Deduction for qualifying design expenditure
14S.—(1)  Subject to this section, for the purpose of ascertaining the income of any person carrying on a trade or business during the basis period for any year of assessment between the year of assessment 2011 and the year of assessment 2015 (both years inclusive), there shall be allowed in respect of all his trades and businesses, the following deductions for qualifying design expenditure incurred for the purposes of those trades and businesses during each basis period:
(a)where such qualifying design expenditure is allowable as a deduction under section 14, a deduction of 150% of the lower of the qualifying design expenditure incurred and $300,000, in addition to the deduction allowed under that section; and
(b)where such qualifying design expenditure is not allowable as a deduction under section 14, a deduction of 250% of the lower of the qualifying design expenditure incurred and $300,000.
(2)  For the year of assessment 2011 and the year of assessment 2012, instead of the deduction under subsection (1) in respect of each year of assessment, a person shall be allowed a deduction computed in accordance with the formula:
(a)A x 150%, in the case of subsection (1)(a); or
(b)A x 250%, in the case of subsection (1)(b),
where A is —
(i)for the year of assessment 2011, the lower of —
(A)the qualifying design expenditure incurred during the basis period for that year of assessment; and
(B)$600,000; and
(ii)for the year of assessment 2012, the lower of —
(A)the qualifying design expenditure incurred during the basis period for that year of assessment; and
(B)the balance after deducting from $600,000 the lower of the amounts specified in paragraph (i)(A) and (B).
(3)  For the purposes of subsections (1) and (2), where an individual carrying on a trade or business through 2 or more firms (excluding partnerships) has incurred qualifying design expenditure during the basis period for any year of assessment between the year of assessment 2011 and the year of assessment 2015 (both years inclusive) in respect of such firms for the purposes of his trade or business, the deduction that may be allowed to him for that expenditure in respect of all his trades and businesses shall not exceed the amount computed in accordance with subsection (1) or, in the case of the year of assessment 2011 or the year of assessment 2012, the amount computed in accordance with subsection (2) for that year of assessment.
(4)  For the purposes of subsections (1) and (2), where a partnership carrying on a trade or business has incurred qualifying design expenditure during the basis period for any year of assessment between the year of assessment 2011 and the year of assessment 2015 (both years inclusive) for the purposes of its trade or business, the aggregate of the deductions that may be allowed to all the partners of the partnership for that expenditure in respect of all the trades and businesses of the partnership shall not exceed the amount computed in accordance with subsection (1) or, in the case of the year of assessment 2011 or the year of assessment 2012, the amount computed in accordance with subsection (2) for that year of assessment.
(5)  For the purpose of this section, any expenditure incurred by a person prior to the commencement of his trade or business shall be deemed to have been incurred by that person on the first day on which he carries on that trade or business.
(6)  In this section —
“approved design service provider” means any person who provides design consultancy services for any trade or business, and who is approved by the Minister or such person as he may appoint;
“industrial or product design” means the professional specifications of creating and developing concepts or specifications that improve or enhance the functions, value or appearance of physical products, taking into account users’ needs, marketability and production;
“qualified designer” means an individual with a design-related tertiary academic qualification of at least a diploma that is approved by such person as the Minister may appoint;
“qualifying design expenditure” means —
(a)expenditure incurred by the person on the staff costs of in-house qualified designers which are attributable to an industrial or product design project approved under subsection (7) and undertaken in Singapore directly by that person; and
(b)where an approved design service provider has been engaged by the person to undertake in Singapore for the trade or business in question an industrial or product design project approved under subsection (7) —
(i)where more than 60% of all payments made by the person to the approved design service provider for the project are staff costs, the actual amount of staff costs; or
(ii)in all other cases, 60% of those payments,
but does not include any expenditure or payment to the extent that it is subsidised by grants or subsidies from the Government or a statutory board;
“staff costs” means any salary, wages and other benefits whether in the form of money or otherwise (but excluding directors’ fees), paid or granted in respect of the employment of any qualified designer which are attributable to the industrial or product design project.
(7)  The Minister or such person as he may appoint may approve an industrial or product design project for the purposes of the definition of “qualifying design expenditure” under subsection (6), and may in granting the approval impose such conditions as he thinks fit.
(8)  Where a person fails to comply with any condition imposed under subsection (7), the aggregate of deductions allowed to him under this section shall be deemed to be his income for the year of assessment in which the Comptroller discovers such non-compliance.
[Act 29/2010 wef Y/A 2011 & Sub Ys/A:2010-ACT-29]