Deduction for qualifying design expenditure
14S.—(1)  Subject to this section, for the purpose of ascertaining the income of a person carrying on a trade or business during the basis period for the year of assessment 2011 or the year of assessment 2012, 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 expenditure is allowable as a deduction under section 14, a deduction of 300% of A, in addition to the deduction allowed under that section; and
(b)where such expenditure is not allowable as a deduction under section 14, a deduction of 400% of A,
where A is —
(i)for the year of assessment 2011, the lower of the following:
(A)such expenditure incurred during the basis period for that year of assessment;
(B)$800,000; and
(ii)for the year of assessment 2012, the lower of the following:
(A)such expenditure incurred during the basis period for that year of assessment;
(B)the balance after deducting from $800,000 the lower of the amounts specified in paragraph (i)(A) and (B).
[22/2011]
(2)  Subject to this section and section 37IC, for the purpose of ascertaining the income of a person carrying on a trade or business during the basis period for the year of assessment 2013, the year of assessment 2014 or the year of assessment 2015, 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 the basis period:
(a)where such expenditure is allowable as a deduction under section 14, a deduction of 300% of A, in addition to the deduction allowed under that section; and
(b)where such expenditure is not allowable as a deduction under section 14, a deduction of 400% of A,
where A is —
(i)for the year of assessment 2013, the lower of the following:
(A)such expenditure incurred during the basis period for that year of assessment;
(B)$1,200,000;
(ii)for the year of assessment 2014, the lower of the following:
(A)such expenditure incurred during the basis period for that year of assessment;
(B)the balance after deducting from $1,200,000 the lower of the amounts specified in paragraph (i)(A) and (B); and
(iii)for the year of assessment 2015, the lower of the following:
(A)such expenditure incurred during the basis period for that year of assessment;
(B)the balance after deducting from $1,200,000 the lower of the amounts specified in paragraph (i)(A) and (B), and the lower of the amounts specified in paragraph (ii)(A) and (B).
[22/2011]
[Act 37 of 2014 wef 27/11/2014]
(2AA)  Subject to this section and section 37IC, for the purpose of ascertaining the income of a person carrying on a trade or business during the basis period for the year of assessment 2016, 2017 or 2018, 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 the basis period:
(a)where such expenditure is allowable as a deduction under section 14, a deduction of 300% of A, in addition to the deduction allowed under that section; and
(b)where such expenditure is not allowable as a deduction under section 14, a deduction of 400% of A,
where A is —
(i)for the year of assessment 2016, the lower of the following:
(A)such expenditure incurred during the basis period for that year of assessment;
(B)$1,200,000;
(ii)for the year of assessment 2017, the lower of the following:
(A)such expenditure incurred during the basis period for that year of assessment;
(B)the balance after deducting from $1,200,000 the lower of the amounts specified in paragraph (i)(A) and (B); and
(iii)for the year of assessment 2018, the lower of the following:
(A)such expenditure incurred during the basis period for that year of assessment;
(B)the balance after deducting from $1,200,000 the lower of the amounts specified in paragraph (i)(A) and (B), and the lower of the amounts specified in paragraph (ii)(A) and (B).
[Act 37 of 2014 wef 27/11/2014]
(2A)  In subsection (1), the amount under paragraph (i)(B) shall be substituted with “$400,000” if the person does not carry on any trade or business during the basis period for the year of assessment 2012, and the balance under paragraph (ii)(B) shall be substituted with “$400,000” if the person does not carry on any trade or business during the basis period for the year of assessment 2011.
[22/2011]
(2B)  In subsection (2) —
(a)if the person does not carry on any trade or business during the basis period for any one year of assessment between the year of assessment 2013 and the year of assessment 2015 (both years inclusive), the references to “$1,200,000” in the paragraphs of that subsection applicable to the other 2 years of assessment shall be substituted with “$800,000”;
(b)if the person does not carry on any trade or business during the basis periods for any 2 years of assessment between the year of assessment 2013 and the year of assessment 2015 (both years inclusive), the reference to “$1,200,000” in the paragraph of that subsection applicable to the remaining year of assessment shall be substituted with “$400,000”; and
(c)for the avoidance of doubt, no deduction shall be made from the substituted amount in subsection (2)(ii)(B) or (iii)(B) of the lower of the amounts specified in subsection (2)(i)(A) and (B) if the person does not carry on any trade or business during the basis period for the year of assessment 2013, and no deduction shall be made from the substituted amount in subsection (2)(iii)(B) of the lower of the amounts specified in subsection (2)(ii)(A) and (B) if the person does not carry on any trade or business during the basis period for the year of assessment 2014.
[22/2011]
(2C)  In subsection (2AA) —
(a)if the person does not carry on any trade or business during the basis period for any one year of assessment between the years of assessment 2016 and 2018 (both years inclusive), the references to “$1,200,000” in the paragraphs of that subsection applicable to the other 2 years of assessment shall be substituted with “$800,000”;
(b)if the person does not carry on any trade or business during the basis periods for any 2 years of assessment between the years of assessment 2016 and 2018 (both years inclusive), the reference to “$1,200,000” in the paragraphs of that subsection applicable to the remaining year of assessment shall be substituted with “$400,000”; and
(c)to avoid doubt, no deduction shall be made from the substituted amount in subsection (2AA)(ii)(B) and (iii)(B) of the lower of the amounts specified in subsection (2AA)(i)(A) and (B) if the person does not carry on any trade or business during the basis period for the year of assessment 2016, and no deduction shall be made from the substituted amount in subsection (2AA)(iii)(B) of the lower of the amounts specified in subsection (2AA)(ii)(A) and (B) if the person does not carry on any trade or business during the basis period for the year of assessment 2017.
[Act 37 of 2014 wef 27/11/2014]
(3)  For the purposes of subsections (1), (2) and (2AA), 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 2018 (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), (2) or (2AA) (as the case may be) for that year of assessment.
[29/2010; 22/2011]
[Act 37 of 2014 wef 27/11/2014]
(4)  For the purposes of subsections (1), (2) and (2AA), 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 2018 (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), (2) or (2AA) (as the case may be) for that year of assessment.
[29/2010; 22/2011]
[Act 37 of 2014 wef 27/11/2014]
(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.
[29/2010]
(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 primarily in Singapore and directly by that person; and
(b)where an approved design service provider has been engaged by the person to undertake primarily 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 or is to be 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.
[29/2010; 22/2011; 29/2012]
(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.
[29/2010]
(7A)  For the purpose of the definition of “qualifying design expenditure” in subsection (6), an industrial or product design project is undertaken primarily in Singapore if at least 3 of the following 5 design phases of the project are carried out wholly in Singapore:
(a)design research;
(b)idea generation;
(c)concept development;
(d)technical development;
(e)communication.
[22/2011]
(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.
[29/2010]