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On 24/09/2017, you requested the version as published on or before 10/08/2001.
REPUBLIC OF SINGAPORE
GOVERNMENT GAZETTE
ACTS SUPPLEMENT
Published by Authority

NO. 26] Friday, August 10 [2001

The following Act was passed by Parliament on 25th July 2001 and assented to by the President on 30th July 2001:—
Income Tax (Amendment) Act 2001

(No. 24 of 2001)


I assent.

S R NATHAN,
President.
30th July 2001.
Date of Commencement: 31st January 2001
Date of Commencement: 10th August 2001
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 2001.
(2)  Section 8(b) shall be deemed to have come into operation on 1st October 2000.
(3)  Sections 10(a) and (c) and 13 shall have effect for the year of assessment 2001 and subsequent years of assessment.
(4)  Sections 7 (in relation to new section 10L), 8 (d), 11 (in relation to new section 13M), 14, 18, 19, 20, 21, 22, 23, 25 (a), 26 (a), 27 (a), 28, 29, 30 (a) and 31 shall have effect for the year of assessment 2002 and subsequent years of assessment.
Amendment of section 2
2.  Section 2(1) of the Income Tax Act (referred to in this Act as the principal Act) is amended —
(a)
by inserting, immediately after the definition of “incapacitated person”, the following definition:
“ “life annuity” means an annuity payable under a policy issued to an SRS member for a term ending with, or at a time ascertainable only by reference to, the end of his life;”;
(b)
by inserting, immediately after the definition of “prescribed”, the following definition:
“ “prescribed retirement age” has the same meaning as in the Retirement Age Act (Cap. 274A);”; and
(c)
by inserting, immediately after the definition of “return”, the following definitions:
“ “SRS account” means an account opened with an SRS operator by an SRS member;
“SRS contribution cap”, in relation to an SRS member, means the maximum contribution prescribed under section 10L that may be made by the member to his SRS account in any year under the SRS;
“SRS member” means a member of the Supplementary Retirement Scheme;
“SRS operator” means any company approved by the Minister, or such other person as he may appoint, for the purposes of the Supplementary Retirement Scheme;
“Supplementary Retirement Scheme” or “SRS” means the Supplementary Retirement Scheme established by regulations made under section 10L;”.
Amendment of section 10
3.  Section 10 of the principal Act is amended —
(a)
by inserting, immediately after subsection (6A), the following subsection:
(6B)  Subsection (6) shall not apply to any annuity purchased under the SRS.”; and
(b)
by inserting, immediately after subsection (15), the following subsection:
(16)  Any payment accrued to a self-employed woman under section 9(2) of the Children Development Co-Savings Act 2001 (Act 13 of 2001) shall be deemed to be income from her trade, business, profession or vocation chargeable to tax under subsection (1)(a).”.
Amendment of section 10I
4.  Section 10I (1) of the principal Act is amended by deleting the words “and 10K” and substituting the words “, 10K and 10M”.
Amendment of section 10J
5.  Section 10J (7) of the principal Act is amended —
(a)
by inserting, immediately after the word “applies” in the 4th line of paragraph (b), the words “or any purchase or acquisition of shares or stocks of a preferential nature to which section 10M applies”; and
(b)
by deleting the full-stop at the end of paragraph (d) and substituting a semi-colon, and by inserting immediately thereafter the following paragraph:
(e)
“shares” includes stocks but does not include shares or stocks of a preferential nature.”.
Amendment of section 10K
6.  Section 10K (5) (b) of the principal Act is amended by inserting, immediately after the words “section 10J (2)” in the 4th line, the words “or 10M”.
New sections 10L and 10M
7.  The principal Act is amended by inserting, immediately after section 10K, the following sections:
Withdrawals from Supplementary Retirement Scheme
10L.
—(1)  Where the amount of withdrawals made by an SRS member from his SRS account in any year exceeds the amount he contributed to his SRS account in that year, the excess amount withdrawn from his SRS account shall, subject to subsections (3), (6), (7), (8) and (9), be deemed to be income of the SRS member chargeable to tax under section 10(1)(g).
(2)  Except where a withdrawal is made by the Official Assignee or the trustee in bankruptcy of an SRS member who is a bankrupt or where a withdrawal is made under subsection (3), (4) or (8) or deemed to be withdrawn under subsection (6), (7) or (9), a penalty of 5% of the amount withdrawn which is deemed to be income of an SRS member under subsection (1) shall be payable by the SRS member and shall be deducted by the SRS operator from the amount so withdrawn.
(3)  Only 50% of the following withdrawals made by an SRS member from his SRS account shall be deemed to be income of the SRS member chargeable to tax under section 10(1)(g):
(a)
withdrawal of all the funds standing in his SRS account at the same time if the SRS member is neither a citizen of Singapore nor a Singapore permanent resident and has maintained his SRS account for a period of not less than 10 years from the date of his first contribution to his SRS account;
(b)
any withdrawal on or after the SRS member has attained the prescribed retirement age prevailing at the time when the SRS member made his first contribution to his SRS account; or
(c)
any withdrawal made on the ground that the SRS member is physically or mentally incapacitated from ever continuing in any employment, is found to be of unsound mind or is suffering from a terminal illness or disease.
(4)  Where any contribution made by an SRS member in any year to his SRS account exceeds his SRS contribution cap for that year (referred to in this section as “excess contribution”) —
(a)
the aggregate of the excess contribution and, unless the Comptroller otherwise directs, an amount equal to 5% of the excess contribution, to be compounded yearly in accordance with regulations made under this section; or
(b)
the total amount standing in his SRS account,
whichever amount is the lower, shall be withdrawn by the SRS member from his SRS account by 31st December of the year in which he has been notified by the Comptroller of the excess contribution; and that amount shall be deemed to be his income chargeable to tax under section 10(1)(g) for that year.
(5)  Where an SRS member is eligible to make a withdrawal under subsection (3)(b), all the funds (excluding any life annuity) standing in his SRS account shall be withdrawn not later than —
(a)
10 years from the prescribed retirement age prevailing at the time he made his first withdrawal under subsection (3)(b); or
(b)
10 years from the prescribed retirement age prevailing at any time,
whichever is earlier.
(6)  Upon the expiry of the earlier of the 2 periods referred to in subsection (5), any balance (excluding any life annuity and any amount not withdrawn under subsection (4)) remaining in the SRS account shall be deemed to be withdrawn by the SRS member and 50% of such balance shall be deemed to be his income chargeable to tax under section 10(1)(g) for the year in which the earlier of such periods expires.
(7)  Where an SRS member is eligible to make a withdrawal under subsection (3)(c), he shall withdraw all the funds (excluding any life annuity) standing in his SRS account not later than 10 years from the date he makes the first withdrawal; and upon the expiry of that period, any balance (excluding any life annuity and any amount not withdrawn under subsection (4)) remaining in his SRS account shall be deemed to be withdrawn by the SRS member and 50% of such balance shall be deemed to be his income chargeable to tax under section 10(1)(g).
(8)  Only 50% of any annuity payment made under a life annuity purchased by an SRS member under the SRS shall be deemed to be income of the SRS member chargeable to tax under section 10(1)(g) upon —
(a)
the expiry of the earlier of the 2 periods referred to in subsection (5);
(b)
the expiry of the period referred to in subsection (7); or
(c)
the closure of his SRS account on or after he has attained the prescribed retirement age prevailing at the time when he made his first contribution to his SRS account.
(9)  Where an SRS member dies, any sum standing in his SRS account shall be deemed to be withdrawn on the date of his death and 50% of the sum shall be deemed to be his income chargeable to tax under section 10(1)(g).
(10)  For the purposes of this section, the use of funds in his SRS account by an SRS member for investment in savings or investment products offered under the SRS and for disbursement of any charges in relation to the operation of his SRS account shall be deemed not to be a withdrawal from his SRS account.
(11)  The Minister may by regulations establish a Supplementary Retirement Scheme to provide for voluntary cash contributions by individuals to accounts operated by SRS operators so as to encourage individuals to save for their old age.
(12)  Without prejudice to the generality of subsection (11), regulations made under that subsection may provide for —
(a)
the opening and the type of account for any SRS member into which contributions may be made;
(b)
the SRS contribution cap, the mode and manner of the contributions and withdrawals that can be made by any SRS member;
(c)
the method of valuation of investment products acquired under the SRS;
(d)
the method of computing income deemed to accrue from excess contributions made by any SRS member;
(e)
the suspension or closure of SRS accounts and the circumstances in which the SRS accounts may be suspended or closed;
(f)
the terms and conditions governing the relationship between the Government, SRS operators, SRS members and the Comptroller under the SRS;
(g)
the purposes for which the contributions made under the SRS can be utilised and invested, the persons with whom investments may be made and the terms and conditions of the investment and withdrawal under the SRS;
(h)
the consequences for any contravention of the regulations, including making any act or omission in contravention of such regulations an offence and prescribing penalties for such offence;
(i)
the requirements and obligations to be observed by SRS members, SRS operators and financial product providers under the SRS; and
(j)
generally for giving full effect to or for carrying out the purposes of this section.
(13)  This section shall not apply to any SRS member whose SRS account is opened and closed within the same year.
Buyback of preferential shares
10M.  Section 10K shall apply in relation to any purchase or acquisition by a company resident in Singapore from its shareholders of shares or stocks of a preferential nature issued by it (referred to in this section as a buyback), and for the purpose of such application —
(a)
any reference to redemption of shares in that section shall be construed as a reference to a buyback of shares or stocks of a preferential nature; and
(b)
any reference to redeemable shares in that section shall be construed as a reference to shares or stocks of a preferential nature.”.
Amendment of section 13
8.  Section 13 of the principal Act is amended —
(a)
by inserting, immediately after paragraph (c) of subsection (1), the following paragraph:
(d)
any gains or profits, other than dividends derived from Singapore from which tax has been deducted under section 44, arising from sums standing in the SRS account of any SRS member except where section 10L(13) applies;”;
(b)
by deleting paragraph (g) of subsection (1) and substituting the following paragraph:
(g)
such income derived by the Singapore Exchange Derivatives Clearing Limited from the commencement of its business to 31st December 2003 as may be prescribed;”;
(c)
by deleting paragraph (u) of subsection (1) and substituting the following paragraph:
(u)
such interest derived during the period 1st January 2002 to 31st December 2004 by any person from the deposit of moneys of up to an aggregate amount of $100,000 in one or more of his POSB savings accounts with The Development Bank of Singapore Ltd;”; and
(d)
by deleting subsection (3).
Amendment of section 13F
9.  Section 13F (6) of the principal Act is amended by inserting, immediately after the word “Minister” in the definition of “approved”, the words “, or such other person as he may appoint,”.
Amendment of section 13J
10.  Section 13J of the principal Act is amended —
(a)
by inserting, immediately after the words “equal to” in the 3rd line of subsection (2)(a), the words “or exceeds”;
(b)
by deleting the word “or” at the end of subsection (3)(a);
(c)
by deleting the full-stop at the end of paragraph (b) of subsection (3) and substituting the word “; or”, and by inserting immediately thereafter the following paragraph:
(c)
which is derived by him for the release of his right or benefit to acquire shares in any qualifying company or in its holding company by reason of his resignation or termination of his employment with the qualifying company due to misconduct.”; and
(d)
by inserting, immediately after subsection (6), the following subsections:
(7)  For the purposes of this section and section 13L, where a company grants on or after 1st April 2001 any right or benefit to acquire shares under a tranche of a stock option scheme and any gains or profits derived by a qualifying employee from the exercise, assignment or release of the right or benefit granted under that tranche qualifies for tax exemption under this section as well as section 13L, the company shall opt for the tax exemption under this section or section 13L to apply in respect of the gains or profits relating to that tranche but not under both sections.
(8)  Where a company has opted under subsection (7) for tax exemption under this section to apply to the gains or profits in respect of a tranche of a stock option scheme, tax exemption under section 13L —
(a)
shall, subject to paragraph (b), not be available in respect of any right or benefit to acquire shares granted by the company under any tranche subsequent to that tranche under the stock option scheme; and
(b)
shall be available in respect of any right or benefit to acquire shares granted subsequent to the option by the company under any tranche under the stock option scheme only where the conditions for tax exemption under this section are not satisfied in respect of any such subsequent tranche granted.
(9)  Where a company has opted under subsection (7) for tax exemption under section 13L to apply to the gains or profits in respect of a tranche of a stock option scheme, tax exemption under this section shall not be available in respect of any right or benefit to acquire shares granted by the company under any tranche subsequent to that tranche under the stock option scheme.
(10)  Any option by a company under subsection (7) shall be irrevocable.”.
New sections 13K, 13L and 13M
11.  The principal Act is amended by inserting, immediately after section 13J, the following sections:
Exemption of certain dividends of Singapore Exchange Derivatives Clearing Limited
13K.
—(1)  Where any income of the Singapore Exchange Derivatives Clearing Limited has been exempted under section 13(1)(g), such income shall be credited to a special account to be kept by the company for the purposes of this section.
(2)  Section 13E shall apply, with the necessary modifications, in respect of any dividends paid out of the special account of the company.
Exemption of tax on gains or profits from company stock option scheme
13L.
—(1)  Where a qualifying employee derives any gains or profits in any year of assessment by the exercise, assignment or release, after the expiry of the minimum vesting period, of any right or benefit granted on or after 1st April 2001 to acquire shares in any qualifying company or in its holding company under a company stock option scheme, there shall, subject to this section and section 13J(7) to (10), be exempt from tax —
(a)
the first $2,000 of such gains or profits in that year of assessment as determined under subsection (2); and
(b)
25% of any amount of such gains or profits in that year of assessment exceeding $2,000 as determined under subsection (2).
(2)  The amount of gains or profits referred to in subsection (1) is —
(a)
where the price to be paid for the shares on the exercise, assignment or release of the right or benefit (referred to in this section as the exercise price) is equal to or exceeds the market value or, if it is not possible to determine such value, the net asset value of the shares at the time of the grant of the right or benefit, the amount as determined under section 10(5); or
(b)
where the exercise price of the shares are at a discount to the market value or, if it is not possible to determine such value, the net asset value of the shares at the time of the grant of the right or benefit, the amount as determined under section 10(5) less the amount of the discount.
(3)  The exemption under this section shall not apply to any amount of gains or profits deemed to be income of a person under section 10(5) —
(a)
to the extent that the amount, when aggregated with the amount of such deemed income previously derived by him and which qualifies for exemption under this section, exceeds $1 million;
(b)
which is derived by him on or after 1st January of the 10th year following the year in which he first derived such deemed income which qualified for exemption under this section; or
(c)
which is derived by him for the release of his right or benefit to acquire shares in any qualifying company or in its holding company by reason of his resignation or termination of his employment with the qualifying company due to misconduct.
(4)  The Minister may make regulations to provide generally for giving full effect to or for carrying out the purposes of this section.
(5)  In this section, unless the context otherwise requires —
“company stock option scheme”, in relation to a qualifying company or its holding company, means any scheme —
(a)
which satisfies the requirement of the minimum vesting period; and
(b)
where any stock option under the scheme is offered to at least 50% of the employees of the qualifying company during any calendar year, which is ascertained in accordance with the formula
where A
is the number of employees who are offered during a calendar year the right or benefit to acquire shares in the qualifying company or in its holding company and who are employees of that qualifying company at the time of such offer;
B
is the number of employees of the qualifying company on the last day of that calendar year;
C
is the number of part-time employees (other than non-executive directors) on the last day of that calendar year where the right or benefit to acquire shares in that qualifying company or in its holding company is not offered to any such employee for the whole of that calendar year, or nil where the right or benefit to acquire shares in that qualifying company or in its holding company is offered to any such employee during that calendar year;
D
is the number of full-time employees with less than one-year’s service (other than non-executive directors) on the last day of that calendar year where the right or benefit to acquire shares in that qualifying company or in its holding company is not offered to any such employee for the whole of that calendar year, or nil where the right or benefit to acquire shares in that qualifying company or in its holding company is offered to any such employee during that calendar year; and
E
is the number of employees engaged on contracts not exceeding 2 years (other than non-executive directors) on the last day of that calendar year where the right or benefit to acquire shares in that qualifying company or in its holding company is not offered to any such employee for the whole of that calendar year, or nil where the right or benefit to acquire shares in that qualifying company or in its holding company is offered to any such employee during that calendar year;
“holding company” has the same meaning as in section 5 of the Companies Act (Cap. 50);
“minimum vesting period” has the same meaning as in section 13J;
“part-time employee” means an employee of a company who is committed to work for not more than 30 hours per week (including any time he would be required to work but for injury, any official leave or such other similar event) for the company in which he is employed;
“qualifying company” means a company incorporated or registered under the Companies Act which, at the time of the grant to its employees of any right or benefit to acquire its shares or that its holding company, carries on business in Singapore;
“qualifying employee” means an employee of a qualifying company who, at the time of the grant to him of any right or benefit to acquire the shares of the company or the shares of its holding company, as the case may be, does not beneficially own, directly or indirectly, voting shares that confer the right to exercise or control the exercise of not less that 25% of the voting power in the qualifying company which grants the right or benefit to acquire its shares;
“shares” includes stocks but does not include redeemable or convertible shares or shares of a preferential nature.
Exemption of income of charities
13M.
—(1)  Subject to this section, there shall be exempt from tax the income of any charitable institution, trust or body of persons established for charitable purposes only.
(2)  For the purposes of this section —
(a)
where a trade or business is carried on by any such charitable institution, trust or body of persons, the income derived from the trade or business shall be exempt from tax only if the income is applied solely for charitable purposes and —
(i)
the trade or business is exercised in the course of the actual carrying out of a primary purpose of such institution, trust or body of persons; or
(ii)
the work in connection with the trade or business is mainly carried on by persons for whose benefit such institution, trust or body of persons was established;
(b)
the other income of any such charitable institution, trust or body of persons shall be exempt from tax only if it applies in any year of assessment for charities or charitable objects within Singapore not less than 80% of the amount of donations (in money or money’s worth) received by it and of other sums accrued to it in the preceding year unless the Comptroller otherwise permits; and
(c)
if any such charitable institution, trust or body of persons applies any amount of its income otherwise than in accordance with its charitable objects, the institution, trust or body of persons shall pay to the Comptroller tax on that amount of its income and a determination and assessment under this paragraph shall be treated as a notice of assessment and shall be subject to the provisions of Parts XVII and XVIII.
(3)  For the purposes of subsection (2)(b), the amount of donations (in money or money’s worth) received by and other sums accrued to any such charitable institution, trust or body of persons for any year shall be ascertained by taking the aggregate in that year of —
(a)
donations in cash received by it;
(b)
donations of properties received by it;
(c)
for the year of assessment 2002, donations of securities received by it in the period 1st January 2001 to 31st May 2001;
(d)
gains or profits from the disposal of properties or securities donated or acquired before 1st June 2001 and disposed of by it on or after 1st June 2001;
(e)
gains or profits from the disposal of properties donated to or acquired by it on or after 1st June 2001;
(f)
gains or profits from the disposal of securities acquired by it on or after 1st June 2001;
(g)
proceeds from the disposal of securities donated to it on or after 1st June 2001 (after providing for brokerage fees, legal fees and other costs directly related to the disposal); and
(h)
all other donations to it and its income (after providing for allowable deductions) not falling within paragraphs (a) to (g).
(4)  For the purposes of subsection (3)(d), (e) and (f), the gains or profits from the disposal of properties or securities shall be calculated in accordance with the formula
where A
is the sale price of the properties or securities at the date of disposal;
B
is the amount of brokerage fees, legal fees and other costs directly related to the disposal of the properties or securities; and
C
is the value of the properties or securities at the date of donation, or the cost of the properties or securities at the date of acquisition.
(5)  For the purposes of subsection (3)(d), (f) and (g), any securities received or acquired on an earlier date shall be deemed to have been disposed of first.
(6)  Where the total of the gains, profits or proceeds in any year from the disposal of properties or securities in subsection (3)(d), (e), (f) and (g) is less than nil, it shall be deemed as nil.
(7)  For the purposes of determining the date of donation or acquisition of the shares in subsection (3) and the valuation or cost of such shares in subsection (4) —
(a)
rights issues shall be deemed to have been acquired on the date the rights were exercised; and the cost in respect of each share after the exercise of the rights shall be the price paid for the acquisition of the shares;
(b)
bonus shares and shares arising from a share split (referred to in this section as split shares) shall be deemed to have been donated or acquired —
(i)
where the original shares upon which the bonus shares or split shares are derived were donated or acquired before 1st June 2001, on 31st May 2001;
(ii)
where the original shares upon which the bonus shares or split shares are derived were acquired on or after 1st June 2001, on the date of acquisition of the original shares,
and the value or cost in respect of each share after the bonus issue or the share split shall be determined in accordance with the formula
where X
is the value of the shares at the date of donation, or the cost of the shares at the date of acquisition, as the case may be; and
Y
is the total number of the original shares, bonus shares and split shares;
(c)
bonus shares and split shares shall be deemed to have been donated on the date of donation of the original shares where the original shares upon which the bonus shares or split shares are derived were donated on or after 1st June 2001.
(8)  In this section —
“disposal”, in relation to any properties or securities, means the assignment, sale, settlement or transfer of the properties or securities, whether by agreement or otherwise, and includes the creation of a trust in respect of the properties or securities but does not include the conversion of debt securities to equity securities where the conversion is in accordance with the terms and conditions of the issue of the debt securities;
“land” includes land of any tenure wherever situated in Singapore, whether or not held apart from the surface, and buildings or parts thereof (whether completed or otherwise and whether divided horizontally, vertically or in any other manner) and tenements and hereditaments, coporeal and incorporeal, and any estate or interest therein;
“properties” means gold bullion, real property, works of art, precious objects, antiques and other items that the Minister may by regulations prescribe but does not include securities;
“real property” means any land and any interest, option or other right in or over any land;
“securities” includes —
(a)
debentures, stocks, shares, bonds or notes issued by any government or company;
(b)
any right or option in respect of any such debentures, stocks, shares, bonds or notes; and
(c)
units in any unit trust.
(9)  The Minister may make regulations which are necessary or expedient for carrying out the purposes of this section.”.
Amendment of section 14
12.  Section 14 of the principal Act is amended —
(a)
by inserting, immediately after the words “1st January 1999” in subsection (1)(e)(i)(C), the words “and before 1st April 2000”; and
(b)
by deleting the comma at the end of sub-paragraph (C) of subsection (1)(e)(i) and substituting a semi-colon, and by inserting immediately thereafter the following sub-paragraphs:
(D)
commencing on or after 1st April 2000 and before 1st January 2001 shall not exceed 12%;
(E)
commencing on or after 1st January 2001 shall not exceed 16%,”.
Amendment of section 14I
13.  Section 14I of the principal Act is amended by deleting subsection (5B).
Amendment of section 15
14.  Section 15 (1) of the principal Act is amended by deleting paragraph (i) and substituting the following paragraph:
(i)
any payment to any provident, savings, widows’ and orphans’ or other society or fund, including the Supplementary Retirement Scheme, except such payments as are allowed under sections 14(1)(e) and (f) and 39 (2)(g) and (o);”.
Repeal and re-enactment of section 19B
15.  Section 19B of the principal Act is repealed and the following section substituted therefor:
Writing-down allowances for approved intellectual property rights
19B.
—(1)  Subject to this section, where a company carrying on a trade or business has incurred on or after 23rd February 2001 capital expenditure in acquiring any approved 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.
(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 approved intellectual property rights.
(3)  Any capital expenditure incurred on the acquisition of any approved 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.
(4)  Where writing-down allowances have been made to any company under this section in respect of any approved 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; or
(d)
the company breaches any condition under which the approval for those rights was granted,
no writing-down allowance in respect of the approved 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.
(5)  Where a company to whom writing-down allowances have been made under subsection (1) in respect of any approved 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.
(6)  For the purposes of subsection (5), where there is more than one sale, transfer or assignment of any part of any approved intellectual property rights, the amount of the capital expenditure incurred in acquiring the approved 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 approved 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.
(7)  In this section —
“approved” means approved by the Minister or such other person as he may appoint;
“capital expenditure” does not include legal fees, registration fees, stamp duty and other costs related to the acquisition of any approved 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.
(8)  For the purpose of this section, any sale, transfer or assignment of any approved 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.
(9)  Notwithstanding the repeal of section 19B by the Income Tax (Amendment) Act 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.”.
Amendment of section 26
16.  Section 26 (3B) of the principal Act is amended by deleting the words “section 43 (3)” wherever they appear in paragraphs (b) and (d) and substituting in each case the words “section 43 (4)”.
Amendment of section 35
17.  Section 35 (2A) of the principal Act is amended by deleting the full-stop at the end of paragraph (c) and substituting a semi-colon, and by inserting immediately thereafter the following paragraph:
(d)
derived during the period from 1st January 2000 to 31st December 2000 shall be treated as his statutory income for the year of assessment 2001 and be charged to tax at the rate applicable to him for that year of assessment.”.
Amendment of section 37
18.  Section 37 of the principal Act is amended —
(a)
by deleting the word “and” at the end of subsection (2)(c);
(b)
by deleting the full-stop at the end of paragraph (d) of subsection (2) and substituting the word “; and”, and by inserting immediately thereafter the following paragraph:
(e)
an amount in respect of gifts of shares in a company listed on the Singapore Exchange or of units in unit trusts traded in Singapore made by an individual in the year preceding the year of assessment to any institution of a public character in Singapore approved by the Minister on the application by that institution.”;
(c)
by deleting the words “subsection (2)(b), (c) and (d)” in subsection (2B) and substituting the words “subsection (2)(b), (c), (d) and (e)”;
(d)
by deleting the words “subsection (2)(c)” in the 1st line of subsection (9) and substituting the words “subsection (2)(c) and (e)”; and
(e)
by inserting, immediately after subsection (9), the following subsection:
(10)  For the purposes of subsection (2)(e) —
(a)
the amount in respect of any gift of shares in a company listed on the Singapore Exchange shall be the price of such shares in the open market at the last transaction on the date of the gift;
(b)
the amount in respect of any gift of units in unit trusts traded in Singapore shall be the bid price of such units immediately after the date of the gift quoted by the manager of the unit trusts; and
(c)
“date of the gift”, in relation to any shares or units referred to in paragraph (a) or (b), as the case may be, means the date of legal transfer to the institution of a public character of the gift of such shares or units.”.
Amendment of section 39
19.  Section 39 (2) of the principal Act is amended —
(a)
by inserting, immediately after sub-paragraph (vii) of paragraph (g), the following sub-paragraph:
(viii)
no such deduction shall be allowed where the premiums for such insurance are paid with funds standing in his SRS account;”;
(b)
by deleting “20%” in the 8th line of paragraph (h) and substituting the words “36% or such other rate as may be prescribed”;
(c)
by deleting “$14,400” in the 10th line of paragraph (h) and substituting the words “$25,920 or such other amount as may be prescribed”;
(d)
by deleting “$14,400” wherever it appears in provisos (ii), (iii) and (iv) to paragraph (h) and substituting in each case the words “$25,920 or such other amount as may be prescribed”; and
(e)
by deleting the full-stop at the end of paragraph (n) and substituting a semi-colon, and by inserting immediately thereafter the following paragraph:
Deduction for contributions under Supplementary Retirement Scheme
(o)
has contributed to an SRS account with an SRS operator, there shall be allowed a deduction of the amount of such contributions up to the amount of the SRS contribution cap applicable to him as determined in accordance with regulations made under section 10L(11), except that no deduction shall be allowed if —
(i)
his SRS account is suspended as at 31st December of the year immediately preceding the year of assessment under regulations made under section 10L; or
(ii)
the amount of such contribution is withdrawn from his SRS account within the year immediately preceding the year of assessment:
Provided that where an SRS member derives income from a trade, business, profession or vocation or the exercise of an employment outside Singapore, the deduction shall not exceed the amount of income remitted to, transmitted or brought into Singapore from outside Singapore.”.
Amendment of section 40A
20.  Section 40A of the principal Act is amended —
(a)
by inserting, immediately before subsection (1), the following subsection:
(1)  This section shall apply to a person who, in any year of assessment, is not resident in Singapore and who derives income as a public entertainer or derives such income and income from any other source in the year preceding that year of assessment which does not include —
(a)
any withdrawal from his SRS account deemed to be income subject to tax under section 10L; or
(b)
income from the exercise of any other employment in Singapore.;”.
(b)
by re-numbering the existing subsections (1), (2) and (3) as subsections (2), (3) and (4), respectively; and
(c)
by deleting the words “Any individual who, in any year of assessment, is not resident in Singapore” in the 1st and 2nd lines of subsection (2) and substituting the words “Any person to whom this section applies”.
Amendment of section 40B
21.  Section 40B of the principal Act is amended —
(a)
by inserting, immediately before subsection (1), the following subsection:
(1)  This section shall apply to a person who, in any year of assessment, is not resident in Singapore and who derives income from the exercise of any employment in Singapore or derives such income and income from any other source in the year preceding that year of assessment which does not include —
(a)
any withdrawal from his SRS account deemed to be income subject to tax under section 10L; or
(b)
income derived as a public entertainer within the meaning of section 40A.;”.
(b)
by re-numbering the existing subsections (1), (1A), (2) and (3) as subsections (2), (3), (4) and (5), respectively;
(c)
by deleting the words “Any person who, in any year of assessment, is not resident in Singapore” in the 1st and 2nd lines of subsection (2) and substituting the words “Any person to whom this section applies”; and
(d)
by deleting the words “subsection (1)” in subsection (3) and substituting the words “subsection (2)”.
New sections 40C and 40D
22.  The principal Act is amended by inserting, immediately after section 40B, the following sections:
Relief for non-resident SRS members
40C.
—(1)  This section shall apply to a person who, in any year of assessment, is not resident in Singapore and who makes any withdrawal from his SRS account which is deemed to be income subject to tax under section 10L or derives such income and income from any other source in the year preceding that year of assessment which does not include —
(a)
income from the exercise of any employment in Singapore; or
(b)
income derived as a public entertainer within the meaning of section 40A.
(2)  Any person to whom this section applies shall, if the tax payable by him in respect of that year of assessment is attributable to withdrawals from his SRS account, be allowed relief in respect of that year of assessment in the following manner:
(a)
where the withdrawals from his SRS account are his only source of income, by reduction of the rate of tax to 15% on every dollar of the chargeable income;
(b)
where the person possesses any other source of income in Singapore and the total assessable income exceeds the statutory income attributable to the withdrawals from his SRS account, by reduction of the rate of tax to 15% on such part of the chargeable income as bears the same proportion to the total chargeable income as the statutory income attributable to the withdrawals from his SRS account bears to the total assessable income;
(c)
where the person possesses any other source of income in Singapore and the total assessable income is equal to or less than the statutory income attributable to the withdrawals from his SRS account, by reduction of the rate of tax to 15% on every dollar of the chargeable income.
(3)  The relief available to any person under subsection (2) shall be so limited that the tax payable in respect of such income shall not be less than that which would be payable by a resident of Singapore in the same circumstances.
(4)  Where any person is entitled to relief under this section and is also entitled to relief under section 40(1) or (2A), he shall be entitled to whichever relief is the greater in respect of the income to which this section relates.
(5)  In this section —
“statutory income attributable to the withdrawals from his SRS account” means the statutory income of a person derived from such source as ascertained under section 35(1);
“total assessable income” means the remainder of the statutory income of a person after the deduction allowed under section 37(2)(a) has been made;
“withdrawals from his SRS account” means all withdrawals from the SRS account of a person which are deemed to be income subject to tax under section 10L.
Relief for non-resident deriving income from activity as public entertainer and employee, etc.
40D.
—(1)  This section shall apply to a person who, in any year of assessment, is not resident in Singapore and who derives income from 2 or more of the following sources (referred to in this section as relevant income) in the year preceding that year of assessment —
(a)
income derived as a public entertainer within the meaning of section 40A;
(b)
income from the exercise of any employment in Singapore; and
(c)
any withdrawal from his SRS account.
(2)  Any person to whom this section applies shall, if the tax payable by him in respect of that year of assessment is attributable to the relevant income, be allowed relief in respect of that year of assessment in the following manner:
(a)
where he only derives the relevant income in Singapore, by reduction of the rate of tax to the rate specified under section 40A, 40B or 40C, as the case may be, on every dollar of the chargeable income attributable to the source of income referred to in subsection (1)(a), (b) or (c), respectively;
(b)
where the person possesses any other source of income in Singapore and the total assessable income exceeds the statutory income attributable to the sources giving rise to the relevant income, by reduction of the rate of tax to —
(i)
the rate of tax specified in section 40A(2) on such part of the chargeable income as bears the same proportion to the total chargeable income as the statutory income attributable to such activity as a public entertainer bears to the total assessable income;
(ii)
the rate of tax specified in section 40B(2) on such part of the chargeable income as bears the same proportion to the total chargeable income as the statutory income attributable to such activity as a non-resident employee bears to the total assessable income; and
(iii)
the rate of tax specified in section 40C(2) on such part of the chargeable income as bears the same proportion to the total chargeable income as the statutory income attributable to the withdrawals from his SRS account bears to the total assessable income;
(c)
where the person possesses any other source of income in Singapore and the total assessable income is equal to or less than the statutory income attributable to the sources giving rise to the relevant income, by reduction of the rate of tax to —
(i)
the lowest of the rates specified under sections 40A(2), 40B (2), 40C (2) and 43 (1)(b), as the case may be, on every dollar of the chargeable income or the amount of statutory income attributable to that source which is subject to tax at that lowest rate, whichever is the less;
(ii)
the second lowest of the rates specified under sections 40A(2), 40B (2), 40C (2) and 43 (1)(b), as the case may be, on every dollar of the chargeable income in excess of the statutory income taxed at the lowest rate, or the amount of statutory income attributable to that source which is subject to tax at that second lowest rate, whichever is the less; and
(iii)
the third lowest of the rates specified under sections 40A(2), 40B (2), 40C (2) and 43 (1)(b), as the case may be, on every dollar of the chargeable income in excess of the statutory income taxed at the other two lower rates, or the amount of statutory income attributable to that source which is subject to tax at that third lowest rate, whichever is the less.
(3)  The relief available to any person under subsection (2) shall be so limited that the tax payable in respect of such income referred to in subsection (1)(b) or (c), shall not be less than that which would be payable by a resident of Singapore in the same circumstances.
(4)  For the purposes of computing the tax payable by a resident of Singapore in the same circumstances referred to in subsection (3), the statutory income derived as a public entertainer by a person to whom this section applies shall be excluded.
(5)  Where any person is entitled to relief under this section and is also entitled to relief under section 40(1) or (2A), he shall be entitled to whichever relief is the greater in respect of the income to which this section relates.
(6)  In this section —
“non-resident employee” has the same meaning as in section 40B;
“public entertainer” has the same meaning as in section 40A;
“statutory income attributable to such activity as a non-resident employee” has the same meaning as in section 40B;
“statutory income attributable to such activity as a public entertainer” has the same meaning as in section 40A;
“statutory income attributable to the withdrawals from his SRS account” has the same meaning as in section 40C;
“total assessable income” means the remainder of the statutory income of a person after the deduction allowed under section 37(2)(a) has been made;
“withdrawals from his SRS account” has the same meaning as in section 40C.”.
Amendment of section 42
23.  Section 42 of the principal Act is amended by deleting subsections (4) and (5) and substituting the following subsections:
(4)  Notwithstanding Part B of the Second Schedule, where the effective rate of tax of a person other than an individual determined by dividing the tax chargeable on his chargeable income by the amount of that income exceeds the effective rate of tax for companies as determined under subsection (5), the rate of tax applicable to that person on every dollar of his chargeable income shall be the effective rate of tax for companies as so determined.
(5)  For the purposes of subsection (4), the effective rate of tax for companies shall be determined in accordance with the formula
where A
is the tax chargeable on the chargeable income of the person for the year of assessment calculated in accordance with section 43(1D) as if the person is a company; and
B
is the chargeable income of the person for the year of assessment.”.
Amendment of section 42A
24.  Section 42A of the principal Act is amended —
(a)
by inserting, immediately before the words “a rebate” in subsection (2)(b), the words “subject to subsection (2A),”; and
(b)
by inserting, immediately after subsection (2), the following subsection:
(2A)  Where a married woman has a legitimate third child or a legitimate fourth child born on or after 1st April 2001, the rebate to be allowed under subsection (2)(b) shall be subject to a maximum of $20,000 in respect of the third child and a maximum of $40,000 in respect of the fourth child.”.
Amendment of section 43
25.  Section 43 of the principal Act is amended —
(a)
by deleting “25.5%” in subsection (1)(a) and (b) and substituting in each case “24.5%”;
(b)
by inserting, immediately after subsection (1C), the following subsections:
(1D)  Notwithstanding subsection (1), for the year of assessment 2002 and subsequent years of assessment, there shall be levied and paid for each year of assessment upon the chargeable income of every company, tax at the rate prescribed in subsection (1)(a) on every dollar of the chargeable income thereof except that —
(a)
for every dollar of the first $10,000 of the chargeable income (excluding Singapore dividends), only 25% shall be charged with tax; and
(b)
for every dollar of the next $90,000 of the chargeable income (excluding Singapore dividends), only 50% shall be charged with tax.
(1E)  In subsection (1D), “Singapore dividends” means any dividend derived from Singapore from which tax has been deducted under section 44.”; and
(c)
by deleting subsection (3) and substituting the following subsection:
(3)  The reference to 24.5% in subsection (1) shall, for the year of assessment 2001, be read as a reference to 25.5%.”.
Amendment of section 44
26.  Section 44 of the principal Act is amended —
(a)
by deleting “25.5%” in subsection (1) and substituting “24.5%”;
(b)
by deleting subsection (13) and substituting the following subsection:
(13)  Notwithstanding anything in this Act, where the tax on any dividend paid in the year 2001 has been deducted at the rate of 25.5% —
(a)
the amount of such dividend received by a shareholder shall be deemed to have been paid without deduction of tax and to be a dividend of such a gross amount as after deduction of tax at the rate of 24.5% would be equal to the net amount paid; and a sum equal to the difference between such gross amount and the net amount paid shall be deemed to have been deducted from the dividend as tax; and
(b)
the difference between the amount of the tax deducted at 25.5% from such dividend and the amount deemed to have been so deducted under paragraph (a) shall be added to the balance on the first day of the year of assessment 2002 and deemed to be a part thereof.”; and
(c)
by deleting the words “section 43(3)” in subsection (14)(e)(i) and substituting the words “section 43(4)”.
Amendment of section 45
27.  Section 45 of the principal Act is amended —
(a)
by deleting “25.5%” in the 4th line of subsection (1) and in the 3rd line of subsection (2)(b) and substituting in each case “24.5%”; and
(b)
by deleting subsection (1A) and substituting the following subsection:
(1A)  Notwithstanding subsection (1), tax shall be deducted at the rate of 25.5% on every payment (other than payment subject to tax at the rate specified in section 43(1B)) made on or after 1st January 2001 which would be assessable on the person receiving the payment for the year of assessment 2001.”.
Amendment of section 45B
28.  Section 45B (2) of the principal Act is amended by deleting “25.5%” and substituting “24.5%”.
New section 45E
29.  The principal Act is amended by inserting, immediately after section 45D, the following section:
Application of section 45 to withdrawals by non-citizen SRS members, etc.
45E.
—(1)  Subject to subsection (2), section 45 shall apply in relation to —
(a)
any withdrawal made —
(i)
under section 10L or after the balance (excluding any life annuity) remaining in the SRS account is deemed withdrawn under section 10L(6) or (7) by an SRS member who is not a citizen of Singapore from his SRS account; or
(ii)
after the sum standing in the SRS account is deemed withdrawn under section 10L(9) by the legal personal representative of a deceased SRS member who is not a citizen of Singapore from the SRS account,
as that section applies to any interest paid by a person to another person not known to him to be resident in Singapore and, for the purpose of such application, any reference in that section to interest shall be construed as a reference to such withdrawal from the SRS account; and
(b)
any payment of any penalty under section 10L(2) which is imposed on any SRS member and paid by an SRS operator to the Comptroller as that section applies to any interest paid by a person to another person not known to him to be resident in Singapore and, for the purposes of such application, any reference in that section to interest payable shall be construed as a reference to the penalty so payable by the SRS operator to the Comptroller.
(2)  For the purpose of subsection (1)(a), where a withdrawal is made —
(a)
under section 10L(3) or (8) or after the balance (excluding any life annuity) remaining in the SRS account is deemed withdrawn under section 10L(6) or (7) by an SRS member; or
(b)
after the sum standing in the SRS account is deemed withdrawn under section 10L(9),
section 45 shall apply only in relation to 50% of the amount withdrawn from the SRS account.
(3)  For the purposes of this section, the amount to be deducted under section 45 in respect of withdrawals from the SRS account of an SRS member —
(a)
under subsection (1)(a), shall be the amount computed based on the rate specified in section 43(1)(b); and
(b)
under subsection (1)(b), shall be the total penalty deducted by the SRS operator from the amount so withdrawn from the SRS account.
(4)  This section shall not apply to any withdrawal by an SRS member who is not a citizen of Singapore if the amount of withdrawal from his SRS account in any year does not exceed the amount of contribution to his SRS account in that year.”.
Amendment of section 46
30.  Section 46 of the principal Act is amended —
(a)
by deleting the words “or 45D” in subsection (1)(a) and substituting the words “, 45D or 45E (1)(a)”; and
(b)
by deleting subsection (2) and substituting the following subsection:
(2)  Notwithstanding subsection (1), where the tax on any dividend paid in the year 2001 has been deducted at the rate of 25.5%, the tax to be set-off under subsection (1) shall be the sum deemed to be the tax deducted from such dividend under section 44(13).”.
Amendment of Second Schedule
31.  The Second Schedule to the principal Act is amended by deleting Part A and substituting the following Part:
Part A
Rates of Tax on Chargeable Income of An Individual or A Hindu Joint Family
Chargeable Income
 
$
 
Rate of Tax
For every dollar of the first
 
7,500
 
Nil
For every dollar of the next
 
12,500
 
3.0%
For every dollar of the next
 
15,000
 
6.0%
For every dollar of the next
 
15,000
 
9.0%
For every dollar of the next
 
25,000
 
12.0%
For every dollar of the next
 
25,000
 
15.0%
For every dollar of the next
 
50,000
 
18.0%
For every dollar of the next
 
50,000
 
21.0%
For every dollar of the next
 
200,000
 
24.0%
For every dollar exceeding
 
400,000
 
26.0%
Remission of tax
32.
—(1)  There shall be remitted the tax payable for the year of assessment 2001 by an individual or a Hindu joint family resident in Singapore a sum equal to the aggregate of —
(a)
10% of the tax payable for that year of assessment; and
(b)
an amount not exceeding $500 as determined by the Comptroller.
(2)  The remission under subsection (1)(a) shall be given before the remission under subsection (1)(b).