Initial and annual allowances for 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 is to 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.
(2) For the purposes of subsection (1) —
(a)
where 2 basis periods overlap, the period common to both is 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 is 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 is 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 is treated for the purposes of subsection (1) as if it had been incurred by that person on the first day on which that person 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 before 1 January 2006 on the construction of that building or structure, an allowance, to be known as an “annual allowance”, equal to 3% of the total capital expenditure incurred by that person on the construction of that building or structure is to be made to that person for that year of assessment.
(5) Where at any time in or after the basis period for the first year of assessment under this Act and before 1 January 2006, the interest in a building or structure which is the relevant interest in relation to any capital expenditure incurred before that date on the construction of that building or structure is sold while the building or structure is an industrial building or structure or after it has ceased to be one, the annual allowance, in the years of assessment the basis periods for which end after the time of that sale, is to be computed by reference to the residue of that expenditure immediately after the sale and is —
(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.
(6) In the case referred to in subsection (4), no annual allowance may 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.
(6A) 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 that interest is the relevant interest in relation to —
(a)
any capital expenditure incurred by the person on or after 1 January 2006 on the construction of that building or structure; or
(b)
a sale or purchase agreement entered into for that building or structure on or after that date, whether or not the building or structure was previously used as an industrial building or structure,
an annual allowance determined under subsection (6B) is to be made to the person for that year of assessment.
(6B) The annual allowance under subsection (6A) is equal to —
(a)
in the case referred to in subsection (6A)(a), 3% of the total capital expenditure incurred by the person on the construction of the building or structure; or
(b)
in the case referred to in subsection (6A)(b), 3% of the capital expenditure incurred by the person on the purchase of the building or structure.
(7) For the purposes of application to any industrial building or structure occupied for the purposes of a trade in intensive poultry production and approved by the Minister or such person as the Minister may appoint under section 18(1), the reference to 3% in subsections (4), (5) and (6B) and in sections 17(3)(a) and 18(9) is a reference to 5%.
(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 or such person as the Minister may appoint under section 18(1) —
(a)
the reference to 25% in subsection (1) is a reference to 20%;
(b)
the reference to 3% in subsections (4), (5) and (6B) and in sections 17(3)(a) and 18(9) is a reference to 2%; and
(c)
the reference to capital expenditure in subsections (1) and (4) does not include any capital expenditure incurred before 1 January 1982.
(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 or such person as the Minister may appoint under section 18(1)(i) —
(a)
the reference to 25% in subsection (1) is a reference to 20%;
(b)
the reference to 3% in subsections (4), (5) and (6B) and in sections 17(3)(a) and 18(9) is a reference to 2%; and
(c)
the reference to capital expenditure in subsections (1), (3) and (4) does not include any capital expenditure incurred before 1 January 1986.
(10) Despite anything in this section and section 17, where a person carrying out a project for the promotion of the tourist industry approved by the Minister or such person as the Minister may appoint under section 18(1)(i) 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 (if the year of assessment relating to the basis period in which the approval is revoked is 2007 or a preceding year of assessment) or 4 years (if the year of assessment relating to the basis period in which the approval is revoked is 2008 or a subsequent year of assessment) 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 that person.
(11) Despite anything in this section, the amount of an annual allowance made to a person for any year of assessment in respect of any expenditure must not in any case 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 the person’s basis period for that year of assessment.
(12) For the purposes of subsection (1), where a person has incurred capital expenditure before 1 January 2006 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, the person is 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 the person for that industrial building or structure or the interest therein, whichever is 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.
(13) For the purposes of subsection (1), where a person has incurred capital expenditure on or after 1 January 2006 on the purchase of an industrial building or structure which has not previously been used by any person, the person is deemed to have incurred expenditure on the construction of that industrial building or structure equal to the capital expenditure incurred by the person on the purchase of that industrial building or structure if —
(a)
the person claiming the initial allowance by virtue of this subsection purchased the industrial building or structure 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.
(14) Unless otherwise provided in this Act or the Economic Expansion Incentives (Relief from Income Tax) Act 1967, where, in the basis period for any year of assessment, the trade, for which purpose the industrial building is used, produces income that is exempt from tax as well as income chargeable with tax, the allowances for that year of assessment must be made against each income for that year of assessment in such proportion as appears reasonable to the Comptroller in the circumstances.
(15) Subject to section 18B, this section does not apply to any capital expenditure incurred on or after 23 February 2010 on the construction or purchase of an industrial building or structure.
(16) Subject to subsection (18) and section 18B, no annual allowance may be made under subsections (4), (5) and (6A) to a person who incurs capital expenditure on or before 22 February 2010 on the construction or purchase of a building or structure which is not an industrial building or structure on 22 February 2010 but is an industrial building or structure on or after 23 February 2010.
(17) Section 18(2) and (3) applies for the purpose of determining under subsection (16) whether a building or structure is an industrial building or structure on 22 February 2010.
(18) Despite subsection (16), annual allowances under subsection (6A)(a) are to be made to a person who incurs capital expenditure on or before 22 February 2010 on a building or structure which is still under construction on 22 February 2010 and which is to be an industrial building or structure upon completion of that construction, if the person —
(a)
on or before 22 February 2010 —
(i)
has been granted the option to purchase the land or has entered into a sale and purchase agreement for the land on which the industrial building or structure is to be constructed;
(ii)
has entered into a lease agreement to lease the land on which the industrial building or structure is to be constructed; or
(iii)
has submitted an application to the Government or any statutory board —
(A)
to bid for the purchase therefrom of the land on which the industrial building or structure is to be constructed; or
(B)
to lease therefrom the land on which the industrial building or structure is to be constructed; and
(b)
on or before 31 December 2010, has made an application for planning permission or conservation permission to the competent authority in accordance with the Planning Act 1998 for the development of the land comprising the construction work.