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REPUBLIC OF SINGAPORE
GOVERNMENT GAZETTE
ACTS SUPPLEMENT
Published by Authority

NO. 29] [2010

The following Act was passed by Parliament on 18th October 2010 and assented to by the President on 15th November 2010:—
INCOME TAX (AMENDMENT) ACT 2010

(No. 29 of 2010)


I assent.

S R NATHAN,
President.
15th November 2010.
Date of Commencement: 22nd November 2010
Be it enacted by the President with the advice and consent of the Parliament of Singapore, as follows:
Short title and commencement
1.
—(1)  This Act may be cited as the Income Tax (Amendment) Act 2010.
(2)  Section 18(a) shall be deemed to have come into operation on 1st January 2004.
(3)  Section 5 shall be deemed to have come into operation on 1st September 2007.
(4)  Section 28(b) shall be deemed to have come into operation on 1st January 2010.
(5)  Sections 4(a), (c) and (d), 6, 36 and 49 shall be deemed to have come into operation on 22nd February 2010.
(6)  Sections 19 to 22, 26, 27, 54(a), (b), (c), (e), (f) and (g) and 55(a), (b) and (c) shall be deemed to have come into operation on 23rd February 2010.
(7)  Sections 28(d) and 33 shall be deemed to have come into operation on 1st March 2010.
(8)  Sections 8, 10, 34, 38(a) and (b), 47, 54(d) and 55(d) shall be deemed to have come into operation on 1st April 2010.
(9)  Section 42 shall be deemed to have come into operation on 21st May 2010.
(10)  Section 9 shall be deemed to have come into operation on 7th July 2010.
(11)  Sections 28(a) and (c) and 43 shall come into operation on 1st January 2011.
(12)  Sections 7(b) and (c), 44(b), 45(b) and 46(b) shall come into operation on 1st March 2011.
(13)  Sections 14(g), (h) and (i) and 29(d) shall have effect for the year of assessment 2009 and subsequent years of assessment.
(14)  Sections 2(b), 35(a) to (g) and (j) to (q) and 53 shall have effect for the year of assessment 2010 and subsequent years of assessment.
(15)  Sections 12, 13(b) and (c), 14(b) to (f), 15(b), 16, 17, 18(b), 24(a), (b), (d), (e) and (g), 25(a) to (g) and (i) to (l), 29(c), 31, 35(r), (s) and (t) and 55(e) shall have effect for the year of assessment 2011 and subsequent years of assessment.
Amendment of section 2
2.  Section 2 of the Income Tax Act (referred to in this Act as the principal Act) is amended —
(a)
by inserting, immediately after the word “sections” in the definition of “Comptroller” in subsection (1), “37J(5),”; and
(b)
by inserting, immediately after subsection (3), the following subsection:
(4)  In this Act, for the avoidance of doubt, a reference to the spouse of a person means a spouse who is of the opposite sex to that person.”.
Amendment of section 13
3.  Section 13(1) of the principal Act is amended by inserting, immediately after “2009” in paragraph (zn), the words “or 2010”.
Amendment of section 13A
4.  Section 13A of the principal Act is amended —
(a)
by inserting, immediately after subsection (1B), the following subsection:
(1C)  The income of a shipping enterprise referred to in this section shall include income derived on or after 22nd February 2010 by the shipping enterprise from the provision of ship management services to any qualifying company in respect of Singapore ships owned or operated by the qualifying company.”;
(b)
by inserting, immediately after the words “from Singapore” in paragraph (b) of the definition of “operation” in subsection (16), the words “, or is only within the limits of the port of Singapore”;
(c)
by inserting, immediately after the definition of “operation” in subsection (16), the following definition:
“ “qualifying company”, in relation to a shipping enterprise, means a company at least 50% of the total number of the issued ordinary shares of which are beneficially and directly owned by the enterprise;”; and
(d)
by inserting, immediately before the definition of “shipping enterprise” in subsection (16), the following definition:
“ “ship management services” means any of the following activities in respect of a ship:
(a)
making a purchase or sale of it, or a decision regarding its ownership;
(b)
deciding on its flag and registry;
(c)
sourcing for and deciding on financing for its acquisition;
(d)
awarding contracts, entering into alliances or deciding on pooling in respect of it;
(e)
securing its employment or its cargo;
(f)
planning its route and tonnage;
(g)
appointing a ship manager or ship agent for it;
(h)
collecting freight in exchange for its use;
(i)
arranging insurance for it;
(j)
undertaking crew related matters such as the appointment of a crew manager;
(k)
arranging dry-docking or ship repairs or overhaul;
(l)
ensuring that it is adequately equipped with supplies, provisions, spares and stores;
(m)
supervising its construction, conversion or registration;
(n)
liaising with the relevant competent authorities or bodies on ship safety and manning requirements and other similar matters;”.
Amendment of section 13C
5.  Section 13C of the principal Act is amended by deleting subsection (2) and substituting the following subsection:
(2)  The Minister may by regulations —
(a)
make such transitional and savings provisions as he may consider necessary or expedient in relation to the repeal of section 13C in force immediately before 1st September 2007;
(b)
provide for the determination of the amount of income of the trustee of any prescribed trust fund to be exempt from tax; and
(c)
make provision generally for giving full effect to or for carrying out the purposes of this section.”.
Amendment of section 13F
6.  Section 13F of the principal Act is amended —
(a)
by deleting the full-stop at the end of paragraph (d) of subsection (1) and substituting a semi-colon, and by inserting immediately thereafter the following paragraph:
(e)
on or after 22nd February 2010 from the provision of ship management services to any qualifying special purpose vehicle in respect of ships owned or operated by the qualifying special purpose vehicle.”;
(b)
by deleting the words “the business of carriage or charter” in subsection (4) and substituting the words “any operation, activity or service”; and
(c)
by deleting the full-stop at the end of the definition of “international shipping enterprise” in subsection (6) and substituting a semi-colon, and by inserting immediately thereafter the following definitions:
“ “qualifying special purpose vehicle”, in relation to an approved international shipping enterprise, means —
(a)
an approved company —
(i)
which is incorporated and resident in Singapore; and
(ii)
at least 50% of the total number of the issued ordinary shares of which are beneficially owned, whether directly or indirectly, by the approved international shipping enterprise;
(b)
an approved company —
(i)
which is incorporated outside Singapore; and
(ii)
at least 25% of the total number of the issued ordinary shares of which are beneficially owned, whether directly or indirectly, by the approved international shipping enterprise; or
(c)
an approved partnership —
(i)
which is registered or formed outside Singapore; and
(ii)
of which the approved international shipping enterprise is a partner and is entitled to at least 25% of its income;
“ship management services” has the same meaning as in section 13A(16).”.
Amendment of section 13S
7.  Section 13S of the principal Act is amended —
(a)
by deleting the words “28th February 2011” in subsection (2) and substituting the words “31st March 2016”;
(b)
by deleting subsection (3) and substituting the following subsection:
(3)  The approval under subsection (2) shall be subject to such conditions as the Minister may specify, and shall —
(a)
where the approval is granted during the period between 1st March 2006 and 28th February 2011, be for such period not exceeding 10 years, as the Minister may specify; and
(b)
where the approval is granted during the period between 1st March 2011 and 31st March 2016, be for such period not exceeding 5 years, as the Minister may specify,
except that the Minister may extend the period so specified for such further periods as he thinks fit.”; and
(c)
by inserting, immediately after subsection (19), the following subsection:
(19A)  In this section, a reference to the leasing of a sea-going ship by a shipping investment enterprise approved on or after 1st March 2011 excludes the leasing of a sea-going ship which has been treated as though it had been sold pursuant to regulations made under section 10D(1).”.
Amendment of section 13V
8.  Section 13V of the principal Act is amended by inserting, immediately after subsection (2), the following subsection:
(2A)  No approval under this section shall be granted to any law practice which is approved on or after 1st April 2010 as a development and expansion company under Part IIIB of the Economic Expansion Incentives (Relief from Income Tax) Act (Cap. 86) in respect of international services that qualify for zero-rating under section 21(3) of the Goods and Services Tax Act (Cap. 117A).”.
Amendment of section 13X
9.  Section 13X of the principal Act is amended —
(a)
by deleting subsection (1) and substituting the following subsection:
(1)  Subject to such conditions as may be prescribed by regulations, there shall be exempt from tax such income as the Minister may by regulations prescribe of —
(a)
an approved person arising from funds managed in Singapore by a fund manager; or
(b)
a company, a trustee of a trust fund or a partner of a limited partnership, where the company, trust fund or partnership is the approved master fund or an approved feeder fund of an approved master-feeder fund structure, arising from funds of the master fund or any feeder fund of that structure that are managed in Singapore by a fund manager.”;
(b)
by deleting the words “subsection (1)” in subsection (2) and substituting the words “subsection (1)(a)”;
(c)
by inserting, immediately after subsection (2), the following subsection:
(2A)  Approval under subsection (1)(b) may be granted during the period from 7th July 2010 to 31st March 2014 (both dates inclusive).”;
(d)
by inserting, immediately after the words “approved person” in subsections (3) and (4)(a) and (b), the words “or company, trustee or partner referred to in subsection (1)(b)”;
(e)
by deleting the word “and” at the end of paragraph (c) of subsection (4), and by inserting immediately thereafter the following paragraphs:
(ca)
provide for the recovery of tax from a company or a trustee of a trust fund referred to in subsection (1)(b) in a case where the exemption ought not to have been allowed to the company or trustee due to non-compliance with any condition imposed on the approved master-feeder fund structure;
(cb)
provide for the recovery of tax from a partner of a limited partnership referred to in subsection (1)(b) in a case where the exemption ought not to have been allowed to that partner due to non-compliance with any condition imposed on the approved master-feeder fund structure, including the deeming of a specified amount as income of the partner for the year of assessment in which the Comptroller discovers the non-compliance of the condition; and”;
(f)
by inserting, immediately after the definition of “designated unit trust” in subsection (5), the following definitions:
“ “feeder fund” means a company, trust fund or limited partnership that invests its funds substantially and directly through only one master fund;
“master-feeder fund structure” means one or more feeder funds and the master fund through which the funds of the feeder fund or funds are substantially and directly invested;
“master fund” means a company, trust fund or limited partnership that enables investors to invest funds in one or more underlying investments that are managed by a fund manager;”; and
(g)
by deleting the words “of approved persons” in the section heading.
New section 13Y
10.  The principal Act is amended by inserting, immediately after section 13X, the following section:
Exemption of certain income of prescribed sovereign fund entity and approved foreign government-owned entity
13Y.
—(1)  There shall be exempt from tax such income as the Minister may by regulations prescribe of —
(a)
a prescribed sovereign fund entity arising from its funds that are managed in Singapore by an approved foreign government-owned entity; and
(b)
an approved foreign government-owned entity arising from its funds that are managed in Singapore, and from managing in Singapore the funds of a prescribed sovereign fund entity.
(2)  The Minister or such person as he may appoint may, at any time between 1st April 2010 and 31st March 2015 (both dates inclusive), approve a foreign government-owned entity for the purpose of subsection (1).
(3)  Regulations made under subsection (1) may —
(a)
provide for the period of each approval, and conditions to which the exemption from tax under that subsection is subject;
(b)
provide for the determination of the amount of income of a prescribed sovereign fund entity or an approved foreign government-owned entity that is exempt from tax;
(c)
provide for the deduction of expenses, allowances, losses and donations of a prescribed sovereign fund entity or an approved foreign government-owned entity otherwise than in accordance with this Act; and
(d)
make provision generally for giving full effect to or for carrying out the purposes of this section.
(4)  In this section —
“foreign government-owned entity” means an entity wholly and beneficially owned, whether directly or indirectly, by the government of a foreign country and whose principal activity is to manage its own funds or the funds of a prescribed sovereign fund entity;
“prescribed sovereign fund entity” means a sovereign fund entity that satisfies such conditions as may be prescribed;
“sovereign fund entity” means the government of a foreign country or an entity wholly and beneficially owned by such government, whose funds (which may include the reserves of that government and any pension or provident fund of that country) are managed by an approved foreign government-owned entity.”.
Amendment of section 14
11.  Section 14(1) of the principal Act is amended by deleting the comma at the end of sub-paragraph (G) of proviso (i) to paragraph (e) and substituting a semi-colon, and by inserting immediately thereafter the following sub-paragraphs:
(H)
commencing on or after 1st September 2010 shall not exceed 15%;
(I)
commencing on or after 1st March 2011 shall not exceed 151/2%,”.
Amendment of section 14A
12.  Section 14A of the principal Act is amended —
(a)
by deleting subsection (1) and substituting the following subsections:
(1)  Subject to this section, where a person carrying on a trade or business has incurred —
(a)
patenting costs during the period from 1st June 2003 to the last day of the basis period for the year of assessment 2010; or
(b)
qualifying intellectual property registration costs during the basis period for any year of assessment between the year of assessment 2011 and the year of assessment 2015 (both years inclusive),
for the purposes of that trade or business, there shall be allowed to him a deduction of the amount of such costs.
(1A)  For the purpose of ascertaining the income of any person carrying on a trade or business during the basis period for any year of assessment between the year of assessment 2011 and the year of assessment 2015 (both years inclusive), there shall be allowed in respect of all his trades and businesses, in addition to any deduction allowed under subsection (1), a deduction of 150% of the lower of the qualifying intellectual property registration costs incurred for the purposes of those trades and businesses during the basis period and $300,000.
(1B)  For the year of assessment 2011 and the year of assessment 2012, instead of the deduction under subsection (1A) in respect of each year of assessment, a person shall be allowed a deduction computed in accordance with the formula
A x 150%,
where A is —
(a)
for the year of assessment 2011, the lower of —
(i)
the qualifying intellectual property registration costs incurred during the basis period for that year of assessment; and
(ii)
$600,000; and
(b)
for the year of assessment 2012, the lower of —
(i)
the qualifying intellectual property registration costs incurred during the basis period for that year of assessment; and
(ii)
the balance after deducting from $600,000 the lower of the amounts specified in paragraph (a)(i) and (ii).
(1C)  For the purposes of subsections (1A) and (1B), where an individual carrying on a trade or business through 2 or more firms (excluding partnerships) has incurred qualifying intellectual property registration costs during the basis period for any year of assessment between the year of assessment 2011 and the year of assessment 2015 (both years inclusive) in respect of such firms for the purposes of his trade or business, the deduction that may be allowed to him for those costs in respect of all his trades and businesses shall not exceed the amount computed in accordance with subsection (1A) or, in the case of the year of assessment 2011 and the year of assessment 2012, the amounts computed in accordance with subsection (1B)(a) and (b), respectively.
(1D)  For the purposes of subsections (1A) and (1B), where a partnership carrying on a trade or business has incurred qualifying intellectual property registration costs during the basis period for any year of assessment between the year of assessment 2011 and the year of assessment 2015 (both years inclusive) for the purposes of its trade or business, the aggregate of the deductions that may be allowed to all the partners of the partnership for those costs in respect of all the trades and businesses of the partnership shall not exceed the amount computed in accordance with subsection (1A) or, in the case of the year of assessment 2011 and the year of assessment 2012, the amounts computed in accordance with subsection (1B)(a) and (b), respectively.”;
(b)
by deleting subsection (2) and substituting the following subsection:
(2)  The claim for deduction under subsection (1), (1A) or (1B) 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 or registered trade mark, the registered owner of the registered design or the grantee of the plant variety, as the case may be, when the patent is granted, the trade mark or design is registered or the plant variety is granted protection; and
(b)
the claim is made by the person in such manner and subject to such conditions as the Comptroller may require.”;
(c)
by inserting, immediately after the words “patenting costs” wherever they appear in subsections (3), (4) and (5), the words “or qualifying intellectual property registration costs, as the case may be,”;
(d)
by deleting the words “this section” wherever they appear in subsections (4) and (5) and substituting in each case the words “subsection (1)”;
(e)
by inserting, immediately after subsection (5), the following subsection:
(5A)  Where —
(a)
a deduction has been made to any person under subsection (1A) or (1B) in respect of any qualifying intellectual property registration costs; and
(b)
the person sells, transfers or assigns all or any part of the qualifying intellectual property rights or the application for the registration or grant of the qualifying intellectual property rights for which such costs were incurred, within a period of one year from the date of filing of the application,
the deduction allowed under subsection (1A) or (1B) (as the case may be) shall be deemed as income of the person for the year of assessment relating to the basis period in which the sale, transfer or assignment occurs.”;
(f)
by deleting the words “or elsewhere” in paragraph (a) of the definition of “patenting costs” in subsection (6) and substituting the words “or an equivalent registry outside Singapore”;
(g)
by inserting, immediately after the definition of “patenting costs” in subsection (6), the following definitions:
“ “qualifying intellectual property registration costs” means the fees paid to —
(a)
the Registry of Patents, Registry of Trade Marks, Registry of Designs or Registry of Plant Varieties in Singapore or an equivalent registry outside Singapore for the —
(i)
filing of an application for a patent, for registration of a trade mark or design, or for the grant of protection of a plant variety;
(ii)
search and examination report on the application for a patent;
(iii)
examination report on the application for grant of protection of a plant variety; or
(iv)
grant of a patent; and
(b)
any person acting as an agent for —
(i)
applying for any patent, for the registration of a trade mark or design, or for the grant of protection of a plant variety, in Singapore or elsewhere;
(ii)
preparing specifications or other documents for the purposes of the Patents Act (Cap. 221), the Trade Marks Act (Cap. 332), the Registered Designs Act (Cap. 266), the Plant Varieties Protection Act (Cap. 232A) or the intellectual property law of any other country relating to patents, trade marks, designs or plant varieties; or
(iii)
giving advice on the validity or infringement of any patent, registered trade mark, registered design or grant of protection of a plant variety;
“qualifying intellectual property right” means the right to do or authorise the doing of anything which would, but for that right, be an infringement of any patent, registered trade mark or design, or grant of protection of a plant variety;”;
(h)
by inserting, immediately after subsection (6), the following subsection:
(7)  In this section, “patenting costs” and “qualifying intellectual property registration costs” exclude any expenditure to the extent that it is subsidised by grants or subsidies from the Government or a statutory board.”; and
(i)
by deleting the words “patenting costs” in the section heading and substituting the words “costs for protecting intellectual property”.
Amendment of section 14D
13.  Section 14D of the principal Act is amended —
(a)
by deleting “2013” in subsection (1)(aa) and (c) and substituting in each case “2015”;
(b)
by inserting, immediately after subsection (1), the following subsection:
(1A)  The expenditure or payment referred to in subsection (1) shall not include any such expenditure or payment to the extent that it is subsidised by grants or subsidies from the Government or a statutory board.”; and
(c)
by inserting, immediately after the words “or payments” in subsection (4)(a) and in the definition of “A” within the definition of “specified amount” in subsection (5), the words “(after deducting any amount in respect of which an election for a cash payout has been made under section 37I)”.
Amendment of section 14DA
14.  Section 14DA of the principal Act is amended —
(a)
by deleting “2013” in subsection (1) and substituting “2015”;
(b)
by inserting, immediately after subsection (1), the following subsections:
(1A)  For the purpose of ascertaining the income of any person carrying on a trade or business during the basis period for any year of assessment between the year of assessment 2011 and the year of assessment 2015 (both years inclusive), there shall be allowed in respect of all his trades and businesses, in addition to the deductions allowed under section 14D and subsection (1), a deduction of the lower of $300,000 and the aggregate of —
(a)
the qualifying expenditure referred to subsection (1)(a); and
(b)
the qualifying amount of the payments referred to in subsection (1)(b).
(1B)  For the year of assessment 2011 and the year of assessment 2012, instead of the deduction under subsection (1A) in respect of each year of assessment, a person shall be allowed a deduction of —
(a)
for the year of assessment 2011, the lower of —
(i)
the aggregate of the qualifying expenditure referred to in subsection (1)(a) incurred and the qualifying amount of the payments referred to in subsection (1)(b) made during the basis period for that year of assessment; and
(ii)
$600,000; and
(b)
for the year of assessment 2012, the lower of —
(i)
the aggregate of the qualifying expenditure referred to in subsection (1)(a) incurred and the qualifying amount of the payments referred to in subsection (1)(b) made during the basis period for that year of assessment; and
(ii)
the balance after deducting from $600,000 the lower of the amounts specified in paragraph (a)(i) and (ii).
(1C)  For the purposes of subsections (1A)(b) and (1B)(a)(i) and (b)(i), the qualifying amount of the payments referred to in subsection (1)(b) is —
(a)
where more than 60% of all such payments are qualifying expenditure, the actual amount of qualifying expenditure;
(b)
in all other cases, 60% of such payments.
(1D)  For the purposes of subsections (1A) and (1B), where an individual carrying on a trade or business through 2 or more firms (excluding partnerships) has incurred qualifying expenditure referred to in subsection (1)(a) or made payments referred to in subsection (1)(b) during the basis period for any year of assessment between the year of assessment 2011 and the year of assessment 2015 (both years inclusive) in respect of such firms, the deduction that may be allowed to him for those expenditure or payments in respect of all his trades and businesses shall not exceed the lower amount referred to in subsection (1A) or, in the case of the year of assessment 2011 and the year of assessment 2012, the lower amounts referred to in subsection (1B)(a) and (b), respectively.
(1E)  For the purposes of subsections (1A) and (1B), where a partnership carrying on a trade or business has incurred qualifying expenditure referred to in subsection (1)(a) or made payments referred to in subsection (1)(b) during the basis period for any year of assessment between the year of assessment 2011 and the year of assessment 2015 (both years inclusive), the aggregate of the deductions that may be allowed to all the partners of the partnership for those expenditure or payments in respect of all the trades and businesses of the partnership shall not exceed the lower amount referred to in subsection (1A) or, in the case of the year of assessment 2011 and the year of assessment 2012, the lower amounts referred to in subsection (1B)(a) and (b), respectively.”;
(c)
by deleting the words “subsection (1)(a) and (b)” in subsection (2) and substituting the words “subsections (1)(a) and (b), (1A) and (1B)”;
(d)
by deleting paragraph (a) of subsection (2) and substituting the following paragraph:
(a)
a reference to the amount of the expenditure or payments (after deducting any amount in respect of which an election for a cash payout has been made under section 37I) is a reference to —
(i)
the percentage of the expenditure or payments referred to in subsection (1)(a) or (b); or
(ii)
the amount determined to be deducted under subsection (1A) or (1B),
as the case may be, after deducting any amount in respect of which an election for a cash payout has been made under section 37I; and”;
(e)
by deleting the definition “A” in subsection (2)(b) and substituting the following definition:
A is —
(i)
the percentage of the expenditure or payments referred to in subsection (1)(a) or (b); or
(ii)
the amount determined to be deducted under subsection (1A) or (1B),
as the case may be, after deducting any amount in respect of which an election for a cash payout has been made under section 37I;”;
(f)
by inserting, immediately after subsection (2), the following subsection:
(2A)  No deduction shall be allowed to a company under subsection (1A) or (1B) for any year of assessment if a deduction for any expenditure has been allowed under section 37G for that year of assessment.”;
(g)
by deleting the comma at the end of paragraph (c) of the definition of “qualifying expenditure” in subsection (3) and substituting a semi-colon;
(h)
by deleting the words “but does not include any expenditure to the extent it is subsidised by Government grants or subsidies;” in the definition of “qualifying expenditure” in subsection (3); and
(i)
by inserting, immediately after subsection (3), the following subsection:
(4)  In this section, a reference to qualifying expenditure or to payment made by a person to a research and development organisation for undertaking research and development in Singapore on his behalf excludes any such expenditure or payment, as the case may be, to the extent that it is subsidised by grants or subsidies from the Government or a statutory board.”.
Amendment of section 14E
15.  Section 14E of the principal Act is amended —
(a)
by deleting “2013” in subsection (1)(aa) and substituting “2015”; and
(b)
by inserting, immediately after subsection (3A), the following subsection:
(3AA)  No deduction shall be allowed to any person under this section in respect of any expenditure for which a deduction has been allowed under section 14DA(1A) or (1B).”.
Amendment of section 14I
16.  Section 14I(7) of the principal Act is amended —
(a)
by deleting the word “or” at the end of paragraph (b) of the definition of “securities”; and
(b)
by deleting the full-stop at the end of paragraph (c) of the definition of “securities” and substituting a semi-colon, and by inserting immediately thereafter the following paragraphs:
(d)
units in a registered business trust within the meaning of section 36B;
(e)
any right or option in respect of any unit in a registered business trust within the meaning of section 36B; or
(f)
units in a real estate investment trust within the meaning of section 43(10).”.
New sections 14R, 14S and 14T
17.  The principal Act is amended by inserting, immediately after section 14Q, the following sections:
Deduction for qualifying training expenditure
14R.
—(1)  Subject to this section, for the purpose of ascertaining the income of a person carrying on any trade or business during the basis period for any year of assessment between the year of assessment 2011 and the year of assessment 2015 (both years inclusive), there shall be allowed in respect of all his trades and businesses, in addition to a deduction under section 14, a deduction of 150% of the lower of the qualifying training expenditure incurred for the purposes of those trades and businesses during the basis period and $300,000.
(2)  No deduction shall be allowed to a person under this section in respect of any expenditure which is not allowed as a deduction under section 14.
(3)  For the year of assessment 2011 and the year of assessment 2012, instead of the deduction under subsection (1) in respect of each year of assessment, a person shall be allowed a deduction computed in accordance with the formula
A x 150%,
where A is —
(a)
for the year of assessment 2011, the lower of —
(i)
the qualifying training expenditure incurred during the basis period for that year of assessment; and
(ii)
$600,000; and
(b)
for the year of assessment 2012, the lower of —
(i)
the qualifying training expenditure incurred during the basis period for that year of assessment; and
(ii)
the balance after deducting from $600,000 the lower of the amounts specified in paragraph (a)(i) and (ii).
(4)  For the purposes of subsections (1) and (3), where an individual carrying on a trade or business through 2 or more firms (excluding partnerships) has incurred qualifying training expenditure during the basis period for any year of assessment between the year of assessment 2011 and the year of assessment 2015 (both years inclusive) in respect of such firms for the purposes of his trade or business, the deduction that may be allowed to him for that expenditure in respect of all his trades and businesses shall not exceed the amount computed in accordance with subsection (1) or, in the case of the year of assessment 2011 and the year of assessment 2012, the amounts computed in accordance with subsection (3)(a) and (b), respectively.
(5)  For the purposes of subsections (1) and (3), where a partnership carrying on a trade or business has incurred qualifying training expenditure during the basis period for any year of assessment between the year of assessment 2011 and the year of assessment 2015 (both years inclusive) for the purposes of its trade or business, the aggregate of the deductions that may be allowed to all the partners of the partnership for that expenditure in respect of all the trades and businesses of the partnership shall not exceed the amount computed in accordance with subsection (1) or, in the case of the year of assessment 2011 and the year of assessment 2012, the amounts computed in accordance with subsection (3)(a) and (b), respectively.
(6)  In this section, “qualifying training expenditure” means —
(a)
any training expenditure incurred directly in providing —
(i)
a Workforce Skills Qualification (WSQ) training course which is accredited by the Singapore Workforce Development Agency and conducted by a WSQ in-house training provider;
(ii)
a course approved by the Institute of Technical Education (ITE) under the ITE Approved Training Centre scheme; or
(iii)
on-the-job training by an on-the-job training centre which is certified by the ITE,
for employees and includes any salary and other remuneration paid to in-house trainers for conducting such courses and training (based on the hours spent in conducting the courses and training), but excludes salaries and other remuneration of any employee attending or providing administrative support to the courses and training, and imputed overheads like rental and the cost of utilities;
(b)
course fees for employees paid (whether directly or in the form of reimbursement) to an external training provider, including —
(i)
registration or enrolment fees;
(ii)
examination fees;
(iii)
tuition fees; and
(iv)
aptitude test fees; and
(c)
rental of training facilities for any course or training referred to in paragraph (a) or (b), expenditure for meals and refreshments provided during any such course or training, and expenditure for training material and stationery used for any such course or training,
but excludes any accommodation, travelling or transportation expenditure incurred in respect of employees attending or conducting the course or training, or any expenditure to the extent that it is subsidised by grants or subsidies from the Government or a statutory board.
Deduction for qualifying design expenditure
14S.
—(1)  Subject to this section, for the purpose of ascertaining the income of any person carrying on a trade or business during the basis period for any year of assessment between the year of assessment 2011 and the year of assessment 2015 (both years inclusive), there shall be allowed in respect of all his trades and businesses, the following deductions for qualifying design expenditure incurred for the purposes of those trades and businesses during each basis period:
(a)
where such qualifying design expenditure is allowable as a deduction under section 14, a deduction of 150% of the lower of the qualifying design expenditure incurred and $300,000, in addition to the deduction allowed under that section; and
(b)
where such qualifying design expenditure is not allowable as a deduction under section 14, a deduction of 250% of the lower of the qualifying design expenditure incurred and $300,000.
(2)  For the year of assessment 2011 and the year of assessment 2012, instead of the deduction under subsection (1) in respect of each year of assessment, a person shall be allowed a deduction computed in accordance with the formula:
(a)
A x 150%, in the case of subsection (1)(a); or
(b)
A x 250%, in the case of subsection (1)(b),
where A is —
(i)
for the year of assessment 2011, the lower of —
(A)
the qualifying design expenditure incurred during the basis period for that year of assessment; and
(B)
$600,000; and
(ii)
for the year of assessment 2012, the lower of —
(A)
the qualifying design expenditure incurred during the basis period for that year of assessment; and
(B)
the balance after deducting from $600,000 the lower of the amounts specified in paragraph (i)(A) and (B).
(3)  For the purposes of subsections (1) and (2), where an individual carrying on a trade or business through 2 or more firms (excluding partnerships) has incurred qualifying design expenditure during the basis period for any year of assessment between the year of assessment 2011 and the year of assessment 2015 (both years inclusive) in respect of such firms for the purposes of his trade or business, the deduction that may be allowed to him for that expenditure in respect of all his trades and businesses shall not exceed the amount computed in accordance with subsection (1) or, in the case of the year of assessment 2011 or the year of assessment 2012, the amount computed in accordance with subsection (2) for that year of assessment.
(4)  For the purposes of subsections (1) and (2), where a partnership carrying on a trade or business has incurred qualifying design expenditure during the basis period for any year of assessment between the year of assessment 2011 and the year of assessment 2015 (both years inclusive) for the purposes of its trade or business, the aggregate of the deductions that may be allowed to all the partners of the partnership for that expenditure in respect of all the trades and businesses of the partnership shall not exceed the amount computed in accordance with subsection (1) or, in the case of the year of assessment 2011 or the year of assessment 2012, the amount computed in accordance with subsection (2) for that year of assessment.
(5)  For the purpose 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.
(6)  In this section —
“approved design service provider” means any person who provides design consultancy services for any trade or business, and who is approved by the Minister or such person as he may appoint;
“industrial or product design” means the professional specifications of creating and developing concepts or specifications that improve or enhance the functions, value or appearance of physical products, taking into account users’ needs, marketability and production;
“qualified designer” means an individual with a design-related tertiary academic qualification of at least a diploma that is approved by such person as the Minister may appoint;
“qualifying design expenditure” means —
(a)
expenditure incurred by the person on the staff costs of in-house qualified designers which are attributable to an industrial or product design project approved under subsection (7) and undertaken in Singapore directly by that person; and
(b)
where an approved design service provider has been engaged by the person to undertake in Singapore for the trade or business in question an industrial or product design project approved under subsection (7) —
(i)
where more than 60% of all payments made by the person to the approved design service provider for the project are staff costs, the actual amount of staff costs; or
(ii)
in all other cases, 60% of those payments,
but does not include any expenditure or payment to the extent that it is subsidised by grants or subsidies from the Government or a statutory board;
“staff costs” means any salary, wages and other benefits whether in the form of money or otherwise (but excluding directors’ fees), paid or granted in respect of the employment of any qualified designer which are attributable to the industrial or product design project.
(7)  The Minister or such person as he may appoint may approve an industrial or product design project for the purposes of the definition of “qualifying design expenditure” under subsection (6), and may in granting the approval impose such conditions as he thinks fit.
(8)  Where a person fails to comply with any condition imposed under subsection (7), the aggregate of deductions allowed to him under this section shall be deemed to be his income for the year of assessment in which the Comptroller discovers such non-compliance.
Deduction for expenditure on leasing of prescribed automation equipment under qualifying lease
14T.
—(1)  Subject to this section, for the purpose of ascertaining the income of a person carrying on a trade or business during the basis period for any year of assessment between the year of assessment 2011 and the year of assessment 2015 (both years inclusive), there shall be allowed in respect of all his trades and businesses, in addition to a deduction under section 14, a deduction of 150% of the lower of the expenditure incurred during the basis period on the leasing of one or more prescribed automation equipment under a qualifying lease or leases for the purposes of those trades and businesses and $300,000.
(2)  No deduction shall be allowed to a person under this section in respect of —
(a)
any expenditure which is not allowed as a deduction under section 14; and
(b)
any expenditure incurred during the basis period for a year of assessment on the leasing of any prescribed automation equipment under a qualifying lease where —
(i)
the equipment is sub-leased to another person during that basis period; or
(ii)
an allowance has been previously made to that person under section 19 or 19A in respect of the equipment.
(3)  For the year of assessment 2011 and the year of assessment 2012, instead of the deduction under subsection (1) in respect of each year of assessment, a person shall be allowed a deduction computed in accordance with the formula
A x 150%,
where A is —
(a)
for the year of assessment 2011, the lower of —
(i)
the expenditure incurred by him on the leasing of one or more prescribed automation equipment under a qualifying lease or leases during the basis period for that year of assessment; and
(ii)
$600,000; and
(b)
for the year of assessment 2012, the lower of —
(i)
the expenditure incurred by him on the leasing of one or more prescribed automation equipment under a qualifying lease or leases during the basis period for that year of assessment; and
(ii)
the balance after deducting from $600,000 the lower of the amounts specified in paragraph (a)(i) and (ii).
(4)  Where a person has incurred expenditure on both the leasing under a qualifying lease and the provision of one or more prescribed automation equipment during the basis period for any year of assessment between the year of assessment 2011 and the year of assessment 2015 (both years inclusive), the aggregate of the deduction under subsection (1) or (3) and the allowance under section 19A(2A) or (2B) in respect of all such expenditure shall not exceed —
(a)
in the case of the year of assessment 2011, 150% of the lower of —
(i)
the aggregate of all such expenditure; and
(ii)
$600,000;
(b)
in the case of the year of assessment 2012, 150% of the lower of —
(i)
the aggregate of all such expenditure; and
(ii)
the balance after deducting from $600,000 the lower of the amounts specified in paragraph (a)(i) and (ii); or
(c)
in the case of any other year of assessment, 150% of the lower of —
(i)
the aggregate of all such expenditure; and
(ii)
$300,000.
(5)  For the purposes of subsections (1), (3) and (4), where an individual carrying on a trade or business through 2 or more firms (excluding partnerships) has incurred expenditure on the leasing of one or more prescribed automation equipment under a qualifying lease or leases and (if applicable) the provision of one or more prescribed automation equipment, during the basis period for any year of assessment between the year of assessment 2011 and the year of assessment 2015 (both years inclusive) in respect of such firms for the purposes of his trade or business, the deductions and allowances that may be allowed to him for that expenditure in respect of all his trades and businesses shall not exceed the amount computed in accordance with subsection (1) or (4)(c) (as the case may be) or, in the case of the year of assessment 2011 and the year of assessment 2012, the amounts computed in accordance with subsection (3)(a) or (4)(a) (as the case may be), and subsection (3)(b) or (4)(b) (as the case may be), respectively.
(6)  For the purposes of subsections (1), (3) and (4), where a partnership carrying on a trade or business has incurred expenditure on the leasing of one or more prescribed automation equipment under a qualifying lease or leases and (if applicable) the provision of one or more prescribed automation equipment, during the basis period for any year of assessment between the year of assessment 2011 and the year of assessment 2015 (both years inclusive) for the purposes of its trade or business, the aggregate of the deductions and allowances that may be allowed to all the partners of the partnership for that expenditure in respect of all the trades and businesses of the partnership shall not exceed the amount computed in accordance with subsection (1) or (4)(c) (as the case may be) or, in the case of the year of assessment 2011 and the year of assessment 2012, the amounts computed in accordance with subsection (3)(a) or (4)(a) (as the case may be), and subsection (3)(b) or (4)(b) (as the case may be), respectively.
(7)  In this section —
“finance lease” has the same meaning as in section 10D;
“operating lease” means a lease of any machinery or plant, other than a finance lease;
“prescribed automation equipment” means any prescribed automation equipment referred to in section 19A(2);
“qualifying lease” means —
(a)
any operating lease; or
(b)
any finance lease other than a lease of prescribed automation equipment which has been treated as though it had been sold pursuant to regulations made under section 10D(1).
(8)  In this section, a reference to expenditure incurred on the leasing of prescribed automation equipment under a qualifying lease or the provision of prescribed automation equipment excludes any such expenditure to the extent that it is subsidised by grants or subsidies from the Government or a statutory board.”.
Amendment of section 15
18.  Section 15(2) of the principal Act is amended —
(a)
by inserting, immediately after the word “section”, “14A,”; and
(b)
by deleting the words “or 14Q” and substituting the words “, 14Q or 14S”.
Amendment of section 16
19.  Section 16 of the principal Act is amended by inserting, immediately after subsection (14), the following subsections:
(15)  Subject to section 18B, this section shall not apply to any capital expenditure incurred on or after 23rd February 2010 on the construction or purchase of an industrial building or structure.
(16)  Subject to subsection (18) and section 18B, no annual allowance shall be made under subsections (4), (5) and (6A) to a person who incurs capital expenditure on or before 22nd February 2010 on the construction or purchase of a building or structure which is not an industrial building or structure on 22nd February 2010 but is an industrial building or structure on or after 23rd February 2010.
(17)  Section 18(2) and (3) shall apply for the purpose of determining under subsection (16) whether a building or structure is an industrial building or structure on 22nd February 2010.
(18)  Notwithstanding subsection (16), annual allowances under subsection (6A)(a) shall be made to a person who incurs capital expenditure on or before 22nd February 2010 on a building or structure which is still under construction on 22nd February 2010 and which is to be an industrial building or structure upon completion of that construction, if the person —
(a)
on or before 22nd February 2010 —
(i)
has been granted the option to purchase the land or has entered into a sale and purchase agreement for the land on which the industrial building or structure is to be constructed;
(ii)
has entered into a lease agreement to lease the land on which the industrial building or structure is to be constructed; or
(iii)
has submitted an application to the Government or any statutory board —
(A)
to bid for the purchase therefrom of the land on which the industrial building or structure is to be constructed; or
(B)
to lease therefrom the land on which the industrial building or structure is to be constructed; and
(b)
on or before 31st December 2010, has made an application for planning permission or conservation permission to the competent authority in accordance with the Planning Act (Cap. 232) for the development of the land comprising the construction work.”.
Amendment of section 17
20.  Section 17 of the principal Act is amended by inserting, immediately after subsection (7), the following subsections:
(8)  Where allowances have been made under both sections 16 and 18C in respect of any industrial building or structure, then, for the purposes of subsections (4) and (5), the sale, insurance, salvage or compensation moneys in respect of that building or structure shall be such amount of those moneys as the Comptroller determines to be reasonable in the circumstances.
(9)  Where the relevant interest in a building or structure in respect of which allowances have been made under section 16 is transferred at less than the open-market price, then for the purpose of determining the amount of any balancing charge under subsection (5), the relevant interest in the building or structure shall be treated as if it had been sold for an amount equal to the open-market price of the building or structure as at the date of transfer.”.
Amendment of section 18
21.  Section 18 of the principal Act is amended —
(a)
by deleting the words “and 17” in subsections (1) and (8) and in the section heading and substituting in each case the words “, 17 and 18B”;
(b)
by inserting, immediately after the word “approved” in subsection (1)(f) , (i) and (j), the words “on or before 22nd May 2010”; and
(c)
by inserting, immediately after the words “such person as he may appoint” in subsection (1)(j), the words “subject to such conditions as he may impose”.
New sections 18B and 18C
22.  The principal Act is amended by inserting, immediately after section 18, the following sections:
Transitional provisions for capital expenditure incurred on industrial buildings or structures on or after 23rd February 2010
18B.
—(1)  Notwithstanding section 16(15) but subject to subsection (11), where a person incurs on or after 23rd February 2010 capital expenditure on the construction of a building or structure which is to be an industrial building or structure upon the completion of the construction works, other than one referred to in subsection (2), and the person —
(a)
on or before 22nd February 2010 —
(i)
has been granted the option to purchase the land or has entered into a sale and purchase agreement for the land on which the industrial building or structure is to be constructed;
(ii)
has entered into a lease agreement to lease the land on which the industrial building or structure is to be constructed; or
(iii)
has submitted an application to the Government or any statutory board —
(A)
to bid for the purchase therefrom of the land on which the industrial building or structure is to be constructed; or
(B)
to lease therefrom the land on which the industrial building or structure is to be constructed; and
(b)
on or before 31st December 2010, has made an application for planning permission or conservation permission to the competent authority in accordance with the Planning Act (Cap. 232) for the development of the land comprising the construction work,
there shall be made to that person an initial allowance and annual allowances in respect of that capital expenditure computed in accordance with section 16.
(2)  Notwithstanding section 16(15) but subject to subsection (11), where a person incurs on or after 23rd February 2010 capital expenditure on the construction of a building or structure which is to be an industrial building or structure by virtue of paragraph (f), (i) or (j) of section 18(1) upon completion of the construction works, there shall be made to that person an initial allowance and annual allowances in respect of that capital expenditure computed in accordance with section 16.
(3)  Notwithstanding section 16(15), where a person —
(a)
on or before 22nd February 2010 —
(i)
has been granted an option to purchase, or has entered into a sale and purchase agreement for, a new building or structure which is to be an industrial building or structure upon purchase other than one referred to in subsection (4); or
(ii)
has been granted an option to acquire or has entered into an agreement to acquire the leasehold interest in such a building or structure; and
(b)
on or after 23rd February 2010, incurs capital expenditure on the purchase of the building or structure or of the leasehold interest therein,
there shall be made to that person an initial allowance and annual allowances in respect of that capital expenditure computed in accordance with section 16.
(4)  Notwithstanding section 16(15) but subject to subsection (12), where a person incurs on or after 23rd February 2010 capital expenditure on the purchase of a new building or structure (including the purchase of a leasehold interest therein), and the building or structure is to be an industrial building or structure by virtue of paragraph (f), (i) or (j) of section 18(1) upon the purchase or the completion of any renovation or refurbishment works carried out on the building or structure upon the purchase, there shall be made to that person an initial allowance and annual allowances in respect of the capital expenditure, as well as the capital expenditure incurred on such renovation or refurbishment works, both to be computed in accordance with section 16.
(5)  Notwithstanding section 16(15), where a person —
(a)
on or before 22nd February 2010 —
(i)
has been granted an option to purchase, or has entered into a sale and purchase agreement for, a building or structure (not being a new building or structure) which is to be an industrial building or structure upon the purchase other than one referred to in subsection (6); or
(ii)
has been granted an option to acquire or has entered into an agreement to acquire the leasehold interest in such a building or structure; and
(b)
on or after 23rd February 2010, incurs capital expenditure on the purchase of the building or structure or of the leasehold interest therein,
there shall be made to that person annual allowances in respect of that capital expenditure computed in accordance with section 16.
(6)  Notwithstanding section 16(15) but subject to subsection (12), where a person incurs on or after 23rd February 2010 capital expenditure on the purchase of a building or structure (not being a new building or structure), or of a leasehold interest therein, and the building or structure is to be an industrial building or structure by virtue of paragraph (f), (i) or (j) of section 18(1) upon the purchase or the completion of any renovation or refurbishment works carried out on the building or structure upon the purchase, there shall be made to that person, in accordance with section 16 —
(a)
annual allowances in respect of the capital expenditure; and
(b)
an initial allowance and annual allowances in respect of capital expenditure incurred on such renovation or refurbishment works.
(7)  Notwithstanding section 16(15) and (16) but subject to subsection (11), where a person —
(a)
on or after 23rd February 2010, incurs capital expenditure on extension works carried out on an existing building or structure that (together with the extension thereto) is to be an industrial building or structure, other than one referred to in subsection (8), upon the completion of the extension works;
(b)
on or before 22nd February 2010, enters into a written agreement for a qualified person to carry out the extension works; and
(c)
on or before 31st December 2010, makes an application for planning permission or conservation permission to the competent authority in accordance with the Planning Act (Cap. 232) for the development of the land comprising the extension works,
there shall be made to that person, computed in accordance with section 16 —
(i)
an initial allowance and annual allowances in respect of the capital expenditure incurred on the extension works; and
(ii)
where the existing building or structure is not an industrial building or structure on 22nd February 2010, annual allowances in respect of any capital expenditure incurred before 23rd February 2010 on the construction or purchase or the residue of that expenditure, as the case may be, of that building or structure.
(8)  Notwithstanding section 16(15) and (16) but subject to subsection (11), where a person incurs on or after 23rd February 2010 capital expenditure on extension works to an existing building or structure, not being an industrial building or structure on or at any time before 22nd February 2010, that (together with the extension thereto) is to be an industrial building or structure by virtue of paragraph (f), (i) or (j) of section 18(1) upon the completion of the extension works, there shall be made to that person, computed in accordance with section 16 —
(a)
an initial allowance and annual allowances in respect of the capital expenditure; and
(b)
annual allowances in respect of any capital expenditure incurred before 23rd February 2010 on the construction or purchase or the residue of that expenditure, as the case may be, of the existing building or structure.
(9)  Notwithstanding section 16(15) and (16) but subject to subsection (12), where a person incurs on or after 23rd February 2010 capital expenditure on renovation or refurbishment works on an existing building or structure, and —
(a)
the building or structure is to be an industrial building or structure, other than one referred to in subsection (10), upon the completion of the renovation or refurbishment works; and
(b)
such renovation or refurbishment works are carried out pursuant to a written agreement entered into with a renovation contractor on or before 22nd February 2010,
there shall be made to that person, computed in accordance with section 16 —
(i)
an initial allowance and annual allowances in respect of the capital expenditure incurred on the renovation or refurbishment works; and
(ii)
where the existing building or structure is not an industrial building or structure on 22nd February 2010, annual allowances in respect of the capital expenditure incurred before 23rd February 2010 on the construction or purchase or the residue of that expenditure, as the case may be, of that building or structure.
(10)  Notwithstanding section 16(15) and (16) but subject to subsection (12), where a person incurs on or after 23rd February 2010 capital expenditure on renovation or refurbishment works on an existing building or structure, not being an industrial building or structure on or at any time before 22nd February 2010, that is to be an industrial building or structure by virtue of paragraph (f), (i) or (j) of section 18(1) upon the completion of the renovation or refurbishment works, there shall be made to that person, computed in accordance with section 16 —
(a)
an initial allowance and annual allowances in respect of the capital expenditure; and
(b)
annual allowances in respect of any capital expenditure incurred before 23rd February 2010 on the construction or purchase or the residue of that expenditure, as the case may be, of the existing building or structure.
(11)  For the purposes of subsections (1), (2), (7) and (8), no allowance shall be made to a person in respect of any capital expenditure incurred on an industrial building or structure after the date of issuance of the temporary occupation permit for that building or structure or the end of the basis period for the year of assessment 2016, whichever is earlier.
(12)  For the purposes of subsections (4), (6), (9) and (10), no allowance shall be made to a person in respect of any capital expenditure incurred after the completion of the renovation or refurbishment works referred to in those subsections or the end of the basis period for the year of assessment 2016, whichever is the earlier.
(13)  No allowance shall be made under this section in respect of any capital expenditure incurred on the construction of a building or structure for which an allowance is made under section 18C.
(14)  In this section —
“new building or structure” means a building or structure which —
(a)
has not previously been used by any person; and
(b)
was purchased by a person from another person who —
(i)
constructed that building or structure; and
(ii)
was not granted initial allowance in respect of that building or structure under section 16;
“qualified person” means —
(a)
any person who is registered as an architect under the Architects Act (Cap. 12) and who has in force a practising certificate issued under that Act; or
(b)
any person who is registered as a professional engineer under the Professional Engineers Act (Cap. 253) and who has in force a practising certificate issued under that Act.
Initial and annual allowances for certain buildings and structures
18C.
—(1)  Where any person proposes to incur or has incurred on or after 23rd February 2010 qualifying capital expenditure on the construction or renovation of a building or structure on industrial land for which an application for planning permission or conservation permission is made to the competent authority in accordance with the Planning Act (Cap. 232) on or after 23rd February 2010, he may apply to the Minister or such person as he may appoint, between 1st July 2010 and 30th June 2015 (both dates inclusive) for such construction or renovation to be approved for the purposes of making an allowance under this section in respect of such expenditure incurred by him.
(2)  Where the Minister or such person as he may appoint, on an application made to him under subsection (1), is satisfied that the construction or renovation of the building or structure on industrial land promotes the intensified use of such land for the purposes of such trade or business as may be prescribed by regulations, he may, by notice in writing, approve the construction or renovation for the purposes of this section, which approval shall be subject to such conditions as he may impose, including the particular trade or business for which the building or structure is to be used upon completion of construction or renovation.
(3)  Where in the basis period for any year of assessment the person has incurred any qualifying capital expenditure on the approved construction or approved renovation, as the case may be, there shall be made to the person for the year of assessment in the basis period for which the expenditure was incurred an allowance to be known as an “initial allowance” equal to 25% of the expenditure.
(4)  Subject to subsections (5) and (6), where the person is, at the end of the basis period for any year of assessment, entitled to a relevant interest in the building or structure which is being used for the purposes of the specified trade or business and in respect of which qualifying capital expenditure is incurred, there shall be made to the person for that year of assessment an allowance to be known as an “annual allowance” equal to 5% of the qualifying capital expenditure incurred by him.
(5)  No allowance shall be made under subsection (4) for any year of assessment unless more than 80% of the total floor area of the building or structure is used, at the end of the basis period for that year of assessment, by any one person or partnership for the purposes of the specified trade or business.
(6)  Any annual allowance made to any person under subsection (4) in respect of an approved construction or approved renovation for any year of assessment shall not exceed the amount of qualifying capital expenditure remaining unallowed as at the beginning of the basis period for that year of assessment.
(7)  For the purposes of this section, qualifying capital expenditure incurred by any person on the approved construction or approved renovation, as the case may be, 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.
(8)  Where the person fails to comply with any condition imposed under subsection (2) in respect of the approved construction or approved renovation, the Minister or such person as he may appoint, may, by notice in writing, revoke the approval granted under that subsection.
(9)  Notwithstanding section 74(1) and (4), where an approval has been revoked under subsection (8), the Comptroller may, at any time, for the purpose of making good any loss of tax attributable to such revocation of approval, assess the person who has utilised the allowance made under this section at such amount or additional amount as according to his judgment ought to have been charged; and this subsection shall also apply, with the necessary modifications, to any assessment which results in any unabsorbed allowances or losses.
(10)  Where, in the basis period for any year of assessment, the specified trade or business for which purpose the building or structure is used, produces income that is exempt from tax as well as income chargeable to tax, the allowance for that year of assessment shall be made against each income for that year of assessment in such proportion as appears reasonable to the Comptroller in the circumstances.
(11)  A person who has incurred qualifying capital expenditure on the approved construction or approved renovation shall maintain and deliver to the Minister or such person he may appoint or the Comptroller, in such form and manner and within such reasonable time as the Minister, the person or the Comptroller may determine, the relevant records of the approved construction or approved renovation, and such other particulars as may be required for the purposes of this section.
(12)  In this section —
“approved construction or approved renovation” means the construction or renovation, as the case may be, of a building or structure on industrial land approved under subsection (2);
“industrial land” means any land zoned for the purpose of “Business 1” or “Business 2” (other than “Business 1 White” and “Business 2 White” ) under the Master Plan, and includes such other land as may be approved by the Minister;
“Master Plan” means the Master Plan as defined in the Planning Act (Cap. 232) which is effective on the date of the application for planning permission or conservation permission referred to in subsection (1);
“qualifying capital expenditure” means the following types of capital expenditure which are incurred in respect of an approved construction or approved renovation, between 23rd February 2010 and the date of completion of that approved construction or approved renovation (both dates inclusive):
(a)
costs of feasibility study on the layout of the building or structure;
(b)
design fees of the building or structure;
(c)
costs of preparing plans for obtaining approval for the building or structure;
(d)
piling, construction and renovation costs;
(e)
demolition costs of an existing building or structure for which an allowance was not made under section 16;
(f)
legal and other professional fees in relation to the approved construction or approved renovation; and
(g)
stamp duties payable in respect of title of the building or structure;
“relevant interest”, in relation to any qualifying capital expenditure incurred on an approved construction or approved renovation of a building or structure, means the interest in that building or structure to which the person who incurred the expenditure was entitled when he incurred it;
“specified trade or business” means the trade or business specified in a condition of approval under subsection (2) as one for which a building or structure shall be used upon completion of the approved construction or approved renovation, as the case may be.”.
Amendment of section 19
23.  Section 19(8) of the principal Act is amended by deleting “2013” and substituting “2015”.
Amendment of section 19A
24.  Section 19A of the principal Act is amended —
(a)
by inserting, immediately after subsection (2), the following subsections:
(2A)  Where a person proves to the satisfaction of the Comptroller that he has incurred capital expenditure during the basis period for any year of assessment between the year of assessment 2011 and the year of assessment 2015 (both years inclusive) on the provision of one or more prescribed automation equipment for the purposes of a trade, profession or business carried on by him, there shall be allowed on due claim in respect of all his trades, professions and businesses, in addition to any allowance under subsection (2), an allowance of 150% of the lower of the capital expenditure incurred on the provision of the prescribed automation equipment and $300,000.
(2B)  For the year of assessment 2011 and the year of assessment 2012, instead of the allowance under subsection (2A) in respect of each year of assessment, a person shall be allowed an allowance computed in accordance with the formula
A x 150%,
where A is —
(a)
for the year of assessment 2011, the lower of —
(i)
the capital expenditure incurred during the basis period for that year of assessment on the provision of one or more prescribed automation equipment; and
(ii)
$600,000; and
(b)
for the year of assessment 2012, the lower of —
(i)
the capital expenditure incurred during the basis period for that year of assessment on the provision of one or more prescribed automation equipment; and
(ii)
the balance after deducting from $600,000 the lower of the amounts specified in paragraph (a)(i) and (ii).
(2C)  Where a person proves to the satisfaction of the Comptroller that he has during or after the basis period for the year of assessment 2011 incurred capital expenditure by way of making one or more instalment payments under a hire-purchase agreement or agreements to acquire one or more prescribed automation equipment for the purposes of a trade, business or profession carried on by him, that is or are signed during the basis period for any year of assessment between the year of assessment 2011 and the year of assessment 2015 (both years inclusive), and he makes a claim for an allowance under subsection (2A) or (2B), those subsections shall apply with the following modifications:
(a)
a reference to the capital expenditure incurred on the provision of one or more prescribed automation equipment during the basis period for a year of assessment, being the basis period in which the agreement or agreements is or are signed, is a reference to the aggregate of —
(i)
the price or prices (including capital expenditure incurred on alterations to an existing building incidental to the installation of the equipment but excluding any finance charges) at which he might have purchased the equipment or all the equipment that is the subject of the hire-purchase agreement or agreements for cash at the time of the signing of the agreement or agreements; and
(ii)
the capital expenditure incurred on the provision of any other prescribed automation equipment for the purposes of his trade, profession or business during that basis period;
(b)
a reference to the capital expenditure incurred on the provision of one or more prescribed automation equipment during the basis period for a year of assessment excludes the amount of any instalment paid or deposit made by him under that agreement or any of those agreements during the basis period; and
(c)
the allowance referred to in subsection (2A) or (2B) in respect of each equipment that is the subject of a hire-purchase agreement shall be made to the person for the year of assessment in respect of each basis period during which he paid an instalment or instalments or made a deposit or deposits under the agreement, in the proportion which the total amount of the instalment or instalments paid, and deposit or deposits made, during that basis period for that equipment bears to the total amount of all instalments and deposits under the agreement for that equipment.
(2D)  For the purposes of subsections (2A) and (2B), where an individual carrying on a trade, profession or business through 2 or more firms (excluding partnerships) has incurred capital expenditure during the basis period for any year of assessment between the year of assessment 2011 and the year of assessment 2015 (both years inclusive) on the provision of one or more prescribed automation equipment in respect of such firms for the purposes of his trade, profession or business, the allowance that may be allowed to him for that expenditure in respect of all his trades, professions and businesses shall not exceed the amount computed in accordance with subsection (2A) or, in the case of the year of assessment 2011 and the year of assessment 2012, the amounts computed in accordance with subsection (2B)(a) and (b), respectively.
(2E)  For the purposes of subsections (2A) and (2B), where a partnership carrying on a trade, profession or business has incurred capital expenditure during the basis period for any year of assessment between the year of assessment 2011 and the year of assessment 2015 (both years inclusive) on the provision of one or more prescribed automation equipment for the purposes of its trade, profession or business, the aggregate of the allowances that may be allowed to all the partners of the partnership for that expenditure in respect of all the trades, professions and businesses of the partnership shall not exceed the amount computed in accordance with subsection (2A) or, in the case of the year of assessment 2011 and the year of assessment 2012, the amounts computed in accordance with subsection (2B)(a) and (b), respectively.
(2F)  Notwithstanding subsections (2A) and (2B), where a person has incurred capital expenditure on the provision of any prescribed automation equipment for the purpose of leasing such equipment, no allowance under those subsections shall be made to him in respect of such expenditure.
(2G)  Notwithstanding subsections (2A) and (2B) —
(a)
where a person who has incurred capital expenditure on the provision of any prescribed automation equipment elects to claim allowances in respect of such equipment under subsection (1) or (1B) or section 19, the allowances under subsections (2A) and (2B) shall be written down over the number of years of working life of the equipment as specified in the Sixth Schedule in the case of section 19, over 3 years in the case of subsection (1) or over 2 years in the case of subsection (1B); and
(b)
if the person referred to in paragraph (a) sells, transfers or assigns the prescribed automation equipment after one year from the provision of such equipment, any allowance in respect of such equipment under subsections (2A) and (2B) remaining unallowed at the time of the sale, transfer or assignment shall be allowed to him for the year of assessment relating to the basis period in which the sale, transfer or assignment occurs.
(2H)  Where any allowance has been made to any person under subsection (2A) or (2B) in respect of any prescribed automation equipment and the person sells, transfers, assigns or leases the prescribed automation equipment within the period of one year from the provision of such equipment —
(a)
no allowance in respect of such equipment shall be made to that person under subsections (2A) and (2B) for the year of assessment relating to the basis period in which the sale, transfer, assignment or lease occurs and for any subsequent year of assessment; and
(b)
any allowance made under subsection (2A) or (2B) shall be brought to charge as if the allowances were not made, and be deemed as income for the year of assessment relating to the basis period in which the sale, transfer, assignment or lease occurs.
(2I)  No allowance under subsections (2A) and (2B) shall be made to any person in respect of any amount of capital expenditure incurred on the provision of prescribed automation equipment for which an investment allowance has been claimed under Part X of the Economic Expansion Incentives (Relief from Income Tax) Act (Cap. 86).
(2J)  No allowance under subsections (2A) and (2B) shall be made to any person in respect of any prescribed automation equipment —
(b)
for which an allowance under this section or section 19 has been previously made to that person.
(2K)  No allowance under subsections (2A) and (2B) shall be made to any person in respect of any instalment paid by him under any hire-purchase agreement to acquire any prescribed automation equipment that is signed before the basis period for the year of assessment 2011.”;
(b)
by deleting the words “(other than subsections (2) to (10C))” in subsection (14B);
(c)
by deleting “2013” in subsection (14B) and substituting “2015”;
(d)
by deleting paragraph (a) of subsection (14C) and substituting the following paragraph:
(a)
a reference to the amount of the expenditure or payments (after deducting any amount in respect of which an election for a cash payout has been made under section 37I) is a reference to the amount of the allowance, after deducting any amount in respect of which an election for a cash payout has been made under section 37I;”;
(e)
by inserting, immediately after the word “allowance” in the definition of “A” in subsection (14C)(c), the words “, after deducting any amount in respect of which an election for a cash payout has been made under section 37I,”;
(f)
by deleting the words “in any office or factory within the meaning of section 5 of the Workplace Safety and Health Act (Cap. 354A)” in the definition of “automation equipment” in subsection (15);
(g)
by inserting, immediately after subsection (15), the following subsection:
(16)  In subsections (2A) to (2G) and (2I), a reference to capital expenditure incurred on the provision of prescribed automation equipment excludes any such expenditure to the extent that it is subsidised by grants or subsidies from the Government or a statutory board.”; and
(h)
by deleting the word “office” in the section heading.
Amendment of section 19B
25.  Section 19B of the principal Act is amended —
(a)
by inserting, immediately after subsection (1), the following subsections:
(1A)  Where a company carrying on a trade or business incurs capital expenditure during the basis period for any year of assessment between the year of assessment 2011 and the year of assessment 2015 (both years inclusive) in acquiring one or more intellectual property rights for use in its trade or business, there shall, in addition to any writing-down allowances under subsection (1), be made in respect of all its trades and businesses a writing-down allowance equal to 150% of the lower of the capital expenditure incurred during the basis period on the acquisition of the intellectual property rights and $300,000.
(1B)  For the year of assessment 2011 and the year of assessment 2012, instead of the writing-down allowance under subsection (1A) in respect of each year of assessment, a company shall be allowed a writing-down allowance computed in accordance with the formula
A x 150%,
where A is —
(a)
for the year of assessment 2011, the lower of —
(i)
the capital expenditure incurred during the basis period for that year of assessment on the acquisition of one or more intellectual property rights for use in its trade or business; and
(ii)
$600,000; and
(b)
for the year of assessment 2012, the lower of —
(i)
the capital expenditure incurred during the basis period for that year of assessment on the acquisition of one or more intellectual property rights for use in its trade or business; and
(ii)
the balance after deducting from $600,000 the lower of the amounts specified in paragraph (a)(i) and (ii).
(1C)  Where a company proves to the satisfaction of the Comptroller that it has during or after the basis period for the year of assessment 2011 incurred capital expenditure by way of making one or more instalment payments under an agreement or agreements in acquiring one or more intellectual property rights for use in its trade or business, that is or are signed during the basis period for any year of assessment between the year of assessment 2011 and the year of assessment 2015 (both years inclusive), and an allowance is made under subsection (1A) or (1B), those subsections shall apply with the following modifications:
(a)
a reference to the capital expenditure incurred on the acquisition of one or more intellectual property rights during the basis period for a year of assessment, being the basis period in which the agreement or agreements is or are signed, is a reference to the aggregate of —
(i)
the price or prices (excluding any finance charges) at which it might have purchased the right or all the rights that is or are the subject of the agreement or agreements for cash at the time of the signing of the agreement or agreements; and
(ii)
the capital expenditure incurred on the acquisition of any other intellectual property rights for use in its trade or business during that basis period;
(b)
a reference to the capital expenditure incurred on the acquisition of one or more intellectual property rights during the basis period for a year of assessment excludes the amount of any instalment paid or deposit made by it under that agreement or any of those agreements during the basis period; and
(c)
the allowance referred to in subsection (1A) or (1B) in respect of each right that is the subject of an agreement shall be made to the company for the year of assessment in respect of each basis period during which it paid an instalment or instalments, or made a deposit or deposits, under the agreement, in the proportion which the total amount of the instalment or instalments paid, and deposit or deposits made, during that basis period for that right bears to the total amount of all instalments and deposits under the agreement for that right.”;
(b)
by deleting subsection (2) and substituting the following subsection:
(2)  The total writing-down allowances to be made to a company under subsection (1) and subsection (1A) or (1B) for any year of assessment shall be an amount equal to 20% of the aggregate of —
(a)
the capital expenditure incurred by it on the acquisition of the intellectual property rights; and
(b)
the writing-down allowances under subsection (1A) or (1B).”;
(c)
by inserting, immediately after subsection (2C), the following subsections:
(2D)  No writing-down allowances under subsections (1A) and (1B) shall be made in respect of any intellectual property rights in respect of which the requirement under subsection (2A) has been waived under subsection (2B), or any intellectual property rights approved under subsection (2C).
(2E)  Where writing-down allowances have been made to any company under subsection (1A) or (1B) in respect of the acquisition of any intellectual property rights and any of the following events occurs within 5 years from the acquisition of such intellectual property rights:
(a)
the rights come to an end without being subsequently revived;
(b)
the company sells, transfers or assigns all or any part of those rights;
(c)
the company permanently ceases to carry on the trade or business,
the following provisions shall apply:
(i)
no writing-down allowance in respect of such intellectual property rights shall be made to that company under subsections (1A) and (1B) for the year of assessment relating to the basis period in which the event occurs and for any subsequent year of assessment; and
(ii)
if any of those events occurs within the period of one year from the acquisition of the intellectual property rights, any writing-down allowances made under subsection (1A) or (1B) shall be brought to charge as if the allowances were not made, and be deemed as income for the year of assessment relating to the basis period in which the event occurs.”;
(d)
by deleting the words “Where writing-down allowances have been made to any company under this section” in subsection (4) and substituting the words “Subject to subsection (4A), where writing-down allowances have been made to any company under subsection (1) or (2C)”;
(e)
by deleting the words “any writing-down allowances made under subsections (1) and (2C) shall be brought to charge as if the writing-down allowances were not made, and deemed as income for the year of assessment relating to the basis period in which the event occurs.” in subsection (4) and substituting the following words:
, where (on the occurrence of the event referred to in paragraph (b)) the price at which the rights were sold, transferred or assigned exceeds the amount of the writing-down allowances yet to be allowed on the date of the event, there shall be made on the company for the year of assessment relating to the basis period in which the event occurs a charge of an amount equal to the lower of —
(i)
the excess; and
(ii)
the writing-down allowances made under subsections (1) and (2C).”;
(f)
by inserting, immediately after subsection (4), the following subsection:
(4A)  Where parts of any intellectual property right are sold, transferred or assigned by the company at different times and at least one sale, transfer or assignment occurs before the end of the writing-down period, subsection (4) shall apply to each sale, transfer and assignment with the following modifications:
(a)
the reference to the amount of writing-down allowances yet to be allowed for the year of assessment relating to the basis period in which the event occurs, is a reference to an amount ascertained in accordance with the formula
A – B,
where A
is the amount of writing-down allowances yet to be allowed for the intellectual property right on the date of the first of such sales, transfers or assignments; and
B
is the aggregate of the prices of the parts of that right previously sold, transferred or assigned by the company,
or zero, if the amount ascertained by that formula is less than or equal to zero; and
(b)
the reference to the writing-down allowances made under subsections (1) and (2C) is a reference to the balance of such allowances made under subsections (1) and (2C) in respect of that right after deducting the total amount of any charges made under this section in respect of that right.”;
(g)
by deleting the words “subsections (1) and (2C)” wherever they appear in subsections (10) and (10A) and substituting in each case the words “subsections (1), (1A), (1B) and (2C)”;
(h)
by deleting the words “31st October 2013” in subsection (10) and substituting the words “the last day of the basis period for the year of assessment 2015”;
(i)
by deleting the words “or 14E” in subsection (10A)(a)(i) and substituting the words “, 14E or 14S”;
(j)
by inserting, immediately after subsection (10B), the following subsections:
(10C)  No writing-down allowance under subsections (1A) and (1B) shall be made to any company in respect of any amount of capital expenditure incurred on the acquisition of intellectual property rights for which an investment allowance has been claimed under Part X of the Economic Expansion Incentives (Relief from Income Tax) Act (Cap. 86).
(10D)  No allowance under subsections (1A) and (1B) shall be made to any company in respect of any instalment paid by it under any agreement to acquire any intellectual property right that is signed before the basis period for the year of assessment 2011.”;
(k)
by inserting, immediately after the words “commercial value” in the definition of “intellectual property rights” in subsection (11), the words “, or the grant of protection of a plant variety”; and
(l)
by inserting, immediately after subsection (11), the following subsection:
(12)  In subsections (1A) and (1B), a reference to capital expenditure incurred on the acquisition of intellectual property rights excludes any such expenditure to the extent that it is subsidised by grants or subsidies from the Government or a statutory board.”.
Amendment of section 24
26.  Section 24 of the principal Act is amended by inserting, immediately after subsection (4), the following subsections:
(4A)  No election may be made under subsection (3) for the sale of an industrial building or structure for which an option to purchase is granted or a sale and purchase agreement is entered into on or after 23rd February 2010, or which is transferred on or after that date.
(4B)  Subsection (4A) does not apply to a transfer of property to which section 34C(8) and (9) apply.”.
Amendment of section 34C
27.  Section 34C of the principal Act is amended by inserting, immediately after subsection (8), the following subsections:
(8A)  Where there is a transfer of a building or structure from any amalgamating company to the amalgamated company on the date of amalgamation for which an allowance has been made to the amalgamating company under section 18C, the annual allowances provided under that section shall continue to be available to the amalgamated company as if it had incurred the qualifying capital expenditure that was incurred in carrying out the approved construction or approved renovation, as the case may be, referred to in that section.
(8B)  Subsection (8A) shall not apply unless the building or structure is used before the transfer by the amalgamating company and after the transfer by the amalgamated company, in the production of income chargeable under the provisions of this Act.”.
Amendment of section 37
28.  Section 37 of the principal Act is amended —
(a)
by deleting the words “subsection (2)” in subsection (3) and substituting the words “subsections (2) and (3B)”;
(b)
by deleting the words “31st December 2009” in subsection (3A) and substituting the words “31st December 2010”;
(c)
by inserting, immediately after subsection (3A), the following subsection:
(3B)  No deduction shall be made under subsection (3)(c), (d), (e) or (f) to a person in respect of any donation made to an institution of a public character on or after 1st January 2011 unless he provides to the institution such information within such time and in such form and manner as the Comptroller may specify.”; and
(d)
by inserting, immediately after the words “subsection (3)(a)” in subsection (7), the words “and section 37K”.
Amendment of section 37G
29.  Section 37G of the principal Act is amended —
(a)
by deleting “2013” in subsection (3)(a) and substituting “2010”;
(b)
by deleting “$450,000” in subsection (3)(b) and (ii) and substituting in each case “$300,000”;
(c)
by inserting, immediately after subsection (9), the following subsection:
(9A)  No deduction shall be allowed to a company under this section for any year of assessment if a deduction for that expenditure has been allowed under section 14DA(1A) or (1B) for that year of assessment.”; and
(d)
by inserting, immediately after the word “Government” in paragraph (c) of the definition of “qualifying research and development expenditure” in subsection (10), the words “or a statutory board”.
Amendment of section 37H
30.  Section 37H of the principal Act is amended —
(a)
by deleting “2013” in subsection (1) and substituting “2010”; and
(b)
by deleting “2013” in paragraph (b) of the definition of “qualifying start-up company” in subsection (14) and substituting “2010”.
New section 37I
31.  The principal Act is amended by inserting, immediately after section 37H, the following section:
Cash payout under Productivity and Innovation Credit Scheme
37I.
—(1)  Subject to this section, where any qualifying person is allowed one or more deductions or allowances under —
(a)
section 14 (in respect of expenditure that falls within the definition of “qualifying training expenditure” under section 14R, “qualifying design expenditure” under section 14S and expenditure on the leasing of a prescribed automation equipment under a qualifying lease under section 14T);
(b)
section 14A;
(c)
section 14D (in respect of expenditure that falls within the definition of “qualifying expenditure” under section 14DA);
(d)
section 14DA;
(e)
section 14R;
(f)
section 14S;
(g)
section 14T;
(h)
section 19A(2), (2A) or (2B) (other than an allowance made in respect of a prescribed automation equipment acquired under a hire-purchase agreement with a payment period that spans over 2 or more basis periods); or
(i)
section 19B (other than a writing-down allowance made in a case where the requirement under section 19B(2A) is waived, or a writing-down allowance made under section 19B(2C), or a writing-down allowance made in respect of any intellectual property right acquired and paid for by instalments under an agreement with a payment period that spans over 2 or more basis periods),
for any year of assessment between the year of assessment 2011 and the year of assessment 2013 (both years inclusive) (referred to in this section as a qualifying year of assessment), he may, in lieu of those deductions or allowances, or any part thereof, which exceeds $1,500, exercise an irrevocable written election for a cash payout computed in accordance with subsection (3) or (4), as the case may be.
(2)  The irrevocable written election under subsection (1) shall —
(a)
be made to the Comptroller by the qualifying person at any time after the end of the basis period for any qualifying year of assessment but before the expiration of the time the qualifying person must deliver a return of his income for that year of assessment or within such extended time as the Comptroller may allow; and
(b)
be accompanied by such information and supporting document to be given in such form and manner as the Comptroller may specify.
(3)  For the year of assessment 2011 and the year of assessment 2012, the amount of cash payout shall be computed in accordance with the formula
A x 7%,
where A is —
(a)
for the year of assessment 2011, the lower of —
(i)
the deductions or allowances or part thereof in respect of which the election is made; and
(ii)
$600,000; and
(b)
for the year of assessment 2012, the lower of —