On 26/05/2013,
you requested for the version in force on 26/05/2013
incorporating all amendments published on or before 26/05/2013.
The closest version currently available is that of 18/04/2013.
Provisions by banks and qualifying finance companies for doubtful debts and diminution in value of investments
14I.
—(1) Subject to this section, for the purpose of ascertaining the income for the basis period for any year of assessment of a bank or qualifying finance company, there shall be allowed as a deduction an amount in respect of the provision for doubtful debts arising from its loans and the provision for diminution in the value of its investments in securities, made in that basis period.
[2/92; 28/96]
(2) Where in the basis period for any year of assessment —
(a)
any amount of the provisions is written back, that amount shall be treated as having been allowed as a deduction under this section and shall be deemed to be a trading receipt of the bank or qualifying finance company for that basis period;
(b)
the bank or qualifying finance company permanently ceases to carry on business in Singapore, any provisions in the account of the bank or qualifying finance company as at the date of the cessation shall be deemed to be a trading receipt of the bank or qualifying finance company for that basis period.
[28/96]
(3) The total amount deemed as trading receipts under subsection (2) shall not exceed the total amount of all deductions previously allowed under this section.
(4) Where in a scheme of amalgamation involving 2 or more banks or finance companies whereby the whole or substantially the whole of the undertaking of any bank or finance company is transferred to another bank or finance company, the Minister may, if he thinks fit and on such conditions as he may impose, by order declare that any provisions in the account of the transferor bank or transferor finance company which have been transferred to the transferee bank or transferee finance company shall not be deemed under subsection (2)(b) to be a trading receipt of the transferor bank or transferor finance company; and the provisions so declared shall for the purposes of this section be treated as having been allowed to the transferee bank or transferee finance company as a deduction under this section.
[28/96]
(5) Subject to subsection (6), the total amount of the provisions to be allowed as a deduction under this section for any year of assessment shall not exceed the lowest of —
(a)
25% of the qualifying profits for the basis period for that year of assessment;
(b)
1/2% of the prescribed value of the loans and investments in securities in the basis period for that year of assessment; or
(c)
3% of the prescribed value of the loans and investments in securities in the basis period for that year of assessment, less the total amount of all deductions previously allowed under this section which have not been deemed to be trading receipts under subsections (2) and (3).
[32/95; 1/98; 32/99]
(6) No deduction shall be allowed for any year of assessment —
(a)
where there are no qualifying profits in the basis period for that year of assessment; or
(b)
where the total amount of all deductions previously allowed under this section, which have not been deemed to be trading receipts under subsections (2) and (3), is in excess of 3% of the prescribed value of the loans and investments in securities for the relevant basis period for that year of assessment.
[1/98; 32/99]
(7) In this section —
“bank” means a bank licensed under the Banking Act (Cap. 19) or a merchant bank approved by the Monetary Authority of Singapore;
“capital funds” has the same meaning as in the Finance Companies Act (Cap. 108);
“loan” means any loan, advance or credit facility made or granted by a bank or qualifying finance company, including an overdraft except for —
(a)
loans to and placements with financial institutions in Singapore or any other country;
(b)
loans to the Government of Singapore or the government of any other country;
(c)
loans to and placements with the Monetary Authority of Singapore or the central bank or other monetary authority of any other country;
(d)
loans to statutory bodies or corporations guaranteed by the Government of Singapore or the government of any other country; and
(e)
such other loans or advances as may be prescribed;
“prescribed value of loans and investments in securities”, in relation to the basis period for any year of assessment, means the value (ascertained in such manner as the Comptroller may determine) of the loans and investments in securities (excluding any loan or investment in respect of which any deduction has been allowed under any other section of this Act) as at the last day of each month in that basis period added together and divided by the number of months in that basis period;
“provisions” means the provision for doubtful debts arising from the loans of a bank or qualifying finance company and the provision for diminution in the value of its investments in securities;
“qualifying finance company” means a company licensed under the Finance Companies Act (Cap. 108) to carry on financing business which has, in the basis period for any year of assessment for which the deduction under this section is first allowed, capital funds of not less than $50 million and a capital adequacy ratio of not less than 12% as determined under that Act;
“qualifying profit” means the net profit (excluding any extraordinary gain which is not subject to tax) as shown in the audited accounts of the bank or qualifying finance company before deducting provision for taxation, tax paid, any extraordinary loss not allowed as a deduction, provision for doubtful debts arising from loans and provision for diminution in value of investments in securities;
“securities” means —
(a)
debentures, stocks, shares, bonds or notes excluding —
(i)
those issued or guaranteed by the Government of Singapore or the government of any other country; and
(ii)
stocks and shares held by a bank or qualifying finance company and issued by any company in which 5% or more of the total number of its issued shares are beneficially owned, directly or indirectly, by the bank or qualifying finance company at any time during the basis period for the relevant year of assessment;
(b)
any right or option in respect of any debentures, stocks, shares, bonds or notes referred to in paragraph (a);
[Act 29/2010 wef Y/A 2011 & Sub Ys/A]
(c)
units in any unit trust within the meaning of section 10B ;
[Act 29/2010 wef Y/A 2011 & Sub Ys/A]
[28/96; 34/2005]
(d)
units in a registered business trust within the meaning of section 36B;
(e)
any right or option in respect of any unit in a registered business trust within the meaning of section 36B; or
(f)
units in a real estate investment trust within the meaning of section 43(10).