduction for the cost of renewal of a motor car to which subsection (3) applies shall not exceed $35,000.
(4)  Subsections (3) and (3A) shall apply to a motor car which is constructed or adapted for the carriage of not more than 7 passengers exclusive of the driver and the weight of which unladen does not exceed 3,000 kilograms and which —
(a)
was registered before 1st April 1998 as a business service passenger vehicle for the purposes of the Road Traffic Act (Cap. 276) but excludes such a motor car which is —
(i)
used principally for instructional purposes; and
(ii)
acquired by a person who carries on the business of providing driving instruction and who holds a driving school licence or driving instructor’s licence issued under that Act; or
(b)
is registered outside Singapore and used exclusively outside Singapore.
[32/99]
(5)  Notwithstanding subsection (1), where, in the basis period for any year of assessment, any employer (other than an employer who derives any income from any trade, business, profession or vocation which is wholly or partly exempt from tax or subject to tax at a concessionary rate of tax under this Act or the Economic Expansion Incentives (Relief from Income Tax) Act (Cap. 86)) incurs medical expenses falling within that subsection in excess of the specified percentage of the total remuneration of his employees in that basis period, the amount of the excess medical expenses shall not be allowed as deductions.
[26/93]
(6)  Where, in the basis period for any year of assessment, any employer derives any income from any trade, business, profession or vocation which is wholly or partly exempt from tax or subject to tax at a concessionary rate of tax under this Act or the Economic Expansion Incentives (Relief from Income Tax) Act and incurs medical expenses in excess of the specified percentage of the total remuneration of his employees in that basis period, an amount equal to the excess medical expenses shall be deemed to be income of the employer chargeable to tax at the rate of tax under section 42(1) or 43(1), as the case may be, for that year of assessment.
[26/93]
(6A)  For the purpose of subsections (5) and (6), the specified percentage for any year of assessment shall be —
(a)
2% in the case of an employer who has —
(i)
contributed the specified amount into the medisave accounts maintained under the Central Provident Fund of —
(A)
at least 20% of the number of local employees who are employed by him as at the first day of the basis period for that year of assessment, for every calendar month in that basis period they are employed by the employer; and
(B)
every local employee who commences his employment with him during the basis period for that year of assessment, for the calendar month he commences his employment and every subsequent calendar month in that basis period he is employed by the employer; or
(ii)
incurred expenses in or in connection with the provision of a specified insurance plan to cover, for every calendar month in the basis period for that year of assessment, the cost of medical treatment of at least 50% of the number of local employees who are employed by him as at the first day of that basis period; and
(b)
1% in any other case.
[Act 34/2005, wef Y/A 2005 and Sub Ys/A:2005-ACT-34]
(6B)  Subsection (6A) shall apply to the year of assessment relating to the basis period which commenced on or after 1st April 2004 and any subsequent year of assessment.
[Act 34/2005, wef Y/A 2005 and Sub Ys/A:2005-ACT-34]
(7)  The references to medical expenses in subsections (5) and (6) shall be read as references to medical expenses which would, but for subsection (5), be allowable as deductions under this Act.
[26/93]
(8)  In this section —
“gross rate of pay” has the same meaning as in section 2 of the Employment Act (Cap. 91);
[Act 34/2005, wef Y/A 2005 and Sub Ys/A:2005-ACT-34]
“local employee” means a full-time or part-time employee who is a citizen or permanent resident of Singapore;
[Act 34/2005, wef Y/A 2005 and Sub Ys/A:2005-ACT-34]
“medical expenses” means expenses incurred in or in connection with the provision of medical treatment and includes —
(a)
expenses incurred in or in connection with the provision of maternity health care, natal care, and preventive and therapeutic treatment;
(b)
expenses incurred in or in connection with the provision of a medical clinic by the employer;
(c)
cash allowance in lieu of medical expenses;
(d)
expenses incurred in or in connection with the provision of insurance against the cost of medical treatment; and
(e)
contributions which are deductible under subsection (1)(f);
“medical treatment” includes all forms of treatment for, and procedures for diagnosing, any physical or mental ailment, infirmity or defect;
“part-time employee” has the same meaning as in section 66A of the Employment Act;
[Act 34/2005, wef Y/A 2005 and Sub Ys/A:2005-ACT-34]
“remuneration” means any wage, salary, leave pay, fee, commission, bonus, gratuity, allowance, other emoluments paid in cash by or on behalf of an employer and contributions to any approved pension or provident fund by any employer which are allowable as deductions under this Act, but does not include any director’s fee, medical expense, cash allowance in lieu of medical expenses and benefit-in-kind;
[26/93; 32/95]
“specified amount”, in relation to any calendar month, means —
(a)
in the case of a full-time employee who falls under subsection (6A)(a)(i), an amount equal to at least 1% of the employee’s gross rate of pay for the calendar month, subject to a minimum contribution of $16 per calendar month;
(b)
in the case of a part-time employee who falls under subsection (6A)(a)(i), an amount equal to at least 1% of the employee’s gross rate of pay for the calendar month;
[Act 34/2005, wef Y/A 2005 and Sub Ys/A:2005-ACT-34]
“specified insurance plan” means a medical insurance plan sponsored by an employer that —
(a)
confers hospitalisation benefits during the period of employment of an employee and up to a period of 12 months immediately after the employee leaves his employment for any reason; and
(b)
treats the employee as being continuously insured when he is employed by another employer who provides him with an insurance plan that confers the hospitalisation benefits described in paragraph (a).
[Act 34/2005, wef Y/A 2005 and Sub Ys/A:2005-ACT-34]
Deduction for patenting costs
14A.
—(1)  Subject to this section, where a person carrying on a trade or business has incurred during the period from 1st June 2003 to 31st May 2013 patenting costs for the purposes of that trade or business, there shall be allowed to him a deduction of the amount of such costs.
[21/2003]
(2)  The claim for deduction under subsection (1) shall be allowed to a person only if —
(a)
there is an undertaking by the person that he would be the proprietor of the patent when the patent is granted; and
(b)
the claim is made by the person in such manner and subject to such conditions as the Comptroller may require.
[21/2003]
(3)  For the purposes of this section, any patenting costs incurred by a person prior to the commencement of his trade or business shall be deemed to have been incurred by that person on the first day he carries on that trade or business.
[21/2003]
(4)  Where a person to whom a deduction for patenting costs has been allowed under this section sells, transfers or assigns in the basis period for any year of assessment all or any part of the rights for which such patenting costs were incurred, the person shall be deemed to have derived an amount of income for that year of assessment equal to the price which the rights were sold, transferred or assigned or the deduction which has been allowed under this section, whichever is the less.
[21/2003]
(5)  For the purposes of subsection (4), where there is more than one sale, transfer or assignment of any part of the rights for which such patenting costs were incurred, the total amount deemed as income shall not exceed the total amount of deduction previously allowed under this section.
[21/2003]
(6)  In this section —
“patenting costs” means the fees paid to —
(a)
the Registry of Patents in Singapore or elsewhere for the —
(i)
filing of a patent;
(ii)
search and examination report on the application for a patent; or
(iii)
grant of a patent; and
(b)
any registered patent agent for —
(i)
applying for any patent in Singapore or elsewhere;
(ii)
preparing specifications or other documents for the purposes of the Patents Act (Cap. 221) or the patents law of any other country; or
(iii)
giving advice on the validity or infringement of the patent;
“registered patent agent” has the same meaning as in the Patents Act (Cap. 221).
[14P
[21/2003]
Further deduction for expenses relating to approved trade fairs, exhibitions or trade missions or to maintenance of overseas trade office
14B.
—(1)  Subject to this section, where the Comptroller is satisfied that the expenses specified in subsection (2) have been incurred by an approved company or firm resident in or having a permanent establishment in Singapore for the primary purpose of —
(a)
promoting the trading of goods or the provision of services; or
(b)
the provision of services in connection with the use of any right under a master franchise or master intellectual property licence where the company or firm is the holder of the franchise or licence,
there shall be allowed a further deduction of the amount of such expenses in addition to the amount allowed under section 14.
[31/98]
(2)  The expenses referred to in subsection (1) are —
(a)
expenses in establishing, maintaining or otherwise participating in an approved trade fair, trade exhibition, trade mission or trade promotion activity;
(b)
expenses in maintaining an approved overseas trade office; or
(c)
market development expenditure for the carrying out of any approved marketing project.
[31/98]
(3)  The Minister or such person as he may appoint may specify the maximum amount of expenditure (or any item thereof) to be allowed under subsection (1).
[26/93; 31/98]
(4)  No deduction shall be allowed under this section in respect of —
(a)
any expenses which are not allowed as deductions under section 14;
(b)
travelling, accommodation and subsistence expenses or allowances for more than the approved number of employees taking part in the approved trade fair, trade exhibition, trade mission, trade promotion activity or the approved marketing project;
(c)
any expenses relating to an approved overseas trade office —
(i)
which are incurred in the establishment of the approved overseas trade office;
(ii)
by way of remuneration, travelling, accommodation and subsistence expenses or allowances for more than the approved number of employees of the approved overseas trade office;
(iii)
which are specifically excluded as a condition for the approval of the overseas trade office under this section;
(iv)
which are incurred after the end of the approved number of years from the date of establishment of the approved overseas trade office; and
(v)
which are incurred by a firm or company having a permanent establishment subject to tax in the country in which the approved trade office is established.
[26/93; 31/98; 32/99]
(5)  Subject to subsection (6), as soon as any amount of further deduction is allowed to any company under this section, section 14E, 14J or 14L, a sum equal to that amount shall be credited to an account (referred to in this section as the further deduction account) to be kept by the company for the purposes of any of those sections.
[28/92; 21/2003]
(6)  Where the company is a transferor company within the meaning of section 37C(19) and where any amount of further deduction allowed under this section, section 14E, 14J or 14L is transferred to a claimant company as part of the loss specified under section 37C(14)(b) —
(a)
the sum transferred shall not be credited to the further deduction account to be kept by the transferor company;
(b)
for the purposes of this section, section 14E, 14J or 14L, upon the transfer of the sum under paragraph (a), the sum transferred shall be credited to the further deduction account to be kept by the claimant company; and
(c)
in relation to the sum transferred under paragraph (a), subsections (7) to (10) shall apply to the claimant company.
[21/2003]
(7)  Where for any year of assessment a further deduction account of a company is in credit, the company shall —
(a)
debit from that account such amount as would have been the chargeable income had the further deduction not been allowed or the amount of the credit in that account, whichever is the less; and
(b)
credit the amount debited under paragraph (a) to an account to be called a tax exempt account which shall be kept by the company for the purposes of this section, section 14E, 14J or 14L,
and any remaining balance in the further deduction account shall be carried forward to be used by the company in the first subsequent year of assessment when the company has chargeable income had the further deduction not been allowed, and so on for subsequent years of assessment until the credit in the further deduction account has been fully used.
[28/92]
(8)  Where a tax exempt account of a company is in credit at the date on which any dividends are paid by the company out of the amount credited to that account, an amount equal to those dividends or to that credit, whichever is the less, shall be debited to the tax exempt account.
[28/92]
(9)  Section 13B(4) to (7) shall apply, with the necessary modifications, in respect of any dividend paid out of the tax exempt account of the company.
[28/92]
(10)  Notwithstanding anything in this section, where it appears to the Comptroller that in any year of assessment —
(a)
any further deduction which has been allowed under this section, section 14E, 14J or 14L; or
(b)
any dividend which has been exempted from tax in the hands of any shareholder,
ought not to have been so allowed or exempted, as the case may be, the Comptroller may, within the year of assessment or within 6 years after the expiration thereof —
(i)
make such assessment or additional assessment upon the company or any such shareholder as may be necessary in order to make good any loss of tax; or
(ii)
direct the company to debit its tax exempt account with such amount as the circumstances require.
[28/92; 11/94; 31/98; 37/2002]
(11)  In this section —
“approved” means approved by the Minister or such person as he may appoint;
“market development expenditure” means —
(a)
approved expenses directly attributable to the carrying out of market research or obtaining of market information, including any feasibility study;
(b)
expenses in respect of advertisements placed in approved media;
(c)
expenses incurred on approved promotion campaigns; or
(d)
approved expenses incurred in the design of packaging, or in the certification of goods or services where such certification is carried out by an approved person;
“master franchise” means any agreement under which the franchisor authorises or permits the franchisee to use in Singapore or overseas a business system owned or controlled by the franchisor, including the sub-franchising of the business system;
“master intellectual property licence” means any licence under which the licensor authorises or permits the licensee to use in Singapore or overseas the rights under a patent, copyright, trademark, design or know-how, including the sub-licensing of the same.
[32/95; 31/98]
Further deduction for logistics expenses
14C.
—(1)  Subject to this section, where the Comptroller is satisfied that an approved company has incurred approved logistics expenses, there shall be allowed to the company a further deduction of the amount of such expenses specified by the Minister or such person as he may appoint, in addition to the amount allowed under section 14.
(2)  The Minister or such person as he may appoint may —
(a)
specify the items of logistics expenses to be allowed to an approved company under subsection (1);
(b)
specify the maximum amount of logistics expenses to be allowed to an approved company under subsection (1) for each year of assessment, up to the full amount of such expenses incurred by the company;
(c)
specify the number of years of assessment for which deduction is to be allowed to an approved company under subsection (1), up to a maximum of 10 years of assessment; and
(d)
impose such conditions as he thinks fit when approving a company for the purpose of this section.
(3)  No deduction shall be allowed under this section in respect of any logistics expenses which are not allowed as deductions under section 14.
(4)  Where in any relevant period an approved company fails to comply with any condition imposed under subsection (2)(d), there shall be deemed to be income of the company, chargeable with tax for the year of assessment relating to the basis period in which such failure occurs, an amount ascertained in accordance with the formula
where E1, E2, E3, En
is the total amount of logistics expenses allowed to the company under subsection (1) for each year of assessment falling within the relevant period in which such failure occurs;
C1, C2, C3, Cn
is the rate of tax under section 43(1)(a) or concessionary rate of tax, or both such rates, as the case may be, applicable to the income of the company for each year of assessment falling within the relevant period in which such failure occurs; and
D
is the rate of tax under section 43(1)(a) or concessionary rate of tax, or both such rates, as the case may be, applicable to the income of the company for the year of assessment relating to the basis period in which such failure occurs.
(5)  Notwithstanding subsection (4), the Minister or such person as he may appoint may vary all or any of the conditions imposed on an approved company under subsection (2)(d).
(6)  In this section —
“approved” means approved by the Minister or such person as he may appoint;
“approved company” means a company resident in Singapore which —
(a)
undertakes logistics activities in-house in support of its business activities; or
(b)
outsources its logistics activities to a service provider,
and approved by the Minister or such person as he may appoint;
“concessionary rate of tax” means the rate of tax in accordance with —
(a)
any order made under section 13(12);
(b)
section 13H, 43C (in respect of those relating to offshore general insurance business only), 43D, 43E, 43F, 43G, 43H, 43I, 43J, 43K, 43L (repealed), 43N, 43O, 43P, 43Q, 43R, 43S, 43T, 43U, 43V, 43W, 43X, 43Y or 43Z, or the regulations made thereunder, as the case may be; or
“logistics expenses” means expenses incurred by an approved company which are —
(a)
directly attributable to the carrying out of logistics activities by the company in Singapore; or
(b)
paid to a service provider that carries out the company’s logistic activities in Singapore,
but excludes such expenses on international freight;
“relevant period”, in relation to an approved company, means the period or periods any condition imposed under subsection (2)(d) is to be satisfied by the company.
(7)  No approval shall be granted under this section on or after 1st July 2009.
Expenditure on research and development
14D.
—(1)  For the purpose of ascertaining the income of any person carrying on a manufacturing trade or business or a trade or business for the provision of any services, the following expenditure incurred (other than any amount which is allowable as a deduction under section 14) by that person shall be allowed as a deduction:
(a)
expenditure incurred on research and development undertaken directly by him and related to that trade or business (except to the extent that it is capital expenditure on plant, machinery, land or buildings or on alterations, additions or extensions to buildings or in the acquisition of rights in or arising out of research and development); and
(b)
payments made by that person to a research and development organisation for undertaking on his behalf research and development related to that trade or business.
[28/80; 3/89; 24/2000; 37/2002]
(2)  For the purposes of this section, any expenditure incurred by a person prior to the commencement of his trade or business shall be deemed to have been incurred by that person on the first day on which he carries on that trade or business.
(3)  If the research and development organisation referred to in subsection (1)(b) is outside Singapore, a claim for deduction shall be allowed to a person only if —
(a)
there is an undertaking by the person that any benefit which may arise from the conduct of the research and development shall accrue to the person; and
(b)
the claim is made by the person in such manner and subject to such conditions as the Comptroller may require.
[37/2002]
Further deduction for expenditure on research and development project
14E.
—(1)  Subject to this section, where the Comptroller is satisfied that —
(a)
a person carrying on a manufacturing trade or business, or a trade or business for the provision of any services has incurred expenditure in undertaking directly by himself, or in paying a research and development organisation to undertake on his behalf, an approved research and development project in Singapore which is related to that trade or business; or
(b)
a research and development organisation has incurred expenditure in undertaking an approved research and development project in Singapore and no deduction under this section has been allowed to another person in respect of any expenditure for that project or for another project of which that project forms a part,
there shall be allowed to that person or research and development organisation a further deduction of the amount of such expenditure in addition to the deduction allowed under section 14 or 14D.
[28/80; 3/89; 37/2002]
(2)  The Minister or such person as he may appoint may —
(a)
specify the maximum amount of the expenditure (or any item thereof) incurred to be allowed under subsection (1);
(b)
impose such conditions as he thinks fit when approving the research and development project; and
(c)
specify the period or periods for which deduction is to be allowed under this section.
(3)  No deduction shall be allowed under this section in respect of any expenditure which is not allowed under section 14 or 14D.
(4)  In this section, “approved” means approved by the Minister or such person as he may appoint.
[3/89; 37/2002]
Management expenses of investment companies
14F.
—(1)  Subject to this section, for the purpose of ascertaining the income for the basis period for any year of assessment of an approved investment company, there shall be allowed as a deduction any expenses for the management of its investments paid to any person who is a resident of or has a permanent establishment in Singapore and the amount of the deduction shall be ascertained by the formula
where A
is the total expenses for the management of its investments paid for that basis period;
B
is the total interest and dividends chargeable to tax in that basis period; and
C
is the total investment income (whether chargeable to tax or not) for that basis period.
(2)  The deduction allowed under this section for any year of assessment shall not exceed the total interest and dividends chargeable to tax of the approved investment company in the basis period for that year of assessment.
(3)  This section shall not apply to any investment company which has been approved under section 10A or any unit trust which has been approved under section 10B or any unit trust designated under section 35(14).
[3/89; 23/90; 32/95]
(4)  In this section —
“approved” means approved by the Minister or such person as he may appoint;
“investment company” means any company whose business consists wholly or mainly in the making of investments and the principal part of whose income is derived therefrom, and includes any unit trust.
14G.  [Repealed by Act 21/2003]
Expenditure on building modifications for benefit of disabled employees
14H.
—(1)  Subject to subsections (2) and (3), where any person being the owner or lessee of any premises and carrying on a trade, business or profession at those premises has incurred approved expenditure on any addition or alteration to those premises for the purpose of facilitating the mobility or work of any disabled employee, there shall, in ascertaining the income of that person for the basis period during which the expenditure was incurred, be allowed as a deduction an amount equal to that expenditure.
[1/90]
(2)  Where any person has been allowed a deduction under subsection (1), no deduction shall be allowed under any other provision of this Act in respect of the expenditure for which the deduction was allowed.
(3)  Where a person has been allowed a deduction or deductions under this section amounting to $100,000, whether for one or more years of assessment, no further deduction shall be allowed to that person under this section.
(4)  In this section, “approved” means approved by the Minister or such person as he may appoint.
Provisions by banks and qualifying finance companies for doubtful debts and diminution in value of investments
14I.
—(1)  Subject to this section, for the purpose of ascertaining the income for the basis period for any year of assessment of a bank or qualifying finance company, there shall be allowed as a deduction an amount in respect of the provision for doubtful debts arising from its loans and the provision for diminution in the value of its investments in securities, made in that basis period.
[2/92; 28/96]
(2)  Where in the basis period for any year of assessment —
(a)
any amount of the provisions is written back, that amount shall be treated as having been allowed as a deduction under this section and shall be deemed to be a trading receipt of the bank or qualifying finance company for that basis period;
[1/82]
(b)
the bank or qualifying finance company permanently ceases to carry on business in Singapore, any provisions in the account of the bank or qualifying finance company as at the date of the cessation shall be deemed to be a trading receipt of the bank or qualifying finance company for that basis period.
[28/96]
(3)  The total amount deemed as trading receipts under subsection (2) shall not exceed the total amount of all deductions previously allowed under this section.
(4)  Where in a scheme of amalgamation involving 2 or more banks or finance companies whereby the whole or substantially the whole of the undertaking of any bank or finance company is transferred to another bank or finance company, the Minister may, if he thinks fit and on such conditions as he may impose, by order declare that any provisions in the account of the transferor bank or transferor finance company which have been transferred to the transferee bank or transferee finance company shall not be deemed under subsection (2)(b) to be a trading receipt of the transferor bank or transferor finance company; and the provisions so declared shall for the purposes of this section be treated as having been allowed to the transferee bank or transferee finance company as a deduction under this section.
[28/96]
(5)  Subject to subsection (6), the total amount of the provisions to be allowed as a deduction under this section for any year of assessment shall not exceed the lowest of —
(a)
25% of the qualifying profits for the basis period for that year of assessment;
(b)
½% of the prescribed value of the loans and investments in securities in the basis period for that year of assessment; or
(c)
3% of the prescribed value of the loans and investments in securities in the basis period for that year of assessment, less the total amount of all deductions previously allowed under this section which have not been deemed to be trading receipts under subsections (2) and (3).
[32/95; 1/98; 32/99]
(6)  No deduction shall be allowed for any year of assessment —
(a)
where there are no qualifying profits in the basis period for that year of assessment; or
(b)
where the total amount of all deductions previously allowed under this section, which have not been deemed to be trading receipts under subsections (2) and (3), is in excess of 3% of the prescribed value of the loans and investments in securities for the relevant basis period for that year of assessment.
[1/98; 32/99]
(7)  In this section —
“bank” means a bank licensed under the Banking Act (Cap. 19) or a merchant bank approved by the Monetary Authority of Singapore;
“capital funds” has the same meaning as in the Finance Companies Act (Cap. 108);
“loan” means any loan, advance or credit facility made or granted by a bank or qualifying finance company, including an overdraft except for —
(a)
loans to and placements with financial institutions in Singapore or any other country;
(b)
loans to the Government of Singapore or the government of any other country;
(c)
loans to and placements with the Monetary Authority of Singapore or the central bank or other monetary authority of any other country;
(d)
loans to statutory bodies or corporations guaranteed by the Government of Singapore or the government of any other country; and
(e)
such other loans or advances as may be prescribed;
“prescribed value of loans and investments in securities”, in relation to the basis period for any year of assessment, means the value (ascertained in such manner as the Comptroller may determine) of the loans and investments in securities (excluding any loan or investment in respect of which any deduction has been allowed under any other section of this Act) as at the last day of each month in that basis period added together and divided by the number of months in that basis period;
“provisions” means the provision for doubtful debts arising from the loans of a bank or qualifying finance company and the provision for diminution in the value of its investments in securities;
“qualifying finance company” means a company licensed under the Finance Companies Act (Cap. 108) to carry on financing business which has, in the basis period for any year of assessment for which the deduction under this section is first allowed, capital funds of not less than $50 million and a capital adequacy ratio of not less than 12% as determined under that Act;
“qualifying profit” means the net profit (excluding any extraordinary gain which is not subject to tax) as shown in the audited accounts of the bank or qualifying finance company before deducting provision for taxation, tax paid, any extraordinary loss not allowed as a deduction, provision for doubtful debts arising from loans and provision for diminution in value of investments in securities;
“securities” means —
(a)
debentures, stocks, shares, bonds or notes excluding —
(i)
those issued or guaranteed by the Government of Singapore or the government of any other country; and
(ii)
stocks and shares held by a bank or qualifying finance company and issued by any company in which 5% or more of the total number of its issued shares are beneficially owned, directly or indirectly, by the bank or qualifying finance company at any time during the basis period for the relevant year of assessment;
(b)
any right or option in respect of any debentures, stocks, shares, bonds or notes referred to in paragraph (a); or
(c)
units in any unit trust within the meaning of section 10B.
[28/96]
Further deduction for expenditure on research and development of new financial activities
14J.
—(1)  Subject to this section, where the Comptroller is satisfied that the following expenses have been incurred by a financial institution, there shall be allowed a further deduction of the amount of such expenses in addition to the amount allowed under section 14 —
(a)
salary, wages and other benefits paid or granted in respect of employment (excluding director’s fees), whether in money or otherwise, to an approved employee engaged in the research and development of any approved new financial activity;
(b)
legal expenses, excluding expenses incurred in respect of litigation, which, in the opinion of the Comptroller, are directly attributable to the research and development of any approved new financial activity;
(c)
expenses incurred in respect of any approved course of instruction or training conducted in Singapore by an approved employee; and
(d)
fees and other benefits paid or granted under or arising out of a contract for financial consultancy services, whether in money or otherwise, to an approved consultant engaged in the research and development of any approved new financial activity, where —
(i)
the contract is for a period of not less than 6 months; and
(ii)
the approved consultant is not absent from Singapore for more than 30 days in the aggregate during the period of the contract.
[28/92; 26/93; 32/95]
(2)  The maximum amount of expenses to be allowed under subsection (1) to any financial institution in the basis period for any year of assessment shall not exceed 30% of such amount as would have been the statutory income of the financial institution for that year of assessment had the further deduction not been allowed.
(3)  Any expenses in excess of the amount allowed under subsection (2) shall not be carried forward to any subsequent year of assessment.
(4)  The Minister or such person as he may appoint may —
(a)
approve any financial institution for such period not exceeding 5 years as he may specify and such approval may be extended for further periods not exceeding 5 years at a time; and
(b)
impose such conditions as he thinks fit when approving the institution, employee or new financial activity and may specify the period or periods for which deduction is to be allowed under this section.
(5)  No deduction shall be allowed to a financial institution in respect of any expenses which are not allowed as a deduction under section 14.
(6)  In this section —
“approved” means approved by the Minister or such person as he may appoint;
“financial institution” means a bank, merchant bank, securities dealer, investment adviser or futures broker which is approved for the purposes of this section;
“new financial activity” means a new or innovative financial activity or instrument which falls within the following categories of activities or instruments:
(a)
derivatives trading including share options, currency options and interest rate options;
(b)
swap transactions excluding plain vanilla swaps;
(c)
technical trading computer systems and software;
(d)
risk management services which employ sophisticated hedging techniques and instruments;
(e)
development of synthetic securities and instruments linked to derivatives;
(f)
research on foreign securities; and
(g)
such other category of activities or instruments as may be prescribed.
Further or double deduction for overseas investment development expenditure
14K.
—(1)  Where the Comptroller is satisfied that —
(a)
any investment development expenditure for the carrying out of an approved investment project overseas; or
(b)
any expense for the maintenance of an approved overseas project development office,
has been incurred by an approved firm or company resident in Singapore and carrying on business in Singapore, there shall be allowed —
(i)
where such expenditure or expense is allowable as a deduction under section 14, a further deduction of the amount of such expenditure or expense in addition to the deduction allowed under that section; and
(ii)
where such expenditure or expense is not allowable as a deduction under section 14, a deduction equal to twice the amount of such expenditure or expense.
[26/93]
(2)  The Minister or such person as he may appoint may —
(a)
specify the maximum amount of investment development expenditure for the carrying out of an approved investment project overseas or expenses for the maintenance of an approved overseas project development office (or any item thereof) to be allowed under subsection (1); and
(b)
impose such conditions as he thinks fit when approving the investment project or the overseas project development office for which the deduction is to be allowed under this section.
(3)  No deduction shall be allowed under this section in respect of —
(a)
travelling, accommodation and subsistence expenses or allowances for more than 2 employees taking part in an approved investment project overseas;
(b)
any expenses for the maintenance of an approved overseas project development office —
(i)
which are incurred for the establishment of that office;
(ii)
by way of remuneration, travelling, accommodation and subsistence expenses or allowances for more than 3 employees of that office;
(iii)
which are specifically excluded as a condition of approval for that office under this section;
(iv)
which are incurred after the end of the first 6 months of the establishment of that office; and
(v)
which are incurred by the approved firm or company having a permanent establishment which has, during the first 6 months of the establishment of that office, income chargeable to tax in the country in which that office is established.
(4)  Subject to subsection (5), as soon as any amount of deduction is allowed to any company under subsection (1), a sum equal to the amount of the expenditure or expense incurred by the company which qualified for the deduction under subsection (1) shall be credited to an account (referred to in this section as the further deduction account) to be kept by the company for the purposes of this section.
[21/2003]
(5)  Where the company is a transferor company within the meaning of section 37C(19) and where any amount of further deduction allowed under this section is transferred to a claimant company as part of the loss specified under section 37C(14)(b) —
(a)
the sum transferred shall not be credited to the further deduction account to be kept by the transferor company;
(b)
for the purposes of this section, upon the transfer of the sum under paragraph (a), the sum transferred shall be credited to the further deduction account to be kept by the claimant company; and
(c)
in relation to the sum transferred under paragraph (a), subsection (6) shall apply to the claimant company.
[21/2003]
(6)  Section 14B(7) to (10) shall apply, with the necessary modifications, to any company to which a deduction is allowed under subsection (1) and, in relation to a deduction allowed to any company under subsection (1)(ii), the references to further deduction in those subsections shall be read as references to a deduction of a sum equal to the amount of the expenditure or expense incurred by the company which qualified for the deduction under subsection (1)(ii).
(7)  In this section —
“approved” means approved by the Minister or such person as he may appoint;
“investment development expenditure” means expenses directly attributable to the carrying out of —
(a)
any study to identify investment overseas; and
(b)
any feasibility or due diligence study on any approved investment overseas;
“overseas project development office” means any office established for the purpose of identifying, initiating and developing any approved investment overseas.
Further deduction for expenses incurred in relocation or recruitment of overseas talent
14L.  The Minister may by regulations provide that, for the purpose of ascertaining the income of any person or class of persons carrying on a trade, profession or business, there shall be allowed to such person or class of persons a further deduction, in addition to the deduction allowed under section 14, of any prescribed expenses incurred in relocating or recruiting any prescribed employee from outside Singapore to be employed in Singapore by the person or class of persons.
[31/98]
Deduction for hotel refurbishment expenditure
14M.
—(1)  Where any person carrying on a hotel trade or business at any hotel premises proposes to carry out a project for any refurbishment of the hotel premises, he may apply to the Minister, or such person as he may appoint, on or before 30th June 2003 for that project (which shall be completed on or before 30th June 2006) to be approved for the purposes of claiming a deduction under this section in respect of expenditure incurred by him on the refurbishment project.
[21/2003]
(2)  Where the Minister, or such person as he may appoint, considers it expedient in the public interest to do so, he may approve the refurbishment project subject to such terms and conditions as he may impose.
[32/99]
(3)  Every approval given under this section shall specify —
(a)
the qualifying period during which the approved refurbishment project is to be carried out;
(b)
the qualifying expenditure and the maximum amount thereof to be allowed as a deduction under this section; and
(c)
a percentage, exceeding 100% but not exceeding 150%, of the qualifying expenditure to be allowed as a deduction under this section.
[32/99]
(4)  Where in the basis period for any year of assessment the person has incurred any qualifying expenditure on the approved refurbishment project, he shall be allowed, on due claim, for a period of 5 years (consecutive or otherwise) a deduction against the income from his hotel trade or business computed in accordance with subsection (5).
[32/99]
(5)  The amount of deduction under subsection (4) for any year of assessment shall be ascertained by the formula
where A
is the percentage referred to in subsection (3)(c); and
B
is the amount of qualifying expenditure incurred.
(6)  No deduction shall be allowed under this section in respect of —
(a)
any expenditure which is not incurred during the qualifying period referred to in subsection (3)(a);
(b)
any expenditure which was incurred before 1st July 1998; and
(c)
any year of assessment relating to any basis period during which the hotel premises are not used for the purposes of a hotel trade or business of the person who incurs the qualifying expenditure.
[32/99]
(7)  Where any person has been allowed a deduction under this section in respect of any qualifying expenditure, no deduction shall be allowed under any other provision of this Act in respect of the expenditure for which the deduction was allowed.
[32/99]
(8)  Subject to subsection (9), as soon as a deduction is allowed under this section to a company resident in Singapore, an amount (referred to in this section as further deduction) computed in accordance with the formula
shall be credited to an account (referred to in this section as further deduction account) to be kept by the company for the purposes of this section, where A and B have the same meanings as in subsection (5).
[21/2003]
(9)  Where the company is a transferor company within the meaning of section 37C(19) and where any amount of further deduction allowed under this section is transferred to a claimant company as part of the loss specified under section 37C(14)(b) —
(a)
the sum transferred shall not be credited to the further deduction account to be kept by the transferor company;
(b)
for the purposes of this section, upon the transfer of the sum under paragraph (a), the sum transferred shall be credited to the further deduction account to be kept by the claimant company; and
(c)
in relation to the sum transferred under paragraph (a), subsections (10) to (17) and subsection (23) shall apply to the claimant company.
[21/2003]
(10)  Where for any year of assessment the further deduction account of the company is in credit, the company shall —
(a)
debit from that account such amount as would have been the chargeable income had the further deduction not been allowed or the amount of the credit in that account, whichever is the less; and
(b)
credit the amount debited under paragraph (a) to an account to be called a tax exempt account which shall be kept by the company for the purposes of this section,
and any remaining balance in the further deduction account shall be carried forward to be used by the company in the first subsequent year of assessment when the company has chargeable income had the further deduction not been allowed, and so on for subsequent years of assessment until the credit in the further deduction account has been fully used.
[21/2003]
(11)  Where the tax exempt account is in credit at the date on which any dividends are paid by the company out of the amount credited to that account, an amount equal to those dividends or to that credit, whichever is the less, shall be debited to the tax exempt account.
[21/2003]
(12)  So much of the amount of any dividends so debited to the tax exempt account as is received by a shareholder of the company shall, if the Comptroller is satisfied with the entries in the account, be exempt from tax in the hands of the shareholder.
[21/2003]
(13)  Any dividends debited to the tax exempt account shall be treated as having been distributed to the shareholders of the company or any particular class of the shareholders in accordance with the proportion of their shareholdings in the company.
[21/2003]
(14)  Where an amount of dividends exempt from tax under this section has been received by a shareholder, if that shareholder is a company, any dividends paid by that company to its shareholders, to the extent that the Comptroller is satisfied that those dividends are paid out of that amount, shall be exempt from tax in the hands of those shareholders.
[21/2003]
(15)  Notwithstanding subsections (12) and (14), no dividend paid on any share of a preferential nature shall be exempt from tax under this section in the hands of the shareholder.
[21/2003]
(16)  Section 44 shall not apply to any dividends or part thereof which are exempt from tax under this section.
[21/2003]
(17)  The company shall deliver to the Comptroller a copy of the tax exempt account made up to any date specified by him whenever called upon to do so by notice in writing.
[21/2003]
(18)  During the qualifying period referred to in subsection (3)(a) or within 5 years after the date of completion of the approved refurbishment project, a person who has been allowed any deduction under this section shall not, without the written approval of the Minister or such person as he may appoint —
(a)
sell, lease out or otherwise dispose of any asset in respect of which a deduction has been allowed under this section;
(b)
cease to use the hotel premises or any part thereof for his hotel trade or business; or
(c)
sell, lease out or otherwise dispose of the hotel premises or any part thereof.
[32/99]
(19)  Where any of the events referred to in subsection (18) occurs in the basis period for any year of assessment, the person shall be deemed to have derived an amount of income for that year of assessment equal to the total amount of deduction which has been allowed under this section in respect of the assets or any part of the hotel premises to which the event relates.
[32/99]
(20)  Notwithstanding subsection (19), the Minister or such person as he may appoint may, subject to such terms and conditions as he may impose and upon any application by the person deemed to have derived income under that subsection, reduce the amount of income so deemed.
[32/99]
(21)  Where any deduction allowed under this section is in respect of any capital expenditure incurred by a person on any machinery or plant and where at any time after 5 years from the date of completion of the approved refurbishment project any of the events referred to in section 20(1) occurs in respect of that machinery or plant, section 20(1) to (3) shall apply, with the necessary modifications, and a balancing allowance or a balancing charge shall be made to or, as the case may be, on that person for the year of assessment in the basis period for which that event occurs.
[32/99]
(22)  For the purposes of subsection (21) —
(a)
any reference in section 20(1) to allowances made under section 19 or 19A shall be read as a reference to a deduction allowed under this section;
(b)
the amount of the capital expenditure on the provision of the machinery or plant still unallowed as at the time of the occurrence of the event shall be ascertained by the formula
where C
is the amount of capital expenditure incurred on the provision of the machinery or plant; and
D
is the number of years of assessment for which any deduction has been allowed under this section in respect of that capital expenditure; and
(c)
notwithstanding anything in section 20(3), in no case shall the amount on which a balancing charge is made on a person exceed an amount computed in accordance with the formula
where C and D
have the same meanings as in paragraph (b).
[32/99]
(23)  Where it appears to the Comptroller that in any year of assessment —
(a)
any deduction allowed under this section; or
(b)
any dividend exempted in the hands of any shareholder under this section,
ought not to have been so allowed or exempted, as the case may be, the Comptroller may, in the year of assessment or within 6 years after the expiration thereof —
(i)
make such assessment or additional assessment upon the company or any such shareholder as may be necessary in order to make good any loss of tax; or
(ii)
direct the company to debit its tax exempt account with such amount as the circumstances require.
[32/99]
Deduction of upfront land premium
14N.
—(1)  Where the Comptroller is satisfied that an upfront land premium has been paid by a lessee to a relevant body in respect of a designated lease for the construction or use of a building or structure for the purposes of carrying on any qualifying activity in that building or structure, there shall, subject to this section, be allowed to the lessee, for each year of assessment in the basis period for which the qualifying activity is carried on, a deduction of an amount of such expenditure ascertained by the formula
where A
is the amount of upfront land premium paid; and
B
is the number of years of the term of the designated lease for which the upfront land premium was paid.
(2)  Where an assignee has incurred any expenditure in acquiring the remaining term of a designated lease for the construction or use of a building or structure for the purposes of carrying on any qualifying activity, there shall, subject to this section, be allowed to the assignee, for each year of assessment in the basis period for which the qualifying activity is carried on, a deduction of an amount of such expenditure ascertained by the formula
where C
is —
(a)
the residual expenditure immediately after the assignment; or
(b)
the upfront land premium at the time of the assignment as determined by the relevant body for the remaining term of the designated lease,
whichever is the lower; and
D
is the remaining number of years (excluding any part of a year) of the term of the designated lease for which the upfront land premium was paid.
(3)  Subsection (2) shall apply, with the necessary modifications, to any subsequent assignment of the remaining term of the designated lease.
[32/99]
(4)  The total amount of deductions to be allowed —
(a)
to a lessee under subsection (1), shall not exceed the amount of the upfront land premium paid by him to the relevant body in respect of the designated lease; and
[32/99]
(b)
to an assignee under subsection (2) or (3), as the case may be, shall not exceed the amount of C as ascertained in the formula in subsection (2).
[32/99]
(5)  Where more than 1/ 10 of the total built-up area of a building or structure constructed on any industrial land under a designated lease is not in use for any qualifying activity, no deduction under subsection (1), (2) or (3) shall be allowed in respect of such part of the building or structure which is not in use for any qualifying activity.
[32/99]
(6)  No deduction shall be allowed under this section to any person for any year of assessment if the building or structure constructed on any industrial land under a designated lease is not in use for any qualifying activity at the end of the basis period for that year of assessment.
[32/99]
(7)  The following provisions shall apply where a designated lease is assigned:
(a)
where the consideration received by the assignor for the remaining term of the designated lease is less than the residual expenditure immediately before the assignment, the difference shall be allowed as a deduction to the assignor for the year of assessment in the basis period in which he assigns the remaining term of the designated lease;
(b)
where the consideration received by the assignor for the remaining term of the designated lease is more than the residual expenditure immediately before the assignment, the difference shall be deemed to be income subject to tax under section 10(1)(g) and shall be included as income of the assignor for the year of assessment in the basis period in which he assigns the remaining term of the designated lease.
[32/99]
(8)  The amount deemed to be income of an assignor for the purposes of subsection (7)(b) shall not exceed the total amount of deduction allowed to the assignor under subsection (1), (2) or (3), as the case may be.
(9)  In this section —
“designated lease” means any lease in respect of any industrial land granted to a lessee by a relevant body —
(a)
for a period of 30 years or less during the period from 1st January 1998 to the last day of the basis period for the year of assessment 2003 of the lessee; or
(b)
for a period of 60 years or less on or after the first day of the basis period for the year of assessment 2004 of the lessee and before 28th February 2013,
and includes an assignment of such a lease;
“industrial land” means any land permitted to be used for industrial purposes under the Planning Act (Cap. 232);
“qualifying activity” means —
(a)
any activity in respect of any of the purposes referred to in section 18(1) other than the activities for purposes referred to in section 18(1)(h) and (i);
(b)
any activity in respect of any prescribed purposes under section 18(1)(j) other than any activity relating to postal services or to organisation or management of exhibitions and conferences; and
(c)
any activity relating to the examination of motor vehicles for the purposes of section 90 of the Road Traffic Act (Cap. 276) and the rules made thereunder;
“relevant body” means —
(a)
the Housing and Development Board constituted under the Housing and Development Act (Cap. 129); or
(b)
the Jurong Town Corporation constituted under the Jurong Town Corporation Act (Cap. 150);
“residual expenditure”, in relation to an assignment of a designated lease, shall be the amount of expenditure available for deduction to the assignor reduced by —
(a)
the amount of any deduction allowed to the assignor under this section; and
(b)
the amount of any deduction not allowed to the assignor under subsection (5) or (6),
and increased by any amount deemed to be income of the assignor under subsection (7)(b);
“upfront land premium”, in relation to a designated lease, means the lump sum payment paid by a lessee to a relevant body at the commencement of the term of the designated lease.
[32/99; 21/2003]
Deduction for special reserve of approved general insurer
14O.
—(1)  The Minister may by regulations provide that, for the purpose of ascertaining the income of a general insurer approved by the Minister or such person as he may appoint from carrying on the business of insuring and reinsuring offshore risks, there shall be allowed for a period of 10 years a deduction for the prescribed amount of special reserves set aside by the approved general insurer for prescribed offshore risks.
[37/2002]
(2)  Regulations made under subsection (1) may provide for —
(a)
any amount transferred to the special reserve on an earlier date to be deemed to have been transferred out of the special reserve first;
(b)
the circumstances in which any amount which has been allowed as deduction under this section may be deemed as trading receipt for any basis period;
(c)
the adjustment of any amount deemed as trading receipt for any basis period in respect of any amount which has been allowed as deduction under this section; and
(d)
generally for giving full effect to or for carrying out the purposes of this section.
[37/2002]
(3)  In this section —
“insurer” has the same meaning as in section 43C;
“offshore risk” has the same meaning as in section 26.
[Act 34/2005, wef Y/A 2005 and Sub Ys/A:2005-ACT-34]
Deduction for treasury shares transferred under employee equity-based remuneration scheme
14P.
—(1)  Where a company transfers, in the basis period for the year of assessment 2007 or any subsequent year of assessment, treasury shares held by it to any person under a stock option scheme or a share award scheme by reason of any office or employment held in Singapore by that person, there shall be allowed a deduction to that company for that year of assessment.
(2)  Subject to subsection (8), the amount of deduction to be allowed to a company under subsection (1) shall be the cost to the company of acquiring the treasury shares transferred to the person less any amount payable by that person for the treasury shares.
(3)  For the purpose of subsection (2), the cost to the company of acquiring the treasury shares transferred to any person shall, at the election of the company, be determined —
(a)
on the basis that treasury shares acquired by the company at an earlier point in time are deemed to be transferred first;
(b)
in accordance with the formula
where A
is the number of treasury shares transferred by the company to the person;
B
is the total number of treasury shares held by the company immediately before the transfer to the person; and
C
is the total cost of acquiring all the treasury shares held by the company immediately before the transfer to the person; or
(c)
on the basis of the aggregate cost of all treasury shares transferred to all persons within each regular interval under subsection (1) computed in accordance with the formula
where D
is the total number of treasury shares transferred under subsection (1) by the company to all persons within that interval;
E
is the total number of treasury shares held by the company at the end of the interval immediately preceding that interval;
F
is the total number of treasury shares acquired by the company within that interval;
G
is the total cost of acquiring all the treasury shares held by the company at the end of the interval immediately preceding that interval; and
H
is the total cost of acquiring all the treasury shares by the company within that interval.
(4)  Any election for determining the cost of acquiring treasury shares under subsection (3) or for the length of any regular interval made by a company shall be irrevocable.
(5)  Where any amount payable by a person for any treasury shares transferred to him exceeds the cost to the company of acquiring the treasury shares transferred as determined under subsection (3), the amount of the excess shall be credited to an account to be kept by the company for the purpose of this section.
(6)  Where there is any balance in the account kept by the company under subsection (5) and any treasury shares are subsequently transferred by the company to any person under subsection (1), the cost to the company of acquiring the treasury shares as determined under subsection (3) shall be reduced —
(a)
where the amount of the balance is equal to or exceeds the amount of the cost, to zero; or
(b)
where the amount of the balance is less than the amount of the cost, by the amount of the balance,
and the amount of the reduction shall be debited to the account.
(7)  For the purpose of this section, a company transfers treasury shares held by it to a person when the person acquires the legal and beneficial interest in the treasury shares.
(8)  Where a holding company transfers treasury shares held by it to any person employed at any time by a subsidiary company of the holding company under a stock option scheme or a share award scheme —
(a)
no deduction shall be allowed to the holding company under subsection (1);
(b)
if any amount is paid or payable by the subsidiary company to the holding company for the transfer of the treasure shares, there shall be allowed to the subsidiary company, on the date of the transfer of the shares or of the payment to the holding company for the shares, whichever is the later, a deduction under subsection (1) for the amount, or an amount equal to the cost to the holding company of acquiring the treasury shares transferred to that person as determined under subsection (3) less any amount payable by that person for the treasury shares, whichever is the less; and
(c)
subsections (5) and (6) shall not apply to a company to which this subsection applies.
(9)  In this section ––
“holding company” and “subsidiary company” have the same meanings as in section 5 of the Companies Act (Cap. 50);
“regular interval”, in relation to a company, means an interval in a number of equal periods where ––
(a)
the period of each interval is elected by the company; and
(b)
the aggregate period of all intervals in a basis period would be equal to the basis period.
[Act 7/2007, wef Y/A 2007 & Sub Ys/A:2007-ACT-7]
Deductions not allowed
15.
—(1)  Notwithstanding the provisions of this Act, for the purpose of ascertaining the income of any person, no deduction shall be allowed in respect of —
(a)
domestic or private expenses except as provided in section 14(1)(g);
(b)
any disbursements or expenses not being money wholly and exclusively laid out or expended for the purpose of acquiring the income;
(c)
any capital withdrawn or any sum employed or intended to be employed as capital except as provided in section 14(1)(h);
(d)
any capital employed in improvements other than improvements effected in the replanting of a plantation;
(e)
any sum recoverable under an insurance or contract of indemnity;
(f)
rent or cost of repairs to any premises or part of premises not paid or incurred for the purpose of producing the income;
(g)
any amount paid or payable in respect of income tax in Singapore, or in respect of any tax on income (by whatever name called) in any country outside Singapore;
(h)
any amount paid or payable in respect of goods and services tax by the person if he, being required to be registered under the Goods and Services Tax Act (Cap. 117A), has failed to do so, or if he is entitled under that Act to credit that amount of tax as an input tax;
(i)
any payment to any provident, savings, widows’ and orphans’ or other society or fund, including the Supplementary Retirement Scheme, except such payments as are allowed under sections 14(1)(e) and (f) and 39(2)(g) and (o);
(j)
any sum payable by way of interest by any person out of Singapore to another person out of Singapore except where tax has been deducted and accounted for under section 45;
(k)
any outgoings and expenses, whether directly or in the form of reimbursements, and any claim for the cost of renewal incurred on or after 1st April 1998 in respect of a motor car (whether owned by him or any other person) which is constructed or adapted for the carriage of not more than 7 passengers (exclusive of the driver) and the weight of which unladen does not exceed 3,000 kilograms except —
(i)
a taxi;
(ii)
a motor car registered outside Singapore and used exclusively outside Singapore;
(iii)
a private hire car if the person is carrying on the business of hiring out cars and the private hire car is used by the person principally for hiring;
(iv)
a motor car which was registered before 1st April 1998 as a business service passenger vehicle for the purposes of the Road Traffic Act (Cap. 276); and
(v)
a motor car registered on or after 1st April 1998 which is used principally for instructional purposes if the person is carrying on the business of providing driving instruction and holds a driving school licence or driving instructor’s licence issued under the Road Traffic Act;
(l)
any outgoings and expenses incurred in respect of any unit trust designated under section 35(14) if the person is a unit holder of such trust;
(m)
any amount of output tax paid or payable under the Goods and Services Tax Act (Cap. 117A) which is borne by the person if he is registered as a taxable person under that Act;
(n)
any outgoings and expenses incurred in respect of any approved CPF unit trust as defined in section 35(14) if the person is a unit holder who has purchased any unit in such trust using moneys other than those standing to his credit in the Central Provident Fund;
(o)
any sum of money, other than any compensatory payment, paid by a transferee to a transferor after the transferee has failed to notify such person within such period as the Comptroller may require under section 10N(6)(b), in place of any dividend derived from Singapore from which tax has been deducted under section 44 in respect of transferred securities under a securities lending or repurchase arrangement to which section 10N applies;
(p)
any outgoings and expenses, whether directly or in the form of reimbursements, incurred in respect of any right or benefit granted to any person to acquire shares on or after 1st January 2002 in any company, if the right or benefit is not granted by reason of any office or employment held in Singapore by the person ; and
[7/79; 9/80; 15/83; 11/94; 32/95; 31/98; 32/99; 24/2001; 37/2002]
(q)
any outgoings and expenses, whether directly or in the form of reimbursements, incurred by any company in respect of any right or benefit granted to any person, by reason of any office or employment held in Singapore by that person, to acquire shares (other than treasury shares) of a holding company of that company.
(2)  Subsection (1)(b) and (d) shall not apply to any expenditure which qualifies for deduction under section 14D, 14E, 14F, 14H, 14I, 14K, 14M, 14N, 14O or 14P.
[9/80; 28/80; 1/82; 20/91; 2/92; 26/93; 32/99; 21/2003]
(3)  In this section, “holding company” has the same meaning as in section 5 of the Companies Act (Cap. 50).