21.—(1) Where machinery or plant in the case of which any of the events mentioned in section 20(1) has occurred is replaced by the owner thereof and a balancing charge falls to be made on the owner by reason of that event or, but for this section, would have fallen to be made on the owner by reason thereof, then, if by written notice to the Comptroller the owner so elects, this section has effect.
(2) If the amount on which the charge would have been made is greater than the capital expenditure on providing the new machinery or plant —
(a)
the charge is to be made only on an amount equal to the difference;
(b)
no initial allowance, no balancing allowance and no annual allowance may be made or allowed in respect of the new machinery or plant or the expenditure on the provision thereof; and
(c)
in considering whether any (and if so what) balancing charge falls to be made in respect of the expenditure on the new machinery or plant, there is deemed to have been made in respect of that expenditure an initial allowance equal to the full amount of that expenditure.
(3) If the capital expenditure on providing the new machinery or plant is equal to or greater than the amount on which the charge would have been made —
(a)
the charge must not be made;
(b)
the amount of any initial allowance in respect of the said expenditure is to be calculated as if the expenditure had been reduced by the amount on which the charge would have been made;
(c)
in considering what annual allowance is to be made in respect of the new machinery or plant, there is to be left out of account a proportion of the machinery or plant equal to the proportion which the amount on which the charge would have been made bears to the amount of the said expenditure; and
(d)
in considering whether any (and if so what) balancing allowance or balancing charge falls to be made in respect of the new machinery or plant, the initial allowance in respect thereof is deemed to have been increased by an amount equal to the amount on which the charge would have been made.
(4) This section does not apply to the provision of any new motor car for which no allowance is allowed by virtue of section 19(5).
(5) For the purpose of this section, where the capital expenditure incurred in providing, in the basis period for the year of assessment 2013 or any preceding year of assessment, a new motor car registered outside Singapore and used exclusively outside Singapore exceeds $35,000, the expenditure incurred is deemed to be $35,000.