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Contents  

Long Title

Part I PRELIMINARY

Part II ADMINISTRATION

Part III IMPOSITION OF INCOME TAX

Part IV EXEMPTION FROM INCOME TAX

Part V DEDUCTIONS AGAINST INCOME

Part VI CAPITAL ALLOWANCES

Part VII ASCERTAINMENT OF CERTAIN INCOME

Part VIII ASCERTAINMENT OF STATUTORY INCOME

Part IX ASCERTAINMENT OF ASSESSABLE INCOME

Part X ASCERTAINMENT OF CHARGEABLE INCOME AND PERSONAL RELIEFS

Part XI RATES OF TAX

Part XII DEDUCTION OF TAX AT SOURCE

Part XIII ALLOWANCES FOR TAX CHARGED

Part XIV RELIEF AGAINST DOUBLE TAXATION

Part XV PERSONS CHARGEABLE

Husband and wife

Trustees, agents and curators

Part XVI RETURNS

Part XVII ASSESSMENTS AND OBJECTIONS

Part XVIII APPEALS

Part XIX COLLECTION, RECOVERY AND REPAYMENT OF TAX

Part XX OFFENCES AND PENALTIES

Part XXI MISCELLANEOUS

FIRST SCHEDULE Institution, Authority, Person or Fund Exempted

SECOND SCHEDULE Rates of Tax

THIRD SCHEDULE

FOURTH SCHEDULE Name of Bond, Securities, Stock or Fund

FIFTH SCHEDULE Child Relief

SIXTH SCHEDULE Number of Years of Working Life of Asset

SEVENTH SCHEDULE Advance Rulings

Legislative History

Comparative Table

 
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On 19/10/2017, you requested the version in force on 01/09/2007 incorporating all amendments published on or before 19/08/2017.
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PART VI
CAPITAL ALLOWANCES
Initial and annual allowances for industrial buildings and structures
16.
—(1)  Where, in or after the basis period for the first year of assessment under this Act, a person incurs capital expenditure on the construction of a building or structure which is to be an industrial building or structure occupied for the purposes of a trade, there shall be made to the person who incurred the expenditure 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% thereof.
[7/79]
(2)  For the purposes of subsection (1) —
(a)
where 2 basis periods overlap, the period common to both shall be deemed to fall in the first basis period only;
(b)
where there is an interval between the end of the basis period for a year of assessment and the commencement of a basis period for the next succeeding year of assessment, then, unless the second mentioned year of assessment is the year of the permanent discontinuance of the trade, the interval shall be deemed to be part of the second basis period; and
(c)
where there is an interval between the end of the basis period for the year of assessment preceding that in which the trade is permanently discontinued and the commencement of the basis period for the year in which it is permanently discontinued, the interval shall be deemed to form part of the first basis period.
(3)  Any capital expenditure incurred for the purposes of a trade by a person about to carry on that trade shall be treated for the purposes of subsection (1) as if it had been incurred by that person on the first day on which he does carry on that trade.
(4)  Where any person is, at the end of the basis period for any year of assessment, entitled to an interest in a building or structure which is an industrial building or structure and where that interest is the relevant interest in relation to the capital expenditure before 1st January 2006 incurred on the construction of that building or structure, an allowance, to be known as an “annual allowance”, equal to 3% of the total capital expenditure incurred by that person on the construction of that building or structure shall be made to him for that year of assessment.
[7/79]
(5)  Where at any time in or after the basis period for the first year of assessment under this Act and before 1st January 2006 the interest in a building or structure which is the relevant interest in relation to any capital expenditure incurred before that date on the construction of that building or structure is sold while the building or structure is an industrial building or structure or after it has ceased to be one, the annual allowance, in the years of assessment the basis periods for which end after the time of that sale, shall be computed by reference to the residue of that expenditure immediately after the sale and shall be —
(a)
the fraction of that residue the numerator of which is one and the denominator of which is the number of years of assessment comprised in the period which begins with the first year of assessment for which the buyer is entitled to an annual allowance or would be so entitled if the building or structure had at all material times continued to be an industrial building or structure, and ends with the fiftieth year after that in which the building or structure was first used; or
(b)
3% of that residue,
whichever is the greater, and so on for any subsequent sales.
[7/79; 21/2003]
(6)  In the case referred to in subsection (4), no annual allowance shall be made to any person for any year of assessment after the end of the fiftieth year after that in which the building or structure was first used.
(6A)  Where any person is, at the end of the basis period for any year of assessment, entitled to an interest in a building or structure which is an industrial building or structure, and that interest is the relevant interest in relation to —
(a)
any capital expenditure incurred by him on or after 1st January 2006 on the construction of that building or structure; or
(b)
a sale or purchase agreement entered into for that building or structure on or after that date, whether or not the building or structure was previously used as an industrial building or structure,
an annual allowance determined under subsection (6B) shall be made to him for that year of assessment.
(6B)  The annual allowance under subsection (6A) shall be equal to —
(a)
in the case referred to in subsection (6A)(a), 3% of the total capital expenditure incurred by the person on the construction of the building or structure; or
(b)
in the case referred to in subsection (6A)(b), 3% of the capital expenditure incurred by the person on the purchase of the building or structure.
(7)  For the purposes of application to any industrial building or structure occupied for the purposes of a trade in intensive poultry production and approved by the Minister or such person as he may appoint under section 18(1), the reference to 3% in subsections (4), (5) and (6B) and in section 18(9) shall be read as a reference to 5%.
[7/79; 21/2003]
(8)  For the purposes of application to any industrial building or structure occupied for the purposes of a hotel on the island of Sentosa and approved by the Minister or such person as he may appoint under section 18(1) —
(a)
the reference to 25% in subsection (1) shall be read as a reference to 20%;
(b)
the reference to 3% in subsections (4), (5) and (6B) and in section 18(9) shall be read as a reference to 2%; and
(c)
the reference to capital expenditure in subsections (1) and (4) shall not include any capital expenditure incurred before 1st January 1982.
[1/82]
(9)  For the purposes of application to any industrial building or structure used for the purposes of a project for the promotion of the tourist industry (other than a hotel) in Singapore and approved by the Minister or such person as he may appoint under section 18(1)(i) —
(a)
the reference to 25% in subsection (1) shall be read as a reference to 20%;
(b)
the reference to 3% in subsections (4), (5) and (6B) and in section 18(9) shall be read as a reference to 2%; and
(c)
the reference to capital expenditure in subsections (1), (3) and (4) shall not include any capital expenditure incurred before 1st January 1986.
[1/88]
(10)  Notwithstanding anything in this section and section 17, where a person carrying out a project for the promotion of the tourist industry approved by the Minister or such person as he may appoint under section 18(1)(i) fails to comply with any condition imposed by the Minister, the Minister may revoke the approval and thereupon the Comptroller may at any time within 6 years from the date of the revocation make such assessment or additional assessment upon the person as may appear necessary in order to recover any tax which ought to have been paid by that person if any allowances under those sections had not been made to him.
[1/88; 11/94]
(11)  Notwithstanding anything in this section, in no case shall the amount of an annual allowance made to a person for any year of assessment in respect of any expenditure exceed what, apart from the writing off falling to be made by reason of the making of that allowance, would be the residue of that expenditure at the end of his basis period for that year of assessment.
(12)  For the purposes of subsection (1), where a person has incurred capital expenditure before 1st January 2006 on the purchase of an industrial building or structure (including the purchase of a leasehold interest therein of not less than 25 years) which has not previously been used by any person, he shall be deemed to have incurred expenditure on the construction of that industrial building or structure equal to the cost of construction of that industrial building or structure or to the net price paid by him for that industrial building or structure or the interest therein, whichever is the less, if —
(a)
the person claiming the initial allowance by virtue of this subsection purchased the industrial building or structure or acquired the leasehold interest therein from the person who constructed that building or structure; and
(b)
no initial allowance has been granted under subsection (1) in respect of that industrial building or structure to the person who constructed that building or structure.
[7/79]
(12A)  For the purposes of subsection (1), where a person has incurred capital expenditure on or after 1st January 2006 on the purchase of an industrial building or structure which has not previously been used by any person, he shall be deemed to have incurred expenditure on the construction of that industrial building or structure equal to the capital expenditure incurred by him on the purchase of that industrial building or structure if —
(a)
the person claiming the initial allowance by virtue of this subsection purchased the industrial building or structure from the person who constructed that building or structure; and
(b)
no initial allowance has been granted under subsection (1) in respect of that industrial building or structure to the person who constructed that building or structure.
(13)  Unless otherwise provided in this Act or the Economic Expansion Incentives (Relief from Income Tax) Act (Cap. 86), where, in the basis period for any year of assessment, the trade, for which purpose the industrial building is used, produces income that is exempt from tax as well as income chargeable with tax, the allowances 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.
Balancing allowances and charges for industrial buildings and structures
17.
—(1)  Where any of the events referred to in subsection (1A) occurs while a building or structure is an industrial building or structure or after it has ceased to be one and —
(a)
any capital expenditure has been incurred on the construction of the building or structure before 1st January 2006; or
(b)
either —
(i)
any capital expenditure has been incurred on the construction of the building or structure on or after 1st January 2006; or
(ii)
a sale and purchase agreement for the building or structure was entered into on or after that date,
then an allowance or charge, to be known as a “balancing allowance” or a “balancing charge” shall, in the circumstances mentioned in this section, be made to or, as the case may be, on the person entitled to the relevant interest immediately before that event occurs for the year of assessment in the basis period for which that event occurs.
(1A)  The events referred to in subsection (1) are —
(a)
the relevant interest in the building or structure is sold;
(b)
that interest, being a leasehold interest, comes to an end otherwise than on the person entitled thereto acquiring the interest which is reversionary thereon;
(c)
the building or structure is demolished or destroyed or, without being demolished or destroyed, ceases altogether to be used.
(2)  In the case referred to in subsection (1)(a), no balancing allowance or balancing charge shall be made to or on any person for any year of assessment by reason of any event occurring after the end of the fiftieth year after that in which the building or structure was first used.
(3)  No balancing allowance shall be made to any person —
(a)
on the sale of the relevant interest in the building or structure unless the person proves to the satisfaction of the Comptroller that the value of the building or structure to the person is less than —
(i)
in the case referred to in subsection (1)(a), the amount of the capital expenditure incurred on the construction of the building or structure reduced by the amount of any initial and annual allowances made (including an amount of 3% of the capital expenditure for each year in which no initial or annual allowance was made); or
(ii)
in the case referred to in subsection (1)(b), the amount of the capital expenditure incurred by him on the construction or purchase of the building or structure (as the case may be) reduced by the amount of any initial and annual allowances made (including an amount of 3% of the capital expenditure for each year in which no initial or annual allowance was made); and
(b)
where the relevant interest in the building or structure is not sold but the building or structure is or would be redeveloped for any use other than as an industrial building or structure.
[21/2003]
(4)  Where there are no sale, insurance, salvage or compensation moneys, or where the residue of the expenditure immediately before the event exceeds those moneys, a balancing allowance shall be made and the amount thereof shall be the amount of the residue or, as the case may be, of the excess thereof over the moneys.
(5)  If the sale, insurance, salvage or compensation moneys exceed the residue, if any, of the expenditure immediately before the event, a balancing charge shall be made and the amount on which it is made shall be an amount equal to the excess or, where the residue is nil, to the moneys.
(6)  Notwithstanding anything in subsection (5) but subject to subsection (7), in no case shall the amount on which a balancing charge is made on a person exceed the aggregate of the following amounts:
(a)
the amount of the initial allowance, if any, made to him in respect of the expenditure in question; and
(b)
the amount of the annual allowances, if any, made to him in respect of the expenditure in question.
(7)  Unless otherwise provided in this Act or the Economic Expansion Incentives (Relief from Income Tax) Act, where, in the basis period for any year of assessment, the trade, for which purpose the industrial building is used, produces income that is exempt from tax as well as income chargeable with tax, and any balancing allowance or balancing charge arises to be made —
(a)
the balancing allowance shall be made against each income for that year of assessment in such proportion as appears reasonable to the Comptroller in the circumstances; and
(b)
such proportion of the balancing charge shall be exempt from tax as appears reasonable to the Comptroller in the circumstances.
Definitions for sections 16 and 17
18.
—(1)  Subject to this section, in sections 16 and 17, “industrial building or structure” means a building or structure in use —
(a)
for the purposes of a trade carried on in a mill, factory or other similar premises;
(b)
for the purposes of a transport, dock, water or electricity undertaking;
(c)
for the purposes of a trade which consists in the manufacture of goods or materials or the subjection of goods or materials to any process;
(d)
for the purposes of a trade which consists in the storage of goods or materials which are to be used in the manufacture of other goods or to be subjected, in the course of a trade, to any process;
(e)
for the purposes of a trade which consists of the storage of goods or materials on their arrival in Singapore;
(f)
for the purposes of a trade in intensive poultry production as may be approved by the Minister or such person as he may appoint;
(g)
by a research and development organisation in carrying out research and development activities for any manufacturing trade or business;
(h)
for the purposes of a hotel on the island of Sentosa and approved before 1st September 2007 by the Minister or such person as he may appoint (referred to in this section as a Sentosa hotel);
(i)
for the purposes of a project for the promotion of the tourist industry (other than a hotel) in Singapore and approved by the Minister or such person as he may appoint subject to such conditions as he may impose; or
(j)
for prescribed purposes and where such building or structure has been approved by the Minister or such person as he may appoint,
and includes any building or structure provided by the person carrying on such a trade or undertaking for the welfare of workers employed in that trade or undertaking and in use for that purpose, but does not include a building or structure in respect of which a deduction is prescribed under section 14(1)(h).
[26/73; 28/80; 1/82; 1/88; 3/89; 2/92; 21/2003]
(2)  A building or structure shall not be deemed, by reason only of its falling or having fallen into temporary disuse, to have thereby ceased altogether to be used for one of the purposes specified in subsection (1) if, immediately prior to falling into such temporary disuse, it was in use for such a purpose and if, during the period of such temporary disuse, it is constantly maintained in readiness to be brought back into use for such a purpose.
(3)  If, in the circumstances mentioned in subsection (2), the building or structure at any time during disuse ceases to be ready for use for any of the purposes mentioned in that subsection, or if at any time, for any reason, the disuse of the building or structure can no longer be reasonably regarded as temporary, then and in any such case, the building or structure shall be deemed to have ceased, on the commencement of the period of disuse, to be used for any of the purposes specified in subsection (1).
(4)  Subsection (1) shall apply in relation to a part of a trade or undertaking as it applies to a trade or undertaking.
(5)  Where part only of a trade or undertaking complies with the conditions set out in subsection (1), a building or structure shall not, by virtue of subsection (4), be an industrial building or structure unless it is in use for the purposes of that part of that trade or undertaking.
(6)  Notwithstanding anything in subsection (1), (2), (3), (4) or (5), “industrial building or structure” does not include any building or structure in use as, or as part of, a dwelling-house, retail shop, showroom, hotel (other than a Sentosa hotel) or office or for any purpose ancillary to the purposes of a dwelling-house, retail shop, showroom, hotel (other than a Sentosa hotel) or office.
[1/82]
(7)  Where part of a building or structure is, and part thereof is not, an industrial building or structure, and —
(a)
in a case where capital expenditure is incurred on the construction of the building or structure before 1st January 2006, the capital expenditure incurred on the construction of the second-mentioned part is not more than one-tenth of the total capital expenditure which has been incurred on the construction of the whole building or structure; or
(b)
in a case where —
(i)
capital expenditure is incurred on the construction of the building or structure on or after 1st January 2006; or
(ii)
a sale and purchase agreement was entered into for the building or structure on or after that date,
the capital expenditure incurred on the construction or purchase (as the case may be) of the second-mentioned part is not more than one-tenth of the total capital expenditure which has been incurred on the construction or purchase of the whole building or structure,
then the whole building or structure and every part thereof shall be treated as an industrial building or structure.
(7A)  Where the Comptroller is satisfied that it is not reasonably practicable to determine the capital expenditure incurred on the second-mentioned part of the building or structure under subsection (7), the whole building or structure and every part thereof may be treated as an industrial building or structure if —
(a)
the floor area of the part of the building or structure that is not an industrial building or structure is not more than one-tenth of the total floor area of the whole building or structure; or
(b)
the Comptroller is otherwise satisfied that it is just and proper to do so.
(8)  In this section and sections 16 and 17 —
“capital expenditure”, in relation to the purchase of a building or structure, means the net price paid for the building or structure, but does not include the cost of land as determined to the satisfaction of the Comptroller;
“relevant interest” means —
(a)
in relation to any capital expenditure incurred on the construction of a building or structure, the interest in that building or structure to which the person who incurred the expenditure was entitled when he incurred it; and
(b)
in relation to a sale and purchase agreement for a building or structure, the interest in that building or structure to which the purchaser was entitled when he entered into the agreement;
“residue of expenditure” means —
(a)
in relation to any capital expenditure incurred on the construction of a building or structure before 1st January 2006, the amount of the capital expenditure incurred on such construction reduced by —
(i)
the amount of any initial allowance made;
(ii)
any annual allowance made; and
(iii)
any balancing allowances granted,
and increased by any balancing charges made; or
(b)
in relation to any capital expenditure incurred on the construction or purchase of a building or structure on or after 1st January 2006, the amount of the capital expenditure incurred on such construction or purchase (as the case may be) reduced by —
(i)
the amount of any initial allowance made; and
(ii)
any annual allowance made.
(9)  For the purpose of computing the residue of expenditure, there shall be written off an amount of 3% of the expenditure in respect of any year in which no initial or annual allowance has been made.
[7/79]
Initial and annual allowances for machinery or plant
19.
—(1)  Where a person carrying on a trade, profession or business incurs capital expenditure on the provision of machinery or plant for the purposes of that trade, profession or business, there shall be made to him, on due claim for the year of assessment in the basis period for which the expenditure is incurred an allowance, to be known as an “initial allowance”, equal to one-fifth of that expenditure or such other allowance as may be prescribed either generally or for any person or class of persons in respect of any machinery or plant or class of machinery or plant.
[7/79]
(1A)  For the purposes of subsection (1), in the case of any trade, profession or business —
(a)
where 2 basis periods overlap, the period common to both shall be deemed to fall in the first basis period only;
(b)
where there is an interval between the end of the basis period for a year of assessment and the commencement of a basis period for the next succeeding year of assessment, then, unless the second mentioned year of assessment is the year of the permanent discontinuance of the trade, the interval shall be deemed to be part of the second basis period; and
(c)
where there is an interval between the end of the basis period for the year of assessment preceding that in which the trade is permanently discontinued and the commencement of the basis period for the year in which it is permanently discontinued, the interval shall be deemed to form part of the first basis period.
(1B)  Any capital expenditure incurred for the purposes of a trade by a person about to carry on that trade shall be treated for the purposes of subsection (1) as if it had been incurred by that person on the first day on which he does carry on that trade.
(2)  Where at the end of the basis period for any year of assessment, a person has in use machinery or plant for the purpose of his trade, profession or business, there shall be made to him, on due claim, in respect of that year of assessment an allowance for depreciation by wear and tear of those assets (to be known as an annual allowance) which shall be calculated in accordance with the following provisions:
(a)
the annual allowance in respect of any machinery or plant shall —
(i)
in the case of an asset, other than an asset acquired under a hire-purchase agreement, be the amount ascertained by dividing the excess of the original cost of the asset over any initial allowance granted under subsection (1) by the number of years of working life of the asset as specified in the Sixth Schedule unless otherwise provided under paragraph (b);
(ii)
in the case of an asset acquired under a hire-purchase agreement, be the amount ascertained by dividing the excess of the original cost of the asset over the total amount of initial allowance allowable in respect of the asset under subsection (1) by the number of years of working life of the asset as specified in the Sixth Schedule unless otherwise provided under paragraph (b);
(b)
for the purposes of paragraph (a), in the case of any aircraft which is acquired on or after 1st March 1995 by a leasing company carrying on the business of offshore leasing within the meaning of section 43I or is acquired by an approved aircraft leasing company within the meaning of section 43Y, the number of years of working life of the aircraft specified in the Sixth Schedule may, on the application of the leasing company, be extended irrevocably for such period not exceeding 20 years as approved by the Minister or such person as he may appoint;
(c)
notwithstanding paragraphs (a) and (b), the annual allowance in respect of any asset for any year of assessment may, at the election of a person to whom a certificate has been issued before 1st January 1981 (or after 1st January 1981 where application for the certificate has been approved before that date) under Part II, IV, VI, VII, XI or XII of the Economic Expansion Incentives (Relief from Income Tax) Act (Cap. 86), be ascertained during his tax relief period as determined in accordance with that certificate at the rates applicable immediately before 4th December 1980 and shall be computed on the reducing value of the asset, which shall be the original cost of the asset reduced by any initial allowance and annual allowances granted under this section;
(d)
where an election under paragraph (c) has been made by a person with respect to any asset, the annual allowance in respect of the same asset to be made to that person for any year of assessment after his tax relief period shall be computed in accordance with the formula
where C
is the amount of the capital expenditure still unallowed under this section in respect of that asset after the end of his tax relief period; and
D
is the number of years of working life of the asset as specified in the Sixth Schedule reduced by the number of whole years the asset has been put into use as at the end of the basis period in which his tax relief ends and if the result is less than 1, D shall be deemed to be 1;
(e)
the annual allowance in respect of any asset for any year of assessment shall not exceed the amount of the capital expenditure of the asset still unallowed under this section as at the beginning of the basis period for that year of assessment;
(f)
for the purposes of the Sixth Schedule, where any question arises as to the classification of an asset under any item of that Schedule, the asset shall be treated as falling under such item as the Comptroller considers proper.
[28/80; 32/95]
(3)  Notwithstanding subsections (1) and (2), in respect of a motor car to which this subsection applies —
(a)
the initial allowance to be made under subsection (1) shall be calculated on an amount equal to the capital expenditure incurred in respect of that motor car or $35,000, whichever is the less;
(b)
the annual allowance to be made under subsection (2) shall be calculated on the basis that the original cost of that motor car is the capital expenditure incurred or $35,000, whichever is the less; and
(c)
the aggregate of the initial and annual allowances to be made under this subsection for all relevant years of assessment shall not exceed $35,000.
[37/75; 5/83]
(4)  Subsection (3) shall apply to a motor car which is constructed or adapted for the carriage of not more than 7 passengers (exclusive of the driver) and the weight of which unladen does not exceed 3,000 kilograms and which —
(a)
was registered before 1st April 1998 as a business service passenger vehicle for the purposes of the Road Traffic Act (Cap. 276) but excludes such a motor car which is —
(i)
used principally for instructional purposes; and
(ii)
acquired by a person who carries on the business of providing driving instruction and who holds a driving school licence or driving instructor’s licence issued under that Act; or
(b)
is registered outside Singapore and used exclusively outside Singapore.
[32/99]
(5)  No allowance under this section shall be made in respect of a motor car which is constructed or adapted for the carriage of not more than 7 passengers (exclusive of the driver) and the weight of which unladen does not exceed 3,000 kilograms except —
(a)
a taxi;
(b)
a motor car registered outside Singapore and used exclusively outside Singapore;
(c)
a private hire car acquired by a person who carries on the business of hiring out cars and which is used by the person principally for hiring;
(d)
a motor car which was registered before 1st April 1998 as a business service passenger vehicle for the purposes of the Road Traffic Act (Cap. 276); and
(e)
a motor car registered on or after 1st April 1998 which is used principally for instructional purposes and acquired by a person who carries on the business of providing driving instruction and who holds a driving school licence or driving instructor’s licence issued under the Road Traffic Act.
[32/99]
(5A)  Unless otherwise provided in this Act or the Economic Expansion Incentives (Relief from Income Tax) Act (Cap. 86), where, in the basis period for any year of assessment, the trade, profession or business, for which purpose the machinery or plant is provided, produces income that is exempt from tax as well as income chargeable with tax, the allowances 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.
(6)  In subsection (1), “prescribed” means prescribed by an order made by the Minister.
(7)  Every order made under this section shall be presented to Parliament as soon as possible after publication in the Gazette.
Allowances of 3 years write off for machinery and plant, and 100% write off for computer, prescribed office automation equipment and robot, etc.
19A.
—(1)  Notwithstanding section 19, where a person carrying on a trade, profession or business incurs capital expenditure on the provision of machinery or plant for the purposes of that trade, profession or business, he shall, in lieu of the allowances provided by section 19, be entitled for a period of 3 years to an annual allowance of 33⅓% in respect of the capital expenditure incurred.
[13/84; 7/85]
(2)  Notwithstanding section 19, where a person proves to the satisfaction of the Comptroller that he has installed a computer or other prescribed automation equipment for the purposes of a trade, business or profession carried on by him, he shall, in lieu of the allowances provided by subsection (1) or section 19, be entitled, if he so elects, to an allowance of 100% in respect of the capital expenditure incurred on the provision of that computer or automation equipment.
[15/83; 13/84; 7/85]
(3)  Notwithstanding section 19, where a person proves to the satisfaction of the Comptroller that he has, for the purposes of a trade, business or profession carried on by him, installed a generator in any office or factory for the supply of electrical power to that office or factory in the event of a disruption in the normal supply of electrical power, he shall, in lieu of the allowances provided by subsection (1) or section 19, be entitled, if he so elects, to an allowance of 100% in respect of the capital expenditure incurred on the provision of that generator.
[20/91]
(4)  Notwithstanding section 19, where a person proves to the satisfaction of the Comptroller that he has installed a robot for the purposes of a trade, business or profession carried on by him, he shall, in lieu of the allowances provided by subsection (1) or section 19, be entitled, if he so elects, to an allowance of 100% in respect of the capital expenditure incurred on the provision of that robot.
[13/84]
(5)  Notwithstanding section 19, where a person proves to the satisfaction of the Comptroller that he has installed on or after 1st January 1996 any efficient pollution control equipment or device for the purposes of a trade, business or profession carried on by him, he shall, in lieu of the allowances provided by subsection (1) or section 19, be entitled, if he so elects, to an allowance of 100% in respect of the capital expenditure incurred on the provision of the efficient pollution control equipment or device.
[28/96]
(6)  Notwithstanding section 19, where a person proves to the satisfaction of the Comptroller that he has installed on or after 1st January 1996 any certified energy-efficient equipment as a replacement for any other equipment, or has installed on or after that date any certified energy-saving equipment, for the purposes of a trade, business or profession carried on by him, he shall, in lieu of the allowances provided by subsection (1) or section 19, be entitled, if he so elects, to an allowance of 100% in respect of the capital expenditure incurred on the provision of the certified energy-efficient equipment or certified energy-saving equipment.
[28/96; 31/98]
(7)  Notwithstanding section 19, where a person proves to the satisfaction of the Comptroller that he has, on or after 1st January 1998, installed any new —
(a)
certified low-decibel machine, equipment or system;
(b)
certified effective noise control device which is a distinct entity or an accessory of any new or existing machine, equipment or system; or
(c)
certified effective engineering noise control measure for any existing machine, equipment or process,
for the purposes of a trade, business or profession carried on by him, he shall, in lieu of the allowances provided by subsection (1) or section 19, be entitled, if he so elects, to an allowance of 100% in respect of the capital expenditure incurred on the provision of the certified machine, equipment or system, or the certified effective noise control device or measure.
[31/98]
(8)  Notwithstanding section 19, where a person proves to the satisfaction of the Comptroller that he has, on or after 1st January 1998, installed any new —
(a)
certified machine, equipment or system which reduces or eliminates exposure to chemical risk;
(b)
certified effective chemical hazard control device which is a distinct entity or an accessory of any new or existing machine, equipment or process; or
(c)
certified effective chemical hazard control measure for any existing machine, equipment or process,
for the purposes of a trade, business or profession carried on by him, he shall, in lieu of the allowances provided by subsection (1) or section 19, be entitled, if he so elects, to an allowance of 100% in respect of the capital expenditure incurred on the provision of the certified machine, equipment or system, or the certified effective chemical hazard control device or measure.
[31/98]
(9)  Notwithstanding section 19, where a person proves to the satisfaction of the Comptroller that he has, for the purposes of a trade, business or profession carried on by him, registered any new vehicle as a replacement for an existing vehicle which used diesel oil as fuel and which was registered before 1st January 1991 and deregistered on or after 27th February 1999, he shall, in lieu of the allowances provided by subsection (1) or section 19, be entitled, if he so elects, to an allowance of 100% in respect of the capital expenditure incurred on the provision of that new vehicle.
(9A)  Notwithstanding section 19, where a person proves to the satisfaction of the Comptroller that he has, for the purposes of a trade, business or profession carried on by him, registered during the period from 15th February 2007 to 14th February 2012 any new vehicle which uses diesel oil as fuel, as a replacement for an existing vehicle which used diesel oil as fuel and which was registered on or after 1st January 1991 but before 1st October 2006, he shall, in lieu of the allowances provided by subsection (1) or section 19, be entitled, if he so elects, to an allowance of 100% in respect of the capital expenditure incurred on the provision of that new vehicle.
(10)  Notwithstanding section 19, where a person proves to the satisfaction of the Comptroller that he has incurred capital expenditure on the provision of a website for the purposes of a trade, business or profession carried on by him, he shall be entitled to an allowance of 100% in respect of the capital expenditure incurred on the provision of that website, and for this purpose, a website is deemed to be machinery or plant.
[37/2002]
(10A)  Notwithstanding section 19 and subject to subsection (10B), where a person proves to the satisfaction of the Comptroller that he has incurred capital expenditure not exceeding $1,000 on the provision of any item of machinery or plant for the purposes of a trade, profession or business carried on by him, he shall, in lieu of the allowances provided by subsection (1) or section 19, be entitled, if he so elects, to an allowance of —
(a)
100% in respect of that capital expenditure; or
(b)
where allowances have been made under subsection (1) or section 19 for any previous year of assessment under subsection (10B), the amount of that capital expenditure still unallowed.
[Act 34/2005, wef Y/A 2005 & Sub Ys/A:2005-ACT-34]
(10B)  The aggregate amount of allowances claimed by any person under subsection (10A) for any year of assessment shall not exceed $30,000; and allowances may be made under subsection (1) or section 19 in respect of any capital expenditure still unallowed.
[Act 34/2005, wef Y/A 2005 & Sub Ys/A:2005-ACT-34]
(10C)  No allowance shall be made under subsection (10A) in respect of any item of machinery or plant which is acquired under a hire-purchase agreement and the original cost of that item of machinery or plant exceeds $1,000.
[Act 34/2005, wef Y/A 2005 & Sub Ys/A:2005-ACT-34]
(11)  Any claim by a person for allowances in respect of any machinery or plant under this section for any year of assessment shall not be disallowed by reason only that the person has not in use the machinery or plant at the end of the basis period for that year of assessment.
[28/96; 31/98; 37/2002]
(12)  Any claim for allowances under this section shall be made at the time of lodgment of the return of income for the relevant years of assessment or within such further time as the Comptroller, in his discretion, may allow.
(13)  Where any allowance has been claimed and allowed under this section for any year of assessment, no allowances shall be made in any subsequent year of assessment under section 19 in respect of such expenditure.
(13A)  Where at the end of the basis period for the year of assessment 1985 a person has in use machinery or plant in respect of which capital allowances have been made under section 19, there shall be made to him, if before the end of that year of assessment he so elects, for a period of 3 years an annual allowance of 33 1/3% in respect of the capital expenditure remaining unallowed under section 19 in respect of the machinery or plant as at the end of that basis period:
Provided that —
(a)
in the case of a person to whom a certificate has been issued under Part II of the Economic Expansion Incentives (Relief from Income Tax) Act (Cap. 86) whose tax relief period expires in any basis period ending on or after 1st January 1992 and who has, at the end of the basis period immediately following that basis period, in use machinery or plant in respect of which capital allowances have been made under section 19, the election under this subsection shall be made before the end of the year of assessment which relates to the second-mentioned basis period; and
(b)
in the case of a person to whom a certificate has been issued under Part IV, VI, VII, XI or XII of that Act and who has, at the end of the basis period immediately following the expiry of his tax relief period, in use machinery or plant in respect of which capital allowances have been made under section 19, the election under this subsection shall be made before the end of the year of assessment which relates to that basis period.
[S 400/2007 wef 27/07/2007]
[13/84; 11/94]
(14)  Subject to subsections (10A) and (13A), where any allowance has been claimed and allowed under section 19 in respect of any expenditure, no allowances shall, except with the approval of the Minister or the Comptroller and subject to such conditions as he may impose, be made in any subsequent year of assessment under this section in respect of the amount of that expenditure remaining unallowed under section 19.
[Act 34/2005, wef Y/A 2005 & Sub Ys/A:2005-ACT-34]
[S 400/2007 wef 27/07/2007]
(14A)  Unless otherwise provided in this Act or the Economic Expansion Incentives (Relief from Income Tax) Act, (Cap. 86) where, in the basis period for any year of assessment, the trade, profession or business, for which purpose the machinery or plant is provided, produces income that is exempt from tax as well as income chargeable with tax, the allowances 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.
(15)  In this section —
“automation equipment” means any machinery or plant designed for the automation of functions or services in any office or factory within the meaning of section 5 of the Workplace Safety and Health Act 2006;
“certificate of entitlement” means a permit issued or deemed to be issued under section 10A of the Road Traffic Act (Cap. 276);
“certified effective chemical hazard control device” means —
(a)
any local exhaust ventilation system;
(b)
any fugitive emission control equipment or system; or
(c)
any dilution ventilation system,
which has been certified by the Standards, Productivity and Innovation Board or the National University of Singapore to have satisfied the prescribed criteria;
“certified effective chemical hazard control measure” means —
(a)
any enclosed or automated system; or
(b)
any modification to machine, equipment or process,
which has been certified by the Standards, Productivity and Innovation Board or the National University of Singapore to have satisfied the prescribed criteria;
“certified effective engineering noise control measure” means —
(a)
any detachable personnel acoustic enclosure;
(b)
any acoustic barrier or shield;
(c)
any acoustic absorption device; or
(d)
any modification to machine, equipment or process,
which has been certified by the Standards, Productivity and Innovation Board or the National University of Singapore to have satisfied the prescribed criteria;
“certified effective noise control device” means —
(a)
any acoustic enclosure for machine, equipment or process;
(b)
any acoustic silencer or muffler;
(c)
any vibration absorption, isolation or damping device; or
(d)
any active noise control device,
which has been certified by the Standards, Productivity and Innovation Board or the National University of Singapore to have satisfied the prescribed criteria;
“certified energy-efficient equipment” means —
(a)
any air-conditioning system;
(b)
any boiler;
(c)
any water pumping system;
(d)
any washing or dry-cleaning machine system;
(e)
any refrigeration system;
(f)
any lift or escalator; and
(g)
any instant hot water system,
which has been certified by a professional engineer registered under the Professional Engineers Act (Cap. 253) to be more energy-efficient than the equipment which it replaces;
“certified energy-saving equipment” means —
(a)
any solar heating or cooling system;
(b)
any solar energy collection system;
(c)
any heat recovery system;
(d)
any power factor controller;
(e)
any high efficiency electric motor;
(f)
any variable speed drive motor control system;
(g)
any high frequency lighting system;
(h)
any computerised energy management system; and
(i)
any other energy-saving equipment or device,
which has been certified by the Standards, Productivity and Innovation Board to be an energy-saving equipment;
“certified low-decibel machine, equipment or system” means —
(a)
any concrete crusher or splitter;
(b)
any plastic granulator or crusher;
(c)
any automatic sawing machine;
(d)
any metal press or stamping machine;
(e)
any machine with active noise control feature; or
(f)
any other machine, equipment or system,
which has been certified by the Standards, Productivity and Innovation Board or the National University of Singapore to have satisfied the prescribed criteria;
“certified machine, equipment or system which reduces or eliminates exposure to chemical risk” means —
(a)
any water-based degreasing machine or system;
(b)
any automated bagging or packing machine or system;
(c)
any automated degreasing machine or system; or
(d)
any other machine, equipment or system,
which has been certified by the Standards, Productivity and Innovation Board or the National University of Singapore to have satisfied the prescribed criteria;
“computer” means any computer used for automatic data processing and includes any part thereof;
“efficient pollution control equipment or device” means any equipment or device for the purposes of preventing, controlling or reducing air pollution or water pollution which satisfies the prescribed criteria;
“existing vehicle” means any goods vehicle or bus using diesel oil as fuel, which —
(a)
is not a vehicle registered under the RU index marks;
(b)
is deregistered not later than one year before the last day on which a renewal of registration licence can be issued under the Road Traffic Act (Cap. 276) in respect of the vehicle; and
(c)
has, unless the vehicle has been exempted from obtaining a certificate of entitlement, at the date of deregistration of the vehicle —
(i)
at least one year remaining in its certificate of entitlement; or
(ii)
a certificate of entitlement which can be renewed after its expiration;
“goods vehicle” means any motor vehicle constructed or adapted for use for the carriage of goods;
“new vehicle” means any new goods vehicle or new bus which —
(a)
is registered within one month before, or within 6 months after, the deregistration of the existing vehicle; and
(b)
bears an index mark which is the same as that of the index mark of the existing vehicle, and for this purpose, where the new goods vehicle and the existing vehicle have a maximum laden weight exceeding 3.0 metric tons but not exceeding 3.5 metric tons, the new goods vehicle shall be deemed to bear an index mark which is the same as that of the existing vehicle;
“website” means a collection of programmes, data and images which is accessible over the Internet or any network using a browser or any other form of access.
[15/83; 13/84; 7/85; 1/90; 28/96; 31/98; 32/99; 24/2000; 18/2002; 37/2002]
(16)  For the purpose of subsections (1) and (13A), machinery or plant shall be deemed not to include the following motor vehicles within the meaning of the Road Traffic Act (Cap. 276):
(a)
a motor car;
(b)
a motor cycle;
(c)
a goods vehicle the maximum weight of which laden does not exceed 3,000 kilograms.
Writing-down allowances for intellectual property rights
19B.
—(1)  Subject to this section, where a company carrying on a trade or business has incurred on or after 1st November 2003 capital expenditure in acquiring any intellectual property rights for use in that trade or business, writing-down allowances in respect of that expenditure shall be made to it during a writing-down period of 5 years beginning with the year of assessment relating to the basis period in which that expenditure is incurred.
[24/2001; 21/2003]
(2)  The writing-down allowances to be made to a company under this section for any year of assessment shall be an amount equal to 20% of the capital expenditure incurred by it on the acquisition of the intellectual property rights.
[24/2001; 21/2003]
(2A)  The writing-down allowances to be made to a company under this section shall be allowed only if —
(a)
there is an undertaking by the company that it is an assignee of the intellectual property rights; and
(b)
the claim is made by the company in such manner and subject to such conditions as the Comptroller may require.
[21/2003]
(2B)  The Minister or such person as he may appoint may in any particular case waive the requirement under subsection (2A) in respect of any intellectual property rights acquired on or after 17th February 2006, subject to such conditions as he may impose.
(3)  Any capital expenditure incurred on the acquisition of any intellectual property rights by a company before the commencement of its trade or business shall be treated for the purpose of this section as if it had been incurred by it on the first day it commences that trade or business.
[24/2001; 21/2003]
(4)  Where writing-down allowances have been made to any company under this section in respect of any intellectual property rights and, before the end of the writing-down period, any of the following events occurs:
(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,
no writing-down allowance in respect of the intellectual property rights shall be made to that company for the year of assessment relating to the basis period in which the event occurs or for any subsequent year of assessment, and any writing-down allowances made under subsection (1) 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.
[24/2001; 21/2003]
(5)  Where a company to whom writing-down allowances have been made under subsection (1) in respect of any intellectual property rights sells, transfers or assigns all or any part of those rights after the writing-down period, there shall be made on the company for the year of assessment relating to the basis period in which the sale, transfer or assignment occurs, a charge in an amount equal to the price which the rights were sold, transferred or assigned or in an amount equal to the capital expenditure incurred in acquiring the rights, whichever is the less.
[24/2001; 21/2003]
(6)  For the purposes of subsection (5), where there is more than one sale, transfer or assignment of any part of any intellectual property rights, the amount of the capital expenditure incurred in acquiring the intellectual property rights for the year of assessment relating to the basis period in which the sale, transfer or assignment of that part of the rights occurs shall be ascertained in accordance with the formula
where A
is the capital expenditure incurred in acquiring the intellectual property rights; and
B
is the total amount of any charges made under this section in any previous years of assessment in respect of that expenditure.
(6A)  Unless otherwise provided in this Act or the Economic Expansion Incentives (Relief from Income Tax) Act (Cap. 86), where, in the basis period for any year of assessment, the trade or business, in which the intellectual property rights are used, produces income that is exempt from tax as well as income chargeable with tax, the allowances 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.
(6B)  Unless otherwise provided in this Act or the Economic Expansion Incentives (Relief from Income Tax) Act, where, in the basis period for any year of assessment, the trade or business, in which the intellectual property rights are used, produces income that is exempt from tax as well as income chargeable with tax, and any charge under subsection (4) or (5) arises to be made, such proportion of that charge shall be exempt from tax as appears reasonable to the Comptroller in the circumstances.
(7)  For the purpose of this section, any sale, transfer or assignment of any intellectual property rights which occurs after the date on which the trade or business of a company permanently ceases shall be deemed to have occurred immediately before the cessation.
[24/2001; 21/2003]
(8)  Notwithstanding the repeal of section 19B by the Income Tax (Amendment) Act 2001 (Act 24 of 2001), the repealed section 19B shall continue to apply and have effect to any approved know-how or patent rights for which writing-down allowances had been made before the repeal as if that Act had not been enacted.
[24/2001]
(9)  Notwithstanding the amendment of section 19B by the Income Tax (Amendment) Act 2003 (Act 21 of 2003), section 19B in force immediately before 1st November 2003 shall continue to apply and have effect to any intellectual property rights approved before that date.
[21/2003]
(10)  No writing-down allowance under subsection (1) shall be made for any capital expenditure incurred in respect of intellectual property rights acquired after 31st October 2008.
(11)  In this section —
“capital expenditure” does not include legal fees, registration fees, stamp duty and other costs related to the acquisition of any intellectual property rights;
“intellectual property rights” means the right to do or authorise the doing of anything which would, but for that right, be an infringement of any patent, copyright, trademark, registered design, geographical indication, lay-out design of integrated circuit, trade secret or information that has commercial value.
[24/2001; 21/2003]
Writing-down allowances for approved cost-sharing agreement for research and development activities
19C.
—(1)  Subject to this section, where a person carrying on a trade or business has incurred expenditure under any cost-sharing agreement entered into and approved on or after 17th February 2006, in respect of research and development activities for the purposes of that trade or business (referred to in this section as the relevant trade or business), he shall, subject to such conditions as may be imposed by the Minister or such person as he may appoint, be entitled to a writing-down allowance of 100% of that expenditure in the year of assessment relating to the basis period in which that expenditure was incurred.
(2)  The Minister or such person as he may appoint may specify the maximum amount of expenditure in respect of which writing-down allowances are to be made under subsection (1).
[26/93]
(3)  No writing-down allowance shall be made under subsection (1) to any person in respect of any payment or contribution paid by him for the right to become a party to any existing approved cost-sharing agreement.
(5)  Any expenditure incurred by a person under any approved cost-sharing agreement before the commencement of his trade or business shall be treated for the purpose of this section as if it had been incurred by him on the first day he commences that trade or business.
(6)  Where a person to whom writing-down allowances have been made under this section —
(a)
sells, assigns or otherwise disposes of any right under any approved cost-sharing agreement to which he is a party;
[24/2001; 21/2003]
(b)
sells, assigns or otherwise disposes of the whole or part of any technology or know-how developed from the research and development activities carried out under any approved cost-sharing agreement to which he is a party;
(c)
receives any consideration from any other person for permitting that other person to become a party to any approved cost-sharing agreement to which he is a party; or
(d)
receives any consideration from the disposal of any machinery, plant or building acquired under any approved cost-sharing agreement to which he is a party,
the amount or value of any consideration shall be treated as a trading receipt of the relevant trade or business for the year of assessment which relates to the basis period in which the event in paragraph (a), (b), (c) or (d) occurs.
(7)  For the purpose of subsection (6), the amount or value of the consideration to be treated as a trading receipt shall not exceed the amount of writing-down allowance made under this section.
(8)  Where no writing-down allowances have been made to any person in respect of expenditure incurred by him by virtue of subsection (2) or in respect of any payment or contribution made by him by virtue of subsection (3), the Minister may for the purposes of subsection (6) exempt such part of the amount or value of the consideration as he thinks fit.
(10)  Any event referred to in subsection (6) which occurs after the date on which the relevant trade or business permanently ceases shall be deemed to have occurred immediately before the cessation.
(11)  Where a person to whom writing-down allowances have been made under this section is entitled to royalty or other payments in one lump sum or otherwise for the use of or right to use any technology or know-how developed from the research and development activities carried out under any approved cost-sharing agreement, such royalty or payments shall be deemed to be income derived from Singapore for the year of assessment which relates to the basis period in which the person is entitled to the royalty or payments, as the case may be.
(11A)  Unless otherwise provided in this Act or the Economic Expansion Incentives (Relief from Income Tax) Act (Cap. 86), where, in the basis period for any year of assessment, the relevant trade or business produces income that is exempt from tax as well as income chargeable with tax, the allowances 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.
(11B)  Unless otherwise provided in this Act or the Economic Expansion Incentives (Relief from Income Tax) Act, where, in the basis period for any year of assessment, the relevant trade or business, produces income that is exempt from tax as well as income chargeable with tax, and an event referred to in subsection (6)(a), (b), (c) or (d) occurs, such proportion of any amount or value of any consideration treated as a trading receipt under that subsection shall be exempt from tax as appears reasonable to the Comptroller in the circumstances.
(11C)  Notwithstanding the provisions of this section, section 19C in force immediately before 17th February 2006 shall continue to apply and have effect in relation to any approved cost-sharing agreement entered into before that date in respect of research and development activities.
(12)  In this section —
“approved” means approved by the Minister or such person as he may appoint;
“cost-sharing agreement” means any agreement or arrangement made by 2 or more persons to share the expenditure of research and development activities to be carried out under the agreement or arrangement.
Writing-down allowance for IRU
19D.
—(1)  Subject to this section, where a person carrying on a trade, business or profession has incurred capital expenditure during or after the basis period for the year of assessment 2004 for the acquisition of an indefeasible right to use any international telecommunications submarine cable system (referred to in this section as Indefeasible Right of Use or IRU) for the purposes of that trade, business or profession (referred to in this section as the relevant trade, business or profession), writing-down allowances computed in accordance with subsection (3) shall be made to him, on due claim, in respect of that capital expenditure during the writing-down period.
[21/2003]
(2)  The writing-down period in respect of an IRU shall be the number of years for which the IRU is acquired commencing with the year of assessment relating to the basis period in which the capital expenditure for the acquisition of the IRU is incurred.
[21/2003]
(3)  For the purposes of this section, the writing-down allowances in respect of an IRU shall be determined by the formula
where A
is the amount of capital expenditure incurred for the acquisition of the IRU; and
B
is the writing-down period for the IRU.
(4)  Notwithstanding anything in this section, no writing-down allowance shall be granted to any person under subsection (1) in any year of assessment if the international telecommunications submarine cable system is not in use at the end of the basis period for that year of assessment by that person in the trade, business or profession carried on by him.
[21/2003]
(5)  Any capital expenditure incurred for the acquisition of any IRU by a person before the commencement of his trade, business or profession shall be treated for the purpose of this section as if it had been incurred by him on the first day he commences that trade, business or profession.
[21/2003]
(6)  Where writing-down allowances in respect of any IRU have been made to any person under this section and, before or at the end of the writing-down period for the IRU, any of the following events occurs:
(a)
the IRU comes to an end without subsequent renewal by the person;
[21/2003]
(b)
the person permanently ceases to carry on the relevant trade, business or profession;
(c)
the person sells, transfers or assigns all the IRU or so much of it as he still owns; or
(d)
the person sells, transfers or assigns part of the IRU and the amount or value of any consideration less any decommissioning cost (referred to in this section as the consideration) for the sale, transfer or assignment is not less than the amount of capital expenditure remaining unallowed for the IRU,
no writing-down allowance in respect of the IRU shall be made to the person for the year of assessment relating to the basis period in which the event occurs or for any subsequent year of assessment.
[21/2003]
(7)  Where an IRU remains with any person after the date on which it permanently ceases to be used by the person for the relevant trade, business or profession, the IRU shall be deemed to have been sold by the person at the open-market price on the date of permanent cessation of use.
[21/2003]
(8)  Where writing-down allowances in respect of any IRU have been made to any person under this section and, before or at the end of the writing-down period for the IRU, any of the following events occurs:
(a)
the IRU comes to an end without subsequent renewal by the person;
(b)
the person permanently ceases to carry on the relevant trade, business or profession; or
(c)
the person sells, transfers or assigns all the IRU or so much of it as he still owns and the consideration for the sale, transfer or assignment is less than the amount of capital expenditure remaining unallowed for the IRU,
there shall be made to the person for the year of assessment relating to the basis period in which the event occurs, a balancing allowance equal to —
(i)
in the case where the amount of capital expenditure remaining unallowed for the IRU exceeds the consideration for the sale, transfer or assignment of the IRU, the excess; or
(ii)
in any other case, the amount of capital expenditure remaining unallowed for the IRU.
[21/2003]
(9)  Where writing-down allowances in respect of any IRU have been made to any person under this section and the person sells, transfers or assigns all or any part of the IRU and the consideration for the sale, transfer or assignment of the IRU exceeds the amount of capital expenditure remaining unallowed for the IRU, if any, there shall be made on the person, a balancing charge, which shall be based on an amount equal to —
(a)
the excess of the consideration for the sale, transfer or assignment of the IRU over the amount of capital expenditure remaining unallowed for the IRU; or
(b)
the consideration for the sale, transfer or assignment of the IRU, where the amount of capital expenditure remaining unallowed for the IRU is nil,
and the balancing charge shall be deemed as income for the year of assessment relating to the basis period in which the sale, transfer or assignment of the IRU occurs.
[21/2003]
(10)  Where writing-down allowances in respect of any IRU have been made to any person under this section and the person sells, transfers or assigns any part of the IRU, and the consideration for the sale, transfer or assignment of the IRU is less than the amount of capital expenditure remaining unallowed for the IRU, the amount of any writing-down allowances made in respect of the IRU for the year of assessment relating to the basis period in which the sale, transfer or assignment of the IRU occurs or any subsequent year of assessment shall be the amount determined by the formula
where C
is the amount of capital expenditure remaining unallowed at the time of the sale, transfer or assignment of the IRU;
D
is the consideration for the sale, transfer or assignment of that part of the IRU; and
E
is the number of complete years of the writing-down period remaining at the beginning of the year of assessment relating to the basis period in which the sale, transfer or assignment of the IRU occurs,
and so on for any subsequent sale, transfer or assignment of the IRU.
[21/2003]
(11)  Notwithstanding subsections (9) and (10), the total amount on which a balancing charge is made in respect of any capital expenditure incurred for the acquisition of an IRU shall not exceed the total writing-down allowances actually made for the IRU in respect of that capital expenditure, less, if a balancing charge has previously been made in respect of that capital expenditure, the amount on which that balancing charge was made.
[21/2003]
(12)  Where the sale, transfer or assignment of all or part of any IRU is made at less than the open-market price, then for the purpose of determining the amount of any balancing allowance or balancing charge, the event shall be treated as if it had given rise to sale, transfer or assignment moneys of an amount equal to the open-market price of the IRU.
[21/2003]
(12A)  Unless otherwise provided in this Act or the Economic Expansion Incentives (Relief from Income Tax) Act (Cap. 86), where, in the basis period for any year of assessment, the relevant trade, business or profession produces income that is exempt from tax as well as income chargeable with tax, the allowances for that year of assessment shall be made against each income in that year of assessment in such proportion as appears reasonable to the Comptroller in the circumstances.
(12B)  Unless otherwise provided in this Act or the Economic Expansion Incentives (Relief from Income Tax) Act, where, in the basis period for any year of assessment, the relevant trade, business or profession produces income that is exempt from tax as well as income chargeable with tax, and any balancing allowance or balancing charge arises to be made —
(a)
the balancing allowance shall be made against each income for that year of assessment in such proportion as appears reasonable to the Comptroller in the circumstances; and
(b)
such proportion of the balancing charge shall be exempt from tax as appears reasonable to the Comptroller in the circumstances.
(13)  In this section —
“capital expenditure” does not include legal fees, registration fees, stamp duty and other costs related to the acquisition of any IRU;
“capital expenditure remaining unallowed”, in relation to any IRU, means the amount of capital expenditure incurred for the acquisition of the IRU less —
(a)
any writing-down allowances made in respect of that capital expenditure for the years of assessment before the year of assessment relating to the basis period in which any event referred to in subsection (6), (8), (9) or (10) occurs; and
(b)
the consideration for any prior sale, transfer or assignment by the person who incurred the capital expenditure of any part of the IRU acquired by the capital expenditure;
“international telecommunications submarine cable system” means an international submarine cable that is laid in the sea and includes its cable landing station and any other equipment ancillary to the submarine cable system;
“open-market price”, in relation to any IRU, means —
(a)
the price which the IRU would have fetched if sold in the open market at the time any event referred to in subsection (6), (8), (9) or (10) occurs; or
(b)
where the Comptroller is satisfied by reason of the special nature of any IRU that it is not practicable to determine the open-market price, such other value as appears to him to be reasonable in the circumstances.
[21/2003]
(14)  For the purposes of this section, any sale, transfer or assignment of any IRU which occurs after the date on which a relevant trade, business or profession permanently ceases shall be deemed to have occurred immediately before the cessation.
[21/2003]
Balancing allowances and charges for machinery or plant
20.
—(1)  Except as provided in this section, where at any time after the setting up and on or before the permanent discontinuance of a trade, profession or business, any event occurs whereby machinery or plant in respect of which allowances under section 19 or 19A have been made to a person carrying on a trade, profession or business —
(a)
ceases to belong to that person (whether on a sale of the machinery or plant or in any other circumstances of any description); or
(b)
while continuing to belong to that person, permanently ceases to be used for the purpose of a trade, profession or business carried on by him in Singapore (whether by reason of the discontinuance of the trade, profession or business, or discontinuance of use of such machinery or plant in a trade, profession or business which continues to be carried on in Singapore),
an allowance or charge, to be known as a balancing allowance or a balancing charge, shall in the circumstances mentioned in this section be made to or, as the case may be, on that person for the year of assessment in the basis period for which that event occurs.
(1A)  Where the property in machinery or plant passes at less than the open-market price, then for the purpose of determining the amount of any balancing allowance or balancing charge the event shall be treated as if it had given rise to sale moneys of an amount equal to the open-market price of the machinery or plant.
(2)  Where machinery or plant continues to belong to that person after the date on which it permanently ceases to be used for the purposes of a trade, profession or business carried on by him in Singapore, it shall be deemed to have been sold on the date of permanent cessation of use at the open-market price on that date.
(2A)  Where there are no sale, insurance, salvage or compensation moneys or where the amount of the capital expenditure of the person in question on the provision of the machinery or plant still unallowed as at the time of the event exceeds those moneys, a balancing allowance shall be made, and the amount thereof shall be the amount of the expenditure still unallowed as aforesaid or, as the case may be, the excess thereof over those moneys.
(3)  If the sale, insurance, salvage or compensation moneys exceed the amount, if any, of the said expenditure still unallowed as at the time of the event, a balancing charge shall be made, and the amount on which it is made shall be an amount equal to the excess or, where the said amount still unallowed is nil, to those moneys.
(4)  Notwithstanding anything in subsection (3), in no case shall the amount on which a balancing charge is made on a person exceed —
(a)
the aggregate of the initial allowance, if any, and the annual allowances, if any, made to him under section 19 in respect of the expenditure in question; and
(b)
the special allowances, if any, made to him under section 19A in respect of the expenditure in question.
[13/84]
(5)  Notwithstanding anything in this section but subject to subsection (6A), where a balancing allowance or balancing charge falls to be made under subsection (1) in respect of a motor car to which section 19(3) applies, the sum to be taken in lieu of the open-market price or sale, insurance, salvage or compensation moneys for the purpose of calculating such balancing allowance or charge shall be ascertained in accordance with the formula
where A
is the open-market price or sale, insurance, salvage or compensation moneys in respect of the motor car; and
B
is the capital expenditure incurred in respect of the motor car.
(6)  Notwithstanding anything in this section, no balancing allowance shall be made in respect of a motor car within the meaning of section 19(4)(a) which is not, for any basis period after the basis period for the year of assessment 1981, registered as a business service passenger vehicle for the purposes of the Road Traffic Act (Cap. 276).
[9/80; 1/98]
(6A)  Unless otherwise provided in this Act or the Economic Expansion Incentives (Relief from Income Tax) Act (Cap. 86), where, in the basis period for any year of assessment, the trade, profession or business, for which purpose the machinery or plant is provided, produces income that is exempt from tax as well as income chargeable with tax, and any balancing allowance or balancing charge arises to be made —
(a)
the balancing allowance shall be made against each income for that year of assessment in such proportion as appears reasonable to the Comptroller in the circumstances; and
(b)
such proportion of the balancing charge shall be exempt from tax as appears reasonable to the Comptroller in the circumstances.
(7)  In this section, “open-market price”, in relation to any machinery or plant, means the price which the machinery or plant would have fetched if sold in the open market at the time of the event in question; except that where the Comptroller is satisfied by reason of the special nature of any machinery or plant that it is not practicable to determine an open-market price, he may adopt such other value as appears to him to be reasonable in the circumstances.
Replacement of machinery or plant
21.
—(1)  Where machinery or plant in the case of which any of the events mentioned in section 20(1) has occurred is replaced by the owner thereof and a balancing charge falls to be made on him by reason of that event or, but for this section, would have fallen to be made on him by reason thereof, then, if by notice in writing to the Comptroller he so elects, this section shall have effect.
(2)  If the amount on which the charge would have been made is greater than the capital expenditure on providing the new machinery or plant —
(a)
the charge shall be made only on an amount equal to the difference;
[37/75; 9/80; 5/83]
(b)
no initial allowance, no balancing allowance and no annual allowance shall be made or allowed in respect of the new machinery or plant or the expenditure on the provision thereof; and
(c)
in considering whether any, and if so what, balancing charge falls to be made in respect of the expenditure on the new machinery or plant, there shall be deemed to have been made in respect of that expenditure an initial allowance equal to the full amount of that expenditure.
(3)  If the capital expenditure on providing the new machinery or plant is equal to or greater than the amount on which the charge would have been made —
(a)
the charge shall not be made;
(b)
the amount of any initial allowance in respect of the said expenditure shall be calculated as if the expenditure had been reduced by the amount on which the charge would have been made;
(c)
in considering what annual allowance is to be made in respect of the new machinery or plant, there shall be left out of account a proportion of the machinery or plant equal to the proportion which the amount on which the charge would have been made bears to the amount of the said expenditure; and
(d)
in considering whether any, and if so what, balancing allowance or balancing charge falls to be made in respect of the new machinery or plant, the initial allowance in respect thereof shall be deemed to have been increased by an amount equal to the amount on which the charge would have been made.
(4)  This section shall not apply to the provision of any new motor car for which no allowance is allowed by virtue of section 19(5).
[32/99]
(5)  For the purpose of this section, where the capital expenditure incurred in providing a new motor car registered outside Singapore and used exclusively outside Singapore exceeds $35,000, the expenditure incurred shall be deemed to be $35,000.
[32/99]
Expenditure on machinery or plant
22.  Expenditure on the provision of machinery or plant shall include capital expenditure on alterations to an existing building incidental to the installation of that machinery or plant for the purposes of the trade, profession or business.
Order of set-off of allowances
22A.
—(1)  Where for any year of assessment the allowances consist of allowances a person is entitled to or allowances made to a person under section 16, 17, 18A (repealed), 19, 19A, 19B, 19C, 19D or 20 for that year of assessment and any previous year of assessment added to and deemed to form part of the corresponding allowance for the year of assessment under section 23(1), the allowances shall be deducted in the following order:
(a)
firstly, any balance of allowance from any previous year of assessment added to and deemed to form part of the corresponding allowance for the year of assessment under section 23(1); and
(b)
secondly, any allowance for that year of assessment falling to be made under section 16, 17, 18A (repealed), 19, 19A, 19B, 19C, 19D or 20.
[21/2003]
(2)  For the purposes of subsection (1)(a), the balance of allowance for the earliest year of assessment shall be deemed to have been deducted first, followed by the balance of allowance for the next earliest year of assessment, and so on.
[21/2003]
Carry forward of allowances
23.
—(1)  Where, in any year of assessment, full effect cannot, by reason of an insufficiency of gains or profits chargeable for that year of assessment, be given to any allowance falling to be made under section 16, 17, 18A (repealed), 19, 19A, 19B, 19C, 19D or 20, then, so long as the person entitled thereto continues to carry on the trade, profession or business in respect of the gains or profits of which the allowance falls to be made, the balance of the allowance shall, subject to subsection (3), be added to, and be deemed to form part of, the corresponding allowance, if any, for the next succeeding year of assessment, and, if no such corresponding allowance falls to be made for that year, shall be deemed to constitute the corresponding allowance for that year, and so on for subsequent years of assessment.
[28/80; 26/93; 37/2002; 21/2003]
(2)  Where any person entitled to the allowances under sections 16 and 17 in respect of an industrial building or structure derives income from the letting of that building or structure, subsection (1) shall, in relation to the allowances under those sections, apply to him so long as he continues to derive such income, whether or not he is carrying on a business in respect of the letting of the building or structure.
[13/84]
(3)  Where any allowance for any year of assessment falling to be made to any person under section 16, 17, 18A (repealed), 19, 19A, 19B, 19C, 19D or 20 is deducted against income of the person from other sources under section 35(1), transferred to a claimant company under section 37C or to a spouse under section 37D or 37F, or deducted against income for the immediate preceding year of assessment under section 37E, the amount of such allowance shall be deducted from the balance in subsection (1).
[21/2003]
(4)  No balance shall be added to and be deemed to form part of the corresponding allowance, if any, to be given to a company under subsection (1) unless the Comptroller is satisfied that the shareholders of the company on the last day of the year in which the allowances arose were substantially the same as the shareholders of the company on the first day of the year of assessment in which such allowances would otherwise be available under this section and such a balance shall not be allowed in any subsequent year of assessment.
[26/73]
(5)  The Minister or such person as he may appoint may, where there is a substantial change in the shareholders of a company and he is satisfied that such change is not for the purpose of deriving any tax benefit or obtaining any tax advantage, exempt that company from the provisions of subsection (4).
[3/89; 11/94]
(6)  Upon such exemption the balance of the allowances referred to in subsection (1) may be added to and be deemed to form part of the corresponding allowance to be given to that company under that subsection but only for deduction against the gains or profits derived from the same trade or business in respect of which the allowances would have been made.
[3/89; 11/94]
(7)  For the purpose of subsection (4) —
(a)
the shareholders of a company at any date shall not be deemed to be substantially the same as the shareholders at any other date unless, on both those dates, not less than 50% of the total number of issued shares of the company are held by or on behalf of the same persons;
(b)
shares in a company held by or on behalf of another company shall be deemed to be held by the shareholders of the last-mentioned company; and
(c)
shares held by or on behalf of the trustee of the estate of a deceased shareholder or by or on behalf of the person entitled to those shares as beneficiaries under the will or any intestacy of a deceased shareholder shall be deemed to be held by that deceased shareholder.
[26/73]
(8)  For the purpose of subsection (7), where any part of a share of a shareholder is not fully paid up, there shall be disregarded a proportion equal to
where A
is the amount that has not been paid in respect of the share; and
B
is the total amount payable in respect of the share.
Special provisions as to certain sales
24.
—(1)  This section, except subsection (5), shall have effect in relation to any sale of any property where the buyer is a body of persons over whom the seller has control, or the seller is a body of persons over whom the buyer has control, or both the seller and buyer are bodies of persons and some other person has control over both of them, and the sale is not one to which section 33 applies.
(2)  References in subsection (1) to a body of persons include references to a company or a partnership.
(3)  Where the parties to the sale by notice in writing to the Comptroller so elect —
(a)
the like consequences shall ensue for the purposes of sections 16 to 21 as would have ensued if the property had been sold —
(i)
in the case of an industrial building or structure, for a sum equal to the residue of expenditure on the construction or purchase (pursuant to a sale and purchase agreement entered into on or after 1st January 2006) of that building or structure immediately before the sale, computed in accordance with section 17;
(ii)
in the case of machinery or plant, for a sum equal to the amount of the expenditure on the provision thereof still unallowed immediately before the sale, computed in accordance with section 20;
(iii)
in the case of an Indefeasible Right of Use, for a sum equal to the amount of capital expenditure remaining unallowed immediately before the sale, computed in accordance with section 19D;
(b)
notwithstanding anything in section 19, where the sale is a sale of machinery or plant, no initial allowance shall be made to the buyer;
(c)
notwithstanding anything in section 19A, where the sale is a sale of machinery or plant, the special allowances provided under that section shall continue to be available as if no sale had taken place;
(d)
notwithstanding anything in section 19D, where the sale is a sale of an Indefeasible Right of Use, the writing-down allowances provided under that section shall continue to be available as if no sale had taken place; and
(e)
notwithstanding anything in the preceding provisions of this section or in sections 17, 19D and 20, such balancing charge, if any, shall be made on the buyer on any event occurring after the date of the sale as would have fallen to be made on the seller if the seller had continued to own the property and had done all such things and been allowed all such allowances and deductions in connection therewith as were done by or allowed to the buyer.
[13/84; 21/2003]
(4)  No election may be made under subsection (3) unless before the sale in the case of the seller and after the sale in the case of the buyer the property is used in the production of income chargeable under the provisions of this Act and unless the machinery or plant was not leased by the seller to the buyer before the sale.
[13/84]
(5)  Where a change occurs in a partnership of persons carrying on any trade, business or profession by reason of retirement or death, or the dissolution of the partnership as to one or more of the partners, or the admission of a new partner, and where no election is made under subsection (3), any property of the partnership shall be treated as if the property had been sold —
(a)
to all the remaining partners and new partners of the partnership on the date the change occurs; and
(b)
at the open-market price.
(6)  In subsection (5), “open-market price” has the same meaning as in section 20(7).
25.  [Spent]