Initial and annual allowances, 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.
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(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 incurred on the construction of that building or structure, an allowance, to be known as an “annual allowance”, equal to 3% of that expenditure shall be made to him for that year of assessment.
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(5)  Where at any time in or after the basis period for the first year of assessment under this Act the interest in a building or structure which is the relevant interest in relation to any expenditure is sold while the building or structure is an industrial building or structure, 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.
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(6)  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.
(7)  For the purposes of application to any industrial building or structure occupied for the purposes of a trade in intensive pig and poultry production and approved by the Minister under section 18(1), the reference to “3%” in subsections (4) and (5) and in section 18(6) shall be read as a reference to “5%”.
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(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 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) and (5) and in section 18(6) shall be read as a reference to “2%”; and
the reference to capital expenditure in subsections (1) and (4) shall not include any capital expenditure incurred before 1st January 1982.
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(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 under section 18(1)(k) —
(a)the reference to 25% in subsection (1) shall be read as a reference to 20%;
(b)the reference to 3% in subsections (4) and (5) and in section 18(6) 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.
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(10)  Notwithstanding anything in sections 16 and 17, where a person carrying out a project for the promotion of the tourist industry approved by the Minister under section 18(1)(k) 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.
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(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 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.
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