Income Tax (Amendment No. 2) Act 1996 - Singapore Statutes Online

REPUBLIC OF SINGAPORE

GOVERNMENT GAZETTE

ACTS SUPPLEMENT

Published by Authority

NO. 28]

Friday, September 6

[1996

The following Act was passed by Parliament on 27th August 1996 and assented to by the President on 29th August 1996:—

Income Tax (Amendment No. 2) Act 1996

(No. 28 of 1996)

I assent.

ONG TENG CHEONG

President

29th August 1996.

Date of Commencement: 6th September 1996

An Act to amend the Income Tax Act (Chapter 134 of the 1996 Revised Edition).

Be it enacted by the President with the advice and consent of the Parliament of Singapore, as follows:

Short title and commencement

1.—(1) This Act may be cited as the Income Tax (Amendment No. 2) Act 1996.

(2) Section 3 shall have effect for the year of assessment 1996 and subsequent years of assessment.

(3) Sections 4, 6, 8, 9(a), 10, 15 and 16 shall have effect for the year of assessment 1997 and subsequent years of assessment.

Amendment of section 10

2. Section 10 of the Income Tax Act (referred to in this Act as the principal Act) is amended —

(a)

by inserting, immediately after the words “and (b)” in sub-paragraph (11) of subsection (2)(c), the words “and any gains or profits under subsection (5)”; and

(b)

by deleting subsection (8) and substituting the following subsection:

“(8) Any maintenance payment received by —

(a)	a child under a maintenance order or a deed of separation; or
(b)	a parent under a maintenance order made under the Maintenance of Parents Act [Cap. 167B],

shall not be deemed to be income for the purposes of subsection (1).”.

Amendment of section 13H

3. Section 13H (18) of the principal Act is amended by inserting, immediately after the words “section 10B” in paragraph (c) of the definition of “investments”, the words “or in any unit trust designated under section 35 (7C)”.

Amendment of section 14I

4. Section 14I of the principal Act is amended —

(a)

by inserting, immediately after the word “bank” wherever it appears in subsections (1) and (2), the words “or qualifying finance company”;

(b)

by deleting subsection (3) and substituting the following subsection:

“(3) Where in a scheme of amalgamation involving 2 or more banks or finance companies whereby the whole or substantially the whole of the undertaking of any bank or finance company is transferred to another bank or finance company, the Minister may, if he thinks fit and on such conditions as he may impose, by order declare that any provisions in the account of the transferor bank or transferor finance company which have been transferred to the transferee bank or transferee finance company shall not be deemed under subsection (2)(b) to be a trading receipt of the transferor bank or transferor finance company; and the provisions so declared shall for the purposes of this section be treated as having been allowed to the transferee bank or transferee finance company as a deduction under this section.”;

(c)

by inserting, immediately after the definition of “bank” in subsection (6), the following definition:

“ “capital funds” has the same meaning as in the Finance Companies Act [Cap. 108]; ”;

(d)

by deleting the words “or advance made or granted by a bank,” in the first and second lines of the definition of “loan” in subsection (6) and substituting the words “, advance or credit facility made or granted by a bank or qualifying finance company,”;

(e)

by inserting, immediately after the definition of “provisions” in subsection (6), the following definition:

“ “qualifying finance company” means a company licensed under the Finance Companies Act [Cap. 108] to carry on financing business which has, in the basis period for any year of assessment for which the deduction under this section is first allowed, capital funds of not less than $50 million and a capital adequacy ratio of not less than 12% as determined under that Act; ”;

(f)

by inserting, immediately after the word “bank” wherever it appears in the definitions of “provisions”, “qualifying profit” and “securities” in subsection (6), the words “or qualifying finance company”;

(g)

by inserting, immediately after the words “section 10B in paragraph (c) of the definition of “securities”” in subsection (6), the words “or in any unit trust designated under section 35(7C)”; and

(h)

by inserting, immediately after the word “banks” in the marginal note, the words “and qualifying finance companies”.

Amendment of section 19A

5. Section 19A of the principal Act is amended —

(a)

by inserting, immediately after subsection (1C), the following subsections:

“(1D) Notwithstanding section 19, where a person proves to the satisfaction of the Comptroller that he has installed on or after lst January 1996 any efficient pollution control equipment or device for the purposes of a trade, business or profession carried on by him, he shall, in lieu of the allowances provided by subsection (1) or section 19, be entitled, if he so elects, to an allowance of 100% in respect of the capital expenditure incurred on the provision of the efficient pollution control equipment or device.

(1E) Notwithstanding section 19, where a person proves to the satisfaction of the Comptroller that he has installed on or after 1st January 1996 any certified energy-efficient equipment as a replacement for any other equipment, or has installed on or after that date any approved energy-saving equipment, for the purposes of a trade, business or profession carried on by him, he shall, in lieu of the allowances provided by subsection (1) or section 19, be entitled, if he so elects, to an allowance of 100% in respect of the capital expenditure incurred on the provision of the certified energy-efficient equipment or approved energy-saving equipment.

(1F) Any claim by a person for allowances in respect of any machinery or plant under this section for any year of assessment shall not be disallowed by reason only that the person has not in use the machinery or plant at the end of the basis period for that year of assessment.”;

(b)

by renumbering the existing subsection (1D) as subsection (1G);

(c)

by deleting the words “subsection (1D)” in the first line of subsection (5) and substituting the words “subsection (1G)”; and

(d)

by deleting the full-stop at the end of paragraph (b) of subsection (6) and substituting a semi-colon, and by inserting immediately thereafter the following paragraphs:

“(c)

“efficient pollution control equipment or device” means any equipment or device for the purposes of preventing, controlling or reducing air pollution or water pollution which satisfies the prescribed criteria;

(d)

“certified energy-efficient equipment” means —

(i)	any air-conditioning system;
(ii)	any boiler;
(iii)	any water pumping system;
(iv)	any washing or dry-cleaning machine system;
(v)	any refrigeration system;
(vi)	any lift or escalator; and
(vii)	any instant hot water system,

which has been certified by a professional engineer registered under the Professional Engineers Act to be more energy-efficient than the equipment which it replaces;

(e)

“approved energy-saving equipment” means —

(i)	any solar heating or cooling system;
(ii)	any solar energy collection system;
(iii)	any heat recovery system;
(iv)	any power factor controller;
(v)	any high efficiency electric motor;
(vi)	any variable speed drive motor control system;
(vii)	any high frequency lighting system;
(viii)	any computerised energy management system; and
(ix)	any other energy-saving equipment or device,

approved by the Minister or such person as he may appoint.”.

Amendment of section 39

6. Section 39 of the principal Act is amended —

(a)

by deleting “$1,000” in sub-paragraph (i) of subsection (2)(i) and substituting “$2,000”;

(b)

by deleting “$500” in sub-paragraph (ii) of subsection (2)(i) and substituting “$1,000”;

(c)

by deleting the full-stop at the end of paragraph (i) of subsection (2) and substituting a semi-colon, and by inserting immediately thereafter the following paragraphs:

“(j)

was the wife or widow of an operationally ready national serviceman and was a citizen of Singapore who had not made a claim under paragraph (k) and had in the case of the wife elected for separate assessment under section 51(6), there shall be allowed a deduction of $500 subject to the following provisions:

(i)	the marriage to such national serviceman had not been dissolved by divorce or annulment at the end of the basis period for that year of assessment;
(ii)	where the wife of such national serviceman dies during the basis period for that year of assessment, her executor shall not be entitled to a deduction under this paragraph if such national serviceman remarries during that basis period;
(iii)	where such national serviceman has more than one wife, the deduction under this paragraph in respect of such national serviceman shall be allowed to any one wife as such national serviceman may nominate; and
(iv)	where such national serviceman has more than one widow, only the widow who was nominated under sub-paragraph (iii) shall be allowed a deduction under this paragraph;

(k)

was a parent of an operationally ready national serviceman and was a citizen of Singapore who had not made a claim under paragraph (i) or (j), there shall be allowed a deduction of $500 subject to the following provisions:

(i)	such national serviceman is a legitimate child, stepchild or child adopted under any written law relating to the adoption of children;
(ii)	where more than 2 parents claim the deduction under this paragraph in respect of such national serviceman, the deduction in respect of such national serviceman shall be allowed to any 2 parents as such national serviceman may nominate;
(iii)	where such national serviceman has died, his parents shall continue to be allowed a deduction under this paragraph; and
(iv)	where a parent has more than one child who is an operationally ready national serviceman, the deduction under this paragraph shall be allowed to the parent in respect of only one such national serviceman.”; and

(d)

by inserting, immediately after the definition of “approved” in subsection (12), the following definition:

“ “operationally ready national serviceman” means any person who has completed national service under the Enlistment Act [Cap. 93] or been deemed to have completed such service by the proper authority; ”.

Amendment of section 40

7. Section 40 of the principal Act is amended —

(a)

by inserting, immediately after the words “assessable income” in subsections (1) and (2)(b), the words “(other than specified income)”;

(b)

by inserting, immediately after the words “all income” in the definition of “aggregate income” in subsection (3), the words “(other than specified income)”; and

(c)

by deleting the full-stop at the end of the definition of “pension” in subsection (3) and substituting a semi-colon, and by inserting immediately there after the following definition:

“ “specified income” means any income of a person not resident in Singapore which is subject to tax at the rate specified in section 43(1B).”.

Amendment of section 42

8. Section 42 of the principal Act is amended —

(a)

by deleting “30%” in the last line of subsection (2) and substituting in each case “28%”;

(b)

by deleting “27%” wherever it appears in sub sections (5) and (6) and substituting in each case “26%”;

(c)

by deleting the word “and” at the end of subsection (6)(c); and

(d)

by deleting the full-stop at the end of paragraph (d) of subsection (6) and substituting a semi-colon, and by inserting immediately thereafter the following paragraph:

“(e)	for the years of assessment 1994, 1995 and 1996, be read as a reference to 27%.”.

Amendment of section 43

9. Section 43 of the principal Act is amended —

(a)

by deleting “27%” wherever it appears in subsections (1) and (2) and substituting in each case “26%”;

(b)

by inserting, immediately after subsection (1A), the following subsections:

“(1B) Notwithstanding anything in this Act, tax at the rate of 15% shall be levied and paid on the gross amount of —

(a)	any income referred to in section 12(6); and
(b)	any income referred to in section 12(7)(a), (b) and (d) but excluding the incomes specified in subsection (1D),

accruing in or derived from Singapore on or after 28th February 1996 by a person not resident in Singapore which is not derived by the person from any trade, business, profession or vocation carried on or exercised by him in Singapore and which is not effectively connected with any permanent establishment in Singapore of the person.

(1C) In subsection (1B), “gross amount”, in relation to any income referred to in that subsection, means the full amount of the income without any deduction and relief being allowed against the income under the provisions of this Act.

(1D) The incomes excluded under subsection (1B)(b) are —

(a)	any royalty and other payments referred to in section 10(9) or (10) which are derived by the person not resident in Singapore; and
(b)	any payment to a person not resident in Singapore for the rendering of assistance or service in connection with the application or use of scientific, technical, industrial or commercial knowledge or information.”; and

(c)

by deleting the full-stop at the end of paragraph (d) of subsection (2) and substituting a semi-colon, and by inserting immediately thereafter the following paragraph:

“(e)	for the years of assessment 1994, 1995 and 1996, be read as a reference to 27%.”.

Amendment of section 44

10. Section 44 of the principal Act is amended —

(a)

by deleting “27%” in subsection (1) and substituting “26%”; and

(b)

by inserting, immediately after subsection (16), the following subsection:

“(16A) Notwithstanding anything in this Act, where the tax on any dividend paid in 1996 has been deducted at the rate of 27% —

(a)	the amount of such dividend received by a shareholder shall be deemed to have been paid without deduction of tax and to be a dividend of such a gross amount as after deduction of tax at the rate of 26% would be equal to the net amount paid; and a sum equal to the difference between such gross amount and the net amount paid shall be deemed to have been deducted from the dividend as tax; and
(b)	the difference between the amount of the tax deducted at 27% from such dividend and the amount deemed to have been so deducted under paragraph (a) shall be added to the balance on the 1st day of the year of assessment 1997 and deemed to be a part thereof.”.

Amendment of section 45

11. Section 45 of the principal Act is amended —

(a)

by deleting “27%” in the fifth line of sub section (1) and substituting the words “26% or the rate specified in subsection (9)(g) or section 43(1B), as the case may be,”;

(b)

by deleting “27%” in the third line of subsection (2)(b) and substituting the words “26% or the rate specified in subsection (9)(g) or section 43(1B), as the case may be,”; and

(c)

by deleting the full-stop at the end of paragraph (e) of subsection (9) and substituting a semi-colon, and by inserting immediately thereafter the following paragraphs:

“(f)	at the rate of 27% on every payment made on or after 1st January 1996 which would be assessable on the person receiving the payment for the year of assessment 1994, 1995 or 1996;
(g)	at the rate of 26% on every payment made on or after 28th February 1996 to a person not known to be resident in Singapore of interest which has accrued to or is derived by the person for the period from 1st January 1996 to 27th February 1996.”.

Amendment of section 45B

12. The principal Act is amended by renumbering section 45B as subsection (1) of that section, and by inserting immediately thereafter the following subsection:

“(2) For the purposes of this section and section 45C, the references to interest therein shall be read as references to interest which is subject to deduction of tax at the rate of 26% on every dollar of the interest.”.

Amendment of section 46

13. Section 46 of the principal Act is amended by inserting, immediately after subsection (5), the following subsection:

“(5A) Notwithstanding subsection (1), where the tax on any dividend paid in 1996 has been deducted at the rate of 27%, the tax to be set off under subsection (1) shall be the sum deemed to be the tax deducted from such dividend under section 44(16A).”.

Amendment of section 48

14. Section 48 of the principal Act is amended —

(a)

by inserting, immediately after the word “income” in the third line of subsection (2), the words “(other than specified income)”;

(b)

by inserting, immediately after the word “payable” in the third line of subsection (4), the words “on any income other than specified income”;

(c)

by inserting, immediately after the word “income” in the fifth and in the seventh lines of subsection (4), the words “(other than specified income)”; and

(d)

by inserting, immediately after subsection (4), the following subsection:

“(4A) In this section, “specified income” means any income of a person not resident in Singapore which is subject to tax at the rate specified in section 43(1B).”.

Amendment of section 50

15. Section 50 of the principal Act is amended by deleting “30%” in the last line of subsection (3) and substituting in each case “28%”.

Amendment of Second Schedule

16. The Second Schedule to the principal Act is amended by deleting Part A and substituting the following Part.

“Part A

Rates of Tax on Chargeable Income of An Individual or A Hindu Joint Family

Chargeable Income

Rate of Tax

For every dollar of the first

7,500

2.0%

For every dollar of the next

12,500

5.0%

For every dollar of the next

15,000

8.0%

For every dollar of the next

15,000

12.0%

For every dollar of the next

25,000

16.0%

For every dollar of the next

25,000

20.0%

For every dollar of the next

50,000

22.0%

For every dollar of the next

50,000

23.0%

For every dollar of the next

200,000

26.0%

For every dollar exceeding

400,000

28.0%

”.

Remission of tax

17.—(1) There shall be remitted the tax payable for the year of assessment 1996 by an individual or Hindu joint family resident in Singapore a sum equal to the aggregate of —

(a)	10% of the tax payable for that year of assessment; and
(b)	an amount not exceeding $600 as determined by the Comptroller.

(2) The remission under subsection (1)(a) shall be given before the remission under subsection (1)(b).

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