On 22/05/2013,
you requested for the version in force on 22/05/2013
incorporating all amendments published on or before 22/05/2013.
The closest version currently available is that of 31/03/2005.
PART X
INVESTMENT ALLOWANCES
66.
—(1) In this Part, unless the context otherwise requires —
“approved project” means a project approved by the Minister under section 67(2);
“chargeable concessionary income” means concessionary income after deducting expenses, donations, allowances or losses allowable under the Income Tax Act against the concessionary income;
“chargeable normal income” means normal income after deducting expenses, donations, allowances or losses allowable under the Income Tax Act against the normal income;
“concessionary income” means income subject to tax at the concessionary rate of tax under section 13H, 43A, 43C, 43D, 43E, 43F, 43G, 43H, 43I, 43J, 43K, 43L, 43N, 43O, 43P, 43Q, 43Ror 43S of the Income Tax Act, as the case may be;
“concessionary investment allowance” means an investment allowance given to a company for an approved project from which the concessionary income of the company is derived;
“concessionary investment allowance account” means an account kept by a company for the purpose of calculating the amount of concessionary investment allowance granted under this Part;
“construction operations” means —
(a)
construction, alteration, repair, extension or demolition of buildings and structures;
(b)
construction, alteration, repair, extension or demolition of any works forming, or to form, part of any land; or
(c)
any operations which form an integral part of, or are preparatory to, or are for rendering complete the operations described in paragraph (a) or (b) including site clearance, earth-moving excavation, laying of foundations, site restoration, landscaping and the provision of drains and of roadways and other access works;
“fixed capital expenditure” means capital expenditure to be incurred on an approved project by a company on the following items that are used for carrying out the project —
(a)
factory building (excluding land) in Singapore and, in relation to any project under section 67(1)(b), (c), (d), (f) or (g), includes a building or structure specially designed for carrying out the project;
(b)
the acquisition of any know-how or patent rights; and
(c)
any new productive equipment (and, subject to the approval of the Minister, any secondhand productive equipment) to be used in Singapore and, in relation to any project under section 67(1)(h) or (i), includes any productive equipment to be used outside Singapore as approved under section 67(3);
“investment day”, in relation to a company, means the date specified in its certificate as the date from which the company shall qualify for the investment allowance;
“normal income” means income subject to tax at the rate of tax under section 43(1)(a) of the Income Tax Act (Cap. 134);
“normal investment allowance” means an investment allowance given to a company for an approved project from which the normal income of the company is derived;
“normal investment allowance account” means an account kept by a company for the purpose of calculating the amount of normal investment allowance granted under this Part;
“relevant income”, in relation to a company, means any income which —
(a)
does not form part of the statutory income of the company or is exempt from tax under the provisions of this Act (other than this Part) or the Income Tax Act (Cap. 134); or
(b)
is subject to tax at the concessionary rate under Part IIIA in force immediately before the date of commencement of the Economic Expansion Incentives (Relief from Income Tax) (Amendment) Act 2004 or IIIB;
“research and development” has the same meaning as in section 2(1) of the Income Tax Act;
“space satellite” means an apparatus placed in orbit relative to the earth for any economic, scientific or technological purpose.
[8/79; 29/80; 17/82; 34/84; 22/87; 1/95; 36/96; 4/98; 44/2002; 11/2004; 48/2004]
(2) For the purposes of this Part, fixed capital expenditure shall not be deemed to be incurred by a company unless —
(a)
in the case of any factory building or productive equipment to be constructed or installed on site, the expenditure is attributable to payment against work done in the construction of the building or the construction or installation of the productive equipment;
(b)
in the case of any productive equipment, other than that to which paragraph (a) or (c) applies, the company has received delivery of the equipment in Singapore;
(c)
in the case of any productive equipment to be used in relation to a project under section 67(1)(h) or (i), the company has received delivery of the equipment.
[8/79; 4/98]
67.
—(1) Where a company proposes to carry out a project —
(a)
for the manufacture or increased manufacture of any product;
(b)
for the provision of specialised engineering or technical services;
(c)
for research and development;
(d)
for construction operations;
(e)
for reducing the consumption of water;
(f)
in relation to any qualifying activity as defined in section 16;
(g)
for the promotion of the tourist industry (other than a hotel) in Singapore;
(h)
for the operation of any space satellite; or
(i)
for the provision of maintenance, repair and overhaul services to any aircraft,
[33/2010 wef 01/04/2010]
the company may apply in the prescribed form to the Minister for the approval of an investment allowance in respect of the fixed capital expenditure for the project.
[8/79; 29/80; 17/82; 34/84; 22/87; 36/96; 4/98]
(2) Where the Minister considers it expedient, having regard to the economic, technical and other merits of the project, he may approve the project and issue the company with a certificate which shall qualify the company for an investment allowance as stipulated in the certificate in respect of the fixed capital expenditure for the approved project subject to such terms and conditions as he thinks fit.
[8/79]
(3) For the purposes of subsection (2), the Minister may approve any investment allowance in respect of the fixed capital expenditure to be incurred on any productive equipment to be used outside Singapore for any project under subsection (1) (h) or (i).
[4/98]
(4) Every certificate issued under this section shall specify a date as the investment day from which the company shall be entitled to an investment allowance under this Part.
[8/79]
(5) The Minister may, in his discretion, upon the application of a company, amend its certificate by substituting for the investment day specified therein such earlier or later date as he thinks fit and thereupon the provisions of this Part shall have effect as if the date so substituted were the investment day in relation to that certificate.
(6) No approval under this section shall be granted to any company in respect of any project under subsection (1)(i) on or after 9th September 2009.
68.
—(1) The investment allowance granted under section 67 shall be a specified percentage, not exceeding 100% of the amount (which may be subject to a specified maximum) of the fixed capital expenditure incurred on each item specified by the Minister under subsection (2) on an approved project if the fixed capital expenditure is incurred —
(a)
within such period (referred to in this Act as the qualifying period), not exceeding 5 years, commencing from the investment day as the Minister may determine; and
(b)
in the case of a project under section 67(1)(g), within such period (hereinafter referred to as the qualifying period), not exceeding 10 years, commencing from the investment day as the Minister may determine.
[8/79; 17/82; 22/87; 36/96]
(2) The Minister —
(a)
shall specify the items of the fixed capital expenditure for the purposes of subsection (1); and
(b)
may specify the maximum amount of the investment allowance granted for the approved project.
(3) Where any question arises as to whether a particular item qualifies as one of the items under subsection (2)(a), it shall be determined by the Minister whose decision shall be final.
(4) In subsection (1), “specified” means specified by the Minister.
69.
—(1) Where in the basis period for a year of assessment a company has incurred fixed capital expenditure, the company shall be given for that year of assessment an investment allowance in respect of such amount of the fixed capital expenditure as qualifies for the investment allowance under the terms and conditions of its certificate and in accordance with section 68.
(2) Notwithstanding subsection (1), no investment allowance shall be given to a company for an approved project from which relevant income of the company is derived.
[36/96]
(3) Where any investment allowance is given to a company for an approved project from which only normal income of the company is derived, the investment allowance shall be credited to an account to be called a “normal investment allowance account” which shall be kept by the company for the purposes of this Part.
[1/95]
(4) Where any investment allowance is given to a company for an approved project from which only concessionary income of the company is derived, the investment allowance shall be credited to an account to be called a “concessionary investment allowance account” which shall be kept by the company for the purposes of this Part.
[1/95]
(5) Where a company derives both normal income and concessionary income at the same time from an approved project, the investment allowance shall be credited wholly to the normal investment allowance account or wholly to the concessionary investment allowance account as the Minister, or such person as he may appoint, may direct.
[1/95]
(6) Notwithstanding subsections (1) to (5), where a company has incurred, on or after 1st January 1996, fixed capital expenditure for a project approved under section 67(1)(e), the Minister may, if he is satisfied that it is expedient in the public interest to do so, direct that an investment allowance be given to the company for such expenditure, and such investment allowance shall be credited into a normal investment allowance account.
[36/96]
(7) Notwithstanding section 71, as from the relevant date, where the income of a company which is derived from an approved project is subject to tax as concessionary income instead of as normal income —
(a)
subject to paragraph (d), any balance in the normal investment allowance account at the end of the basis period for the year of assessment before the transitional year shall only be used for deduction against the chargeable normal income of the company for the transitional year;
(b)
where the company has incurred any fixed capital expenditure before the relevant date, any investment allowance given to the company for the fixed capital expenditure shall be credited to the normal investment allowance account;
(c)
where the company has incurred any fixed capital expenditure on or after the relevant date, any investment allowance given to the company for the fixed capital expenditure shall be credited to the concessionary investment allowance account; and
(d)
the normal investment allowance account for the transitional year shall be debited with the amount of chargeable normal income for the transitional year not exceeding the credit in that account; and any remaining balance in that account for that year shall be debited from that account and credited to the concessionary investment allowance account for use against the chargeable concessionary income of the company for the transitional year and subsequent years of assessment.
[1/95]
(8) Notwithstanding section 71, as from the relevant date, where the income of a company which is derived from an approved project is subject to tax as normal income instead of as concessionary income —
(a)
subject to paragraph (d), any balance in the concessionary investment allowance account at the end of the basis period for the year of assessment before the transitional year shall only be used for deduction against the chargeable concessionary income of the company for the transitional year;
(b)
where the company has incurred any fixed capital expenditure before the relevant date, any investment allowance given to the company for the fixed capital expenditure shall be credited to the concessionary investment allowance account;
(c)
where the company has incurred any fixed capital expenditure on or after the relevant date, any investment allowance given to the company for the fixed capital expenditure shall be credited to the normal investment allowance account; and
(d)
the concessionary investment allowance account for the transitional year shall be debited with the amount of chargeable concessionary income for the transitional year not exceeding the credit in that account; and any remaining balance in that account for that year shall be debited from that account and credited to the normal investment allowance account for use against the chargeable normal income of the company for the transitional year and subsequent years of assessment.
[1/95]
(9) Notwithstanding section 71(4), where the Comptroller is satisfied that a company has permanently ceased to derive any concessionary income in the basis period for any year of assessment —
(a)
the concessionary investment allowance account shall be debited with the amount of chargeable concessionary income of the company for that year of assessment not exceeding the credit in that account;
(b)
any remaining balance in the concessionary investment allowance account shall be debited from that account; and
(c)
an adjusted amount of any remaining balance referred to in paragraph (b) shall be credited to the normal investment allowance account for use against the chargeable normal income of the company for that year of assessment and subsequent years of assessment, and for this purpose “adjusted amount” means the amount ascertained in accordance with the formula
B | |||||||||
A | x | — | |||||||
C | |||||||||
where | A | is the amount of any remaining balance referred to in paragraph (b); | |||||||
B | is the concessionary rate of tax for that year of assessment at which the concessionary income is subject to tax; and | ||||||||
C | is the rate of tax under section 43(1)(a) of the Income Tax Act (Cap. 134) for that year of assessment. | ||||||||
[1/95]
(10) In this section —
“relevant date” means the date in the basis period relating to any transitional year on which the income of an approved project is subject to tax as concessionary income instead of as normal income, or vice versa;
“transitional year” means any year of assessment relating to the basis period in which the income of an approved project is from the relevant date subject to tax as concessionary income instead of as normal income, or vice versa.
[1/95]
70.
—(1) During its qualifying period or within 2 years after the end of its qualifying period, a company shall not, without the written approval of the Minister, sell, lease out or otherwise dispose of any assets in respect of which an investment allowance has been given.
(2) Where during its qualifying period, or within 2 years after the end of its qualifying period, a company has sold, leased out or otherwise disposed of any assets in respect of which an investment allowance has been given, an amount equal to the aggregate of the investment allowance given in respect of that asset shall be recovered in the following manner:
(a)
where the investment allowance given had been credited to the normal investment allowance account —
(i)
the amount shall be deducted from that account; and
(ii)
where that account is insufficient to give full effect to the recovery, an assessment or additional assessment in respect of the amount unrecovered shall be made upon the company or any shareholder of the company and the tax exempt account, kept in accordance with section 72), shall be debited accordingly; and
(b)
where the investment allowance given had been credited to the concessionary investment allowance account —
(i)
the amount shall be deducted from that account; and
(ii)
where that account is insufficient to give full effect to the recovery, an assessment or additional assessment in respect of the amount unrecovered shall be made upon the company or any shareholder of the company and the tax exempt account, kept in accordance with section 72), shall be debited accordingly.
[1/95; 11/2004; 48/2004]
(3) Notwithstanding subsection (2), the Minister may waive wholly or partly the recovery of the investment allowance.
[1/95]
71.
—(1) Subject to subsection (2), where for any year of assessment a normal investment allowance account of a company is in credit and the company has for that year of assessment any chargeable normal income —
(a)
an amount of the chargeable normal income, not exceeding the credit in the normal investment allowance account, shall be exempt from tax and the normal investment allowance account shall be debited with such amount; and
(b)
any remaining balance in the normal investment allowance account shall be carried forward to be used by the company in the first subsequent year of assessment when the company has chargeable normal income, and so on for subsequent years of assessment until the credit in the normal investment allowance account has been fully used.
[1/95]
(2) Where, for any year of assessment, a company has any chargeable concessionary income and the normal investment allowance account is in credit, the company may elect for any amount of the chargeable concessionary income, not exceeding the credit in the normal investment allowance account, to be exempt from tax and the normal investment allowance account to be debited with such amount.
[1/95]
(3) A company shall make the election under subsection (2) for any year of assessment at the time of lodgment of the return of income for that year of assessment, except that the election for the year of assessment 1994 shall be made before 1st April 1995.
[1/95]
(4) Where, for any year of assessment, a concessionary investment allowance account of a company is in credit and the company has, for that year of assessment any chargeable concessionary income —
(a)
an amount of the chargeable concessionary income, not exceeding the credit in the concessionary investment allowance account, shall be exempt from tax and the concessionary investment allowance account shall be debited with such amount; and
(b)
any remaining balance in the concessionary investment allowance account shall be carried forward to be used by the company in the first subsequent year of assessment when the company has chargeable concessionary income, and so on for subsequent years of assessment until the credit in the concessionary investment allowance account has been fully used.
[1/95]
(5) Any amount of chargeable normal income of a company debited from the normal investment allowance account under section 69(7)(d) or any amount of chargeable concessionary income of a company debited from the concessionary investment allowance account under section 69(8)(d) or (9)(a) shall be exempt from tax.
[1/95]
72.
—(1) As soon as any amount of chargeable income of a company which has been granted an investment allowance has become exempt under section 71, that amount shall be credited to a tax exempt account to be kept by the company for the purposes of this Part.
[48/2004]
(2) Where a tax exempt account is in credit at the date on which any dividends are paid by a company, out of income which has been so exempted, an amount equal to those dividends or to that credit, whichever is the less, shall be debited to the account.
[48/2004]
(3) 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.
[48/2004]
(4) Notwithstanding subsections (3) and (7), no dividends paid on any share of a preferential nature shall be exempt from tax under this section in the hands of the shareholder.
[48/2004]
(5) 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.
[48/2004]
(6) The company shall deliver to the Comptroller a copy of the account, made up to a date specified by him, whenever called upon to do so by notice in writing sent by him to its registered office, until such time as he is satisfied that there is no further need for maintaining the account.
[48/2004]
(7) Where an amount has been received by way of dividend from a company by a shareholder and the amount is exempt from tax under this Part, 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.
[48/2004]
73. Notwithstanding any other provisions of this Part, where it appears to the Comptroller that —
(a)
any amount of exempted income of a company; or
(b)
any dividend exempted in the hands of any shareholder,
ought not to have been exempted by reason of the revocation under section 99 of the certificate issued under section 67 to the company, the Comptroller may subject to section 74 of the Income Tax Act (Cap. 134) —
(i)
make such assessment or additional assessment upon the company or any such shareholder as may appear to be necessary in order to recover such tax as may have been exempted under this Part; or
(ii)
direct the company to debit its tax exempt account with such amount as the circumstances require.
[1/95]
74.
—(1) Parts XVII and XVIII of the Income Tax Act (relating to assessments, objections and appeals) shall apply, with the necessary modifications, to any direction given under section 73 as if it were a notice of assessment given under those provisions.
(2) Section 44 of the Income Tax Act shall not apply in respect of any dividend or part thereof which is exempted from tax under this Part.