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On 21/10/2017, you requested the version as published on or before 02/08/1996.
REPUBLIC OF SINGAPORE
GOVERNMENT GAZETTE
ACTS SUPPLEMENT
Published by Authority

NO. 23] Friday, August 2 [1996

The following Act was passed by Parliament on 12th July 1996 and assented to by the President on 25th July 1996:—
Income Tax (Amendment) Act 1996

(No. 23 of 1996)


I assent.

ONG TENG CHEONG
President
25th July 1996.
Date of Commencement: 2nd August 1996
Be it enacted by the President with the advice and consent of the Parliament of Singapore, as follows:
Short title
1.  This Act may be cited as the Income Tax (Amendment) Act 1996.
New sections 10F and 10G
2.  The Income Tax Act (referred to in this Act as the principal Act) is amended by inserting, immediately after section 10E, the following sections:
Gains from short-term real property transactions
10F.
—(1)  Where any person has disposed of any real property (with or without any change in use, improvement or development after its acquisition) on or after 15th May 1996 before the expiration of the period of 3 years from the date on which he acquired the real property, then, notwithstanding any other provisions of this Act but subject to this section, the relevant amount of any gain arising from the disposal of the real property shall be deemed to be income of the person chargeable to tax under section 10(1)(g).
(2)  Where any loss arises from the disposal of any real property referred to in subsection (1), the relevant amount of such loss shall be available as a deduction in accordance with subsection (3).
(3)  The relevant amount of any loss incurred by any person from the disposal of any real property to which subsection (1) applies during the basis period for any year of assessment shall only be available as a deduction against any income of the person which is chargeable to tax by virtue of subsection (1) or section 10G for that year of assessment and any balance of such loss shall not be available as a deduction against any income of the person for any subsequent year of assessment.
(4)  Where any person disposes of any real property otherwise than in a transaction at arm’s length, the disposal of the real property by that person shall be deemed to have been made for a consideration equal to the market value of the real property as at the date of disposal.
(5)  Unless regulations made under subsection (9) otherwise provide, where any person disposes of any real property in pursuance of an option or agreement, this section shall have effect as if the person had disposed of the real property on the date on which the option was exercised or the agreement entered into, as the case may be.
(6)  Where a person entitled to any real property by way of security or to the benefit of a charge or incumbrance on any real property deals with the real property for the purpose of enforcing or giving effect to the security, charge or incumbrance, his dealings with it shall be treated for the purpose of this section as if they were done through him as nominee by the person entitled to it subject to the security, charge or incumbrance; and this subsection shall apply to the dealings of any person appointed to enforce or give effect to the security, charge or incumbrance as receiver and manager as it applies to the dealings of the person so entitled.
(7)  In this section —
“acquire” includes acquire by way of purchase, grant, exchange, gift, settlement or otherwise; and “acquisition” shall be construed accordingly;
“consideration” means consideration in money or money’s worth;
“disposal”, in relation to any real property, means the sale, conveyance, transfer, assignment, settlement or other alienation of the real property, whether by agreement or otherwise, and includes the creation of a trust in respect of the real property and any transfer by way of a distribution of the real property by a private company to the transferee in his capacity as a shareholder in the company but excludes any disposal —
(a)
upon the death of the owner of the real property;
(b)
as a result of bankruptcy, dissolution, receivership or winding-up of the owner of the real property, other than a voluntary winding-up;
(c)
as a result of compulsory acquisition of the real property under any written law;
(d)
by way of a lease or an agreement for a lease of the real property for a term not exceeding 7 years without the option of renewal or purchase;
(e)
by force of law; or
(f)
subject to subsection (6), by way of security (including a retransfer of the real property on redemption of the security);
“gain” means any gain other than gain or profit chargeable to or exempted from tax under any other provisions of this Act;
“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, corporeal and incorporeal, and any estate or interest therein;
“real property” means any land and any interest, option or other right in or over any land not being trading stock of the owner of the land;
“relevant amount,” in relation to any gain or loss arising from the disposal of any real property —
(a)
where the disposal occurs within one year from the date of acquisition of the real property, is 100% of the amount of gain or loss;
(b)
where the disposal occurs more than one year but not more than 2 years from the date of acquisition of the real property, is 66 ⅔% of the amount of gain or loss;
(c)
where the disposal occurs more than 2 years but not more than 3 years from the date of acquisition of the real property, is 33 ⅓% of the amount of gain or loss.
(8)  For the purposes of this section —
(a)
a reference to an option or agreement includes a reference to an option or agreement that is not enforceable by legal proceedings whether or not it was intended to be so enforceable;
(b)
a reference to a disposal of any real property includes, unless the context otherwise requires, a reference to a part disposal of any real property;
(c)
a reference to a private company is a reference to a company other than a company the shares in which are listed on any stock exchange in Singapore or elsewhere;
(d)
an arrangement or understanding, whether formal or informal and whether express or implied, shall be deemed to be an agreement;
(e)
if a real property is disposed of or acquired in pursuance of an option or agreement, the date on which the option is exercised or agreement is made, as the case may be, shall be deemed to have been the date on which the real property is disposed of or acquired;
(f)
in the case of a disposal of any real property owned by 2 or more persons as joint owners, the amount of gain or loss shall be presumed, until the contrary is proved, to be shared by the joint owners in equal shares.
(9)  The Minister may make regulations to provide —
(a)
for the computation of the amount of gain or loss arising from the disposal of any real property;
(b)
for the deduction of losses and expenditure allowable in relation to the disposal of any real property;
(c)
for the exemption of any real property or class of real property or any person or class of persons from the provisions of this section;
(d)
generally for giving full effect to or for carrying out the purposes of the provisions of this section.
Gains from short-term transactions of shares in private real property companies
(10)  This section shall not apply to any gain arising from the disposal of any real property which is chargeable to tax under section 10(1)(a).
Gains from short-term transactions of shares in private real property companies
10G.
—(1)  Where —
(a)
any person has disposed of any shares in a private company on or after 15th May 1996 before the expiration of the period of 3 years from the date on which he acquired the shares; and
(b)
at the time of the disposal of the shares the company is a relevant company,
then, notwithstanding any other provisions of this Act but subject to this section, the relevant amount of any gain arising from the disposal of the shares shall be deemed to be income of the person chargeable to tax under section 10(1)(g).
(2)  Where —
(a)
any person has disposed of any shares in a private company on or after 15th May 1996 after the expiration of the period of 3 years from the date on which he acquired the shares;
(b)
the private company had, during the period of 3 years prior to the disposal of the shares by the person referred to in paragraph (a), acquired any real property which continued to be held by the private company at the date of the disposal of the shares by such person; and
(c)
the private company is a relevant company at the time of the disposal of the shares by such person,
then, notwithstanding any other provisions of this Act but subject to this section, the relevant amount of any gain of such person arising from the disposal of the shares shall be deemed to be income of such person chargeable to tax under section 10(1)(g).
(3)  Where any loss arises from the disposal of any shares referred to in subsection (1) or (2), the relevant amount of such loss shall be available as a deduction in accordance with subsection (4).
(4)  The relevant amount of any loss incurred by any person from the disposal of any shares to which subsection (1) or (2) applies during the basis period for any year of assessment shall only be available as a deduction against any income of the person which is chargeable to tax by virtue of this section or section 10F for that year of assessment and any balance of such loss shall not be available as a deduction against any income of the person for any subsequent year of assessment.
(5)  Where any person disposes of any shares in a relevant company to which subsection (1) applies, the disposal of the shares by that person shall be deemed to have been made for a consideration equal to the amount paid to him for the shares or to the net asset value of the shares, whichever is the higher.
(6)  Where a person entitled to any shares in a relevant company by way of security or to the benefit of a charge or incumbrance on any such shares deals with the shares for the purpose of enforcing or giving effect to the security, charge or incumbrance, his dealings with them shall be treated for the purpose of this section as if they were done through him as nominee by the person entitled to them subject to the security, charge or incumbrance; and this subsection shall apply to the dealings of any person appointed to enforce or give effect to the security, charge or incumbrance as receiver and manager as it applies to the dealings of the person so entitled.
(7)  In this section —
“acquire,” in relation to any shares in a relevant company, includes acquire by way of purchase, subscription, exchange, gift, settlement or otherwise;
“consideration”, “gain” and “land” have the same meanings as in section 10F;
“disposal”, in relation to any shares in a relevant company, means the assignment, sale, settlement or transfer of the shares, whether by agreement or otherwise, and includes the creation of a trust in respect of the shares but excludes any disposal —
(a)
upon the death of the owner of the shares;
(b)
as a result of bankruptcy, dissolution, receivership or winding-up of the owner of the shares, other than a voluntary winding-up;
(c)
by force of law; or
(d)
subject to subsection (6), by way of security (including a retransfer of the shares on redemption of the security);
“net asset value”, in relation to any shares in a relevant company, means the net asset value of the shares as at the end of the accounting period of the relevant company immediately before any disposal of any shares in the relevant company by the person referred to in subsection (1) or (2);
“real property” means any land and any interest, option or other right in or over any land;
“relevant amount”  —
(a)
in relation to any gain or loss of any person arising from the disposal of shares in a relevant company to which subsection (1) applies —
(i)
where the disposal occurs within one year from the date of acquisition of the shares, is 100% of the amount of gain or loss;
(ii)
where the disposal occurs more than one year but not more than 2 years from the date of acquisition of the shares, is 66⅔% of the amount of gain or loss;
(iii)
where the disposal occurs more than 2 years but not more than 3 years from the date of acquisition of the shares, is 33⅓% of the amount of gain or loss;
(b)
in relation to any gain or loss of any person arising from the disposal of any shares in a relevant company to which subsection (2) applies, shall be the amount as determined in accordance with the formula:
A × [X1 (M1 − C1 ) + X 2 (M2 − C2 ) + X3 (M3 - C3 )]
where A is the percentage of shareholding in the relevant company disposed of by the person on the date of disposal;
X1 is 100%;
X2 is 66⅔%;
X3 is 33⅓%;
M1, M2 and M3 are the aggregate of the market values as at the date of disposal of shares by the person of all such real property acquired by the relevant company during the following periods respectively and which continued to be held by the relevant company at the date of the disposal of the shares by the person:
(i)
within one year prior to the disposal of the shares;
(ii)
more than one year but not more than 2 years prior to the disposal of the shares; and
(iii)
more than 2 years but not more than 3 years prior to the disposal of the shares;
C1, C2 and C3 are the aggregate of the costs of all such real property acquired by the relevant company during the following periods respectively and which continued to be held by the relevant company at the date of the disposal of the shares by the person:
(i)
within one year prior to the disposal of the shares;
(ii)
more than one year but not more than 2 years prior to the disposal of the shares; and
(iii)
more than 2 years but not more than 3 years prior to the disposal of the shares;
“relevant company” means any private company which has shares (including shares which are trading stock of the private company) in one or more relevant investment companies or real property, the aggregate value of which comprises at least 75% of the market value of its total tangible assets as at the end of the accounting period of the private company immediately before any disposal of any shares in the private company by the person referred to in subsection (1) or (2);
“relevant investment company” means any private company which has real property the value of which comprises at least 75% of the market value of its total tangible assets as at the end of the accounting period of the private company immediately before any disposal of any shares in the relevant company by the person referred to in subsection (1) or (2);
“shares” includes stocks but excludes shares which are trading stock of the owner of the shares.
(8)  For the purposes of this section —
(a)
a reference to an option or agreement includes a reference to any option or agreement that is not enforceable by legal proceedings whether or not it was intended to be so enforceable;
(b)
a reference to a disposal of any shares includes, unless the context otherwise requires, a reference to a part disposal of any shares;
(c)
a reference to a private company is a reference to a company other than a company the shares in which are listed on any stock exchange in Singapore or elsewhere;
(d)
an arrangement or understanding, whether formal or informal and whether express or implied, shall be deemed to be an agreement;
(e)
if shares are disposed of or acquired in pursuance of an option or agreement, the date on which the option is exercised or agreement is made, as the case may be, shall be deemed to have been the date on which the shares were disposed of or acquired.
(9)  The Minister may make regulations to provide —
(a)
for the computation of the amount of gain or loss arising from the disposal of any shares in a relevant company;
(b)
for the deduction of losses and expenditure allowable in relation to the disposal of any shares in a relevant company;
(c)
for the exemption of any shares or class of shares in a relevant company or any person or class of persons from the provisions of this section; and
(d)
generally for giving full effect to or for carrying out the purposes of the provisions of this section.
(10)  This section shall not apply to —
(a)
any gains or profits derived from the disposal of securities by any approved investment company subject to tax under section 10A;
(b)
any gains or profits derived from the disposal of securities by any approved unit trust subject to tax under section 10B;
(c)
any income of any person not resident in Singapore which is exempt from tax under section 13C;
(d)
any income of any foreign trust which is exempt from tax under section 13G;
(e)
any income of any approved venture company which is exempt from tax under section 13H; and
(f)
any gains or profits arising from the disposal of any shares which are chargeable to tax under section 10(1)(a).”.
New section 45D
3.  The principal Act is amended by inserting, immediately after section 45C, the following section:
Application of section 45 to gains from short-term real property transactions and short-term transactions of shares in private real property companies
45D.
—(1)  Where any person —
(a)
who disposes of any real property to which section 10F applies is a non-resident person;
(b)
whose income arising from the disposal of any real property is chargeable to tax under section 10(1)(a) is a non-resident person; or
(c)
who disposes of shares in a relevant company to which section 10G applies is a non-resident person,
any designated person shall, before paying to the non-resident person any money which is the whole or part of the consideration for the disposal of such real property or shares, as the case may be, notwithstanding any other written law, immediately deduct therefrom tax at the rate of 15% on every dollar of every such payment.
(2)  In relation to any disposal of any real property to which subsection (1)(a) applies, the reference to 15% in subsections (1) and (3) shall —
(a)
for any disposal of any real property which occurs more than one year but not more than 2 years from the date of acquisition, be read as 10%; and
(b)
for any disposal of any real property which occurs more than 2 years but not more than 3 years from the date of acquisition, be read as 5%.
(3)  The total deduction to be made under subsection (1) shall be equal to 15% of the gross amount of the consideration for the real property or shares.
(4)  Any designated person who has deducted any money under subsection (1) shall immediately give notice of the deduction of tax in writing to the Comptroller and shall, notwithstanding any other written law, pay to the Comptroller within 10 days of such deduction the amount so deducted and every such amount shall be a debt due from him to the Government and shall be recoverable in the manner provided under section 90.
(5)  Section 45(2) to (8) shall apply, with the necessary modifications, to any designated person as those provisions apply to any person referred to therein.
(6)  For the purpose of payment of any tax due from —
(a)
any income which is chargeable to tax under section 10(1)(a); or
(b)
any amount deemed to be income under section 10F,
in respect of any disposal of any real property which is owned by 2 or more persons as joint owners, the designated person deducting the tax shall retain such amount as is presumed under subsection (7) to be owned by any non-resident person and pay over the tax due from such amount to the Comptroller.
(7)  It shall be presumed, until the contrary is proved, that the persons who own any real property as joint owners shall share the proceeds of disposal of the real property in equal shares.
(8)  In this section —
“designated person,” in relation to any disposal of any real property or shares —
(a)
in the case where an advocate and solicitor acts for the buyer of the real property or shares in such disposal, means that advocate and solicitor; and
(b)
in any other case, means the buyer of the real property or shares;
“disposal”, in relation to real property and to shares, has the same meanings as in sections 10F and 10G, respectively;
“land” has the same meaning as in section 10F;
“non-resident person” means a person who is not known to be resident in Singapore to the designated person;
“real property”  —
(a)
in relation to a disposal of which the income is chargeable to tax under section 10(1)(a), means any land and any interest, option or other right in or over any land;
(b)
in relation to a disposal of real property referred to in section 10F, means any land and any interest, option or other right in or over any land not being trading stock of the owner of the land.”.
Amendment of section 46
4.  Section 46 (1) of the principal Act is amended by deleting the words “or 45C” in paragraph (a) and substituting the words “, 45C or 45D”.