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Income Tax (Amendment) Bill

Bill No. 16/1997

Read the first time on 19th November 1997.

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) Act 1997.

(2) Section 11(f) to (i) shall have effect for the year of assessment 1997 and subsequent years of assessment.

(3) Sections 5, 8, 11(a), (c) to (e) and 12 to 16 shall have effect for the year of assessment 1998 and subsequent years of assessment.

Amendment of section 2

2. Section 2(1) of the Income Tax Act (referred to in this Act as the principal Act) is amended —

(a)

by inserting, immediately after the definition of “employee”, the following definition:

“ “employment pass” means an employment pass issued by the Controller of Immigration under the Immigration Regulations (Cap. 133, Rg 1);”;

(b)

by inserting, immediately after the definition of “prescribed”, the following definition:

“ “professional visit pass” means a professional visit pass issued by the Controller of Immigration under the Immigration Regulations (Cap. 133, Rg 1);”; and

(c)

by inserting, immediately after the definition of “tax”, the following definition:

“ “work permit” means a work permit issued by the Controller of Work Permits under the Employment of Foreign Workers Act (Cap. 91A);”.

Amendment of section 10

3. Section 10(5) of the principal Act is amended —

(a)

by deleting the word “and” at the end of paragraph (b); and

(b)

by deleting paragraph (c) and substituting the following paragraphs:

“(c)	notwithstanding paragraphs (a) and (b), any gains or profits derived by him by any exercise of a right or benefit to acquire shares in a company listed on the Stock Exchange of Singapore shall be the last done price on the listing date of the shares so acquired less the amount paid for such shares;
(d)	“the last done price on the listing date”, in relation to any shares referred to in paragraph (c), means the price of such shares in the open market at the last transaction on the date on which such shares are first listed on the Stock Exchange of Singapore after the acquisition of such shares by him; and
(e)	“shares” includes stocks.”.

Amendment of section 10C

4. Section 10C of the principal Act is amended —

(a)

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

“(1AA) Subsection (1A) shall not apply to contributions made by an employer in any year from 1st January 1999 to the Central Provident Fund in respect of an employee who holds a professional visit pass, an employment pass or a work permit in that year.”;

(b)

by deleting the words “subsection (1C)” in the penultimate line of subsection (1B) and substituting the words “subsections (1C) and (1D)”; and

(c)

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

“(1D) Subsection (1B) shall not apply to contributions made by an employer in any year from 1st January 1999 to the Central Provident Fund in respect of an employee who holds a professional visit pass, an employment pass or a work permit in that year.”.

Amendment of section 10D

5. Section 10D of the principal Act is amended —

(a)

by deleting subsections (2) and (3) and substituting the following subsections:

“(2) In determining the income of a lessor from the leasing of any machinery or plant, other than those which have been treated as though they had been sold pursuant to regulations made under subsection (1), the following provisions shall apply:

(a)

the Comptroller shall determine the manner and extent to which —

(i)	allowances under section 19, 19A, 20, 21, 22 or 23 and any expenses and donations allowable under this Act are to be deducted;
(ii)	any loss may be deducted under section 37;

(b)

where the lessor derives income from onshore leasing but does not derive income from offshore leasing, the allowances under section 19, 19A, 20, 21, 22 or 23 in respect of onshore finance leasing shall, subject to paragraph (c), only be available as a deduction against the income from such onshore finance leasing and any balance of the allowances shall not be available as a deduction against any other income;

(c)

where the lessor referred to in paragraph (b) ceases to derive income from onshore finance leasing in the basis period for any year of assessment, any balance of the allowances after the deduction in paragraph (b) shall be available as a deduction against any other income for that year of assessment or for any subsequent year of assessment in accordance with section 23;

(d)

where the lessor derives income from both onshore leasing and offshore leasing and such income is subject to tax under section 42(1) or 43(1), the allowances under section 19, 19A, 20, 21, 22 or 23 in respect of the leasing under any finance lease shall, subject to paragraph (e), only be available as a deduction against the income from such finance lease and any balance of the allowances shall not be available as a deduction against any other income;

(e)

where the lessor referred to in paragraph (d) ceases to derive income from the leasing of any machinery or plant under any finance lease in the basis period for any year of assessment, any balance of the allowances after the deduction in paragraph (d) shall be available as a deduction against any other income for that year of assessment and for any subsequent year of assessment in accordance with section 23;

(f)

where the lessor is a leasing company which derives income from onshore leasing and also derives income from offshore leasing subject to the concessionary rate of tax under section 43I —

(i)	the allowances under section 19, 19A, 20, 21, 22 or 23 in respect of onshore finance leasing shall firstly be available as a deduction against the income from such leasing and any balance of the allowances shall be available as a deduction against any other income in accordance with such regulations as may be prescribed;
(ii)	the allowances under section 19, 19A, 20, 21, 22 or 23 in respect of onshore operating leasing shall firstly be available as a deduction against the income from such leasing and any balance of the allowances shall be available as a deduction against any other income in accordance with such regulations as may be prescribed;
(iii)	any losses incurred in respect of onshore finance leasing or onshore operating leasing shall be available as a deduction against any other income in accordance with such regulations as may be prescribed.

(3) In this section —

“finance lease” means a lease of any machinery or plant (including any arrangement or agreement in connection with the lease) which has the effect of transferring substantially the obsolescence, risks or rewards incidental to ownership of such machinery or plant to the lessee;

“leasing company” and “offshore leasing” have the same meanings as in section 43I(8);

“onshore finance leasing” means the onshore leasing of any machinery or plant under any finance lease;

“onshore leasing” means the leasing, other than offshore leasing, of any machinery or plant;

“onshore operating leasing” means the onshore leasing of any machinery or plant, other than onshore finance leasing.”; and

(b)

by inserting, immediately after the word “finance” in the marginal note, the words “or operating”.

Amendment of section 13

6. Section 13 (1) of the principal Act is amended —

(a)	by deleting the words “5 years” in paragraph (p) and substituting the words “10 years”; and
(b)	by inserting, immediately after the word “Minister” in the second line of paragraph (v), the words “or such person as he may appoint”.

Amendment of section 14

7. Section 14(1) of the principal Act is amended —

(a)

by inserting, immediately after sub-paragraph (ii) of paragraph (e), the following sub-paragraph:

“(iii)

no deduction shall be allowed in respect of any sum contributed by an employer for the period on or after 1st January 1999 to the Central Provident Fund in respect of an employee who holds a professional visit pass, an employment pass or a work permit or who would be required to obtain such a pass or permit if he were to work in Singapore;”; and

(b)

by deleting the semi-colon at the end of paragraph (ea) and substituting a colon, and by inserting immediately thereafter the following proviso:

“Provided that no deduction shall be allowed in respect of any sum contributed by an employer for the period on or after 1st January 1999 to the medisave account maintained under the Central Provident Fund Act (Cap. 36) in respect of an employee who holds a professional visit pass, an employment pass or a work permit or who would be required to obtain such a pass or permit if he were to work in Singapore;”.

Amendment of section 14I

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

(a)	by deleting “2%” in the first line of subsection (4)(c) and substituting the words “2% in the case of a qualifying finance company or 3% in the case of a bank,”; and
(b)	by deleting “2%” in the fourth line of subsection (5)(b) and substituting the words “the appropriate percentage referred to in subsection (4)(c)”.

Amendment of section 20

9. Section 20(5A) of the principal Act is amended by inserting, immediately after the word “thereunder” at the end thereof, the words “except where the motor car is registered outside Singapore and used exclusively outside Singapore”.

Amendment of section 35

10. Section 35(2A) of the principal Act is amended by deleting the full-stop at the end of paragraph (e) and substituting a semi-colon, and by inserting immediately thereafter the following paragraph:

“(f)	derived during the period from 1st January 1995 to 31st December 1995 shall be treated as his statutory income for the year of assessment 1996 and be charged to tax at the rate applicable to him for that year of assessment.”.

Amendment of section 39

11. Section 39 (2) of the principal Act is amended —

(a)

by deleting “$1,500” wherever it appears in paragraphs (a), (b), (c), (ca)(ii), (d) (proviso) and (g) and substituting in each case “$2,000”;

(b)

by inserting, immediately after sub-paragraph (vi) of paragraph (e), the following sub-paragraph:

“(vii)

notwithstanding sub-paragraph (iii), no deduction shall be allowed in respect of any sum contributed to the Central Provident Fund for the period on or after 1st January 1999 by an employee who holds a professional visit pass, an employment pass or a work permit;”;

(c)

by deleting the words “$1,500 in that year;” in paragraph (f)(iii) and substituting the words “$2,000 in that year; and”;

(d)

by deleting the word “; and” at the end of paragraph (f)(iv) and substituting a comma;

(e)

by deleting sub-paragraph (v) of paragraph (f), and the words “there shall be allowed in respect of each such dependant a deduction of $3,500:” immediately thereafter and substituting the following words:

“there shall be allowed in respect of each such dependant —

(A)	a deduction of $4,500, where the dependant was living with him in the same household; or
(B)	a deduction of $3,500, where the dependant was not living with him in the same household but in respect of whom a sum of not less than $2,000, or such lower sum as the Comptroller may determine, was incurred in that year by the individual in maintaining the dependant:”;

(f)

by deleting the word “and” at the end of paragraph (j)(iii);

(g)

by inserting, immediately after sub-paragraph (iv) of paragraph (j), the following sub-paragraphs:

“(v)	no deduction under this paragraph shall be allowed to a wife of such national serviceman who is not entitled to a deduction under paragraph (i) for that year of assessment; and
(vi)	where such national serviceman dies during the basis period for any year of assessment for which he is not entitled to a deduction under paragraph (i), no deduction under this paragraph shall be allowed to his widow for that year of assessment;”;

(h)

by deleting sub-paragraph (iii) of paragraph (k), and substituting the following sub-paragraph:

“(iii)

where such national serviceman has died, his parents shall continue to be allowed a deduction under this paragraph, except that where he dies during the basis period for any year of assessment for which he is not entitled to a deduction under paragraph (i), his parents shall not be allowed a deduction under this paragraph for that year of assessment;”; and

(i)

by deleting the full-stop at the end of sub-paragraph (iv) of paragraph (k) and substituting the word “; and”, and by inserting immediately thereafter the following sub-paragraph:

“(v)	no deduction under this paragraph shall be allowed to a parent of an operationally ready national serviceman who is not entitled to a deduction under paragraph (i) for that year of assessment.”.

Amendment of section 43D

12. Section 43D(2) of the principal Act is amended by deleting the words “and 43L” and substituting the words “, 43L and 43M”.

Amendment of section 43I

13. Section 43I of the principal Act is amended —

(a)

by deleting paragraphs (b) and (c) of subsection (2) and substituting the following paragraphs:

“(b)	the allowances under section 19, 19A, 20, 21, 22 or 23 in respect of offshore finance leasing shall, subject to paragraph (c), only be deducted against the income from such leasing and any balance of the allowances shall not be available as a deduction against any other income;
(c)	where the leasing company ceases to derive income from offshore finance leasing in the basis period for any year of assessment, any balance of the allowances after the deduction in paragraph (b) shall be available as a deduction against any other income in accordance with regulations made under subsection (3);
(d)	the allowances under section 19, 19A, 20, 21, 22 or 23 in respect of offshore operating leasing shall firstly be deducted against the income from such leasing and any balance of the allowances shall, subject to paragraph (e), be deducted against the income from offshore finance leasing but not against any other income;
(e)	where the leasing company ceases to derive income from offshore operating leasing in the basis period for any year of assessment, any balance of the allowances after the deduction against the income from such leasing shall be available as a deduction against any other income in accordance with regulations made under subsection (3);
(f)	the Comptroller shall determine the manner and extent to which allowances under section 19, 19A, 20, 21, 22 or 23 and any expenses and donations allowable under this Act are to be deducted;
(g)	any losses incurred in respect of offshore finance leasing for any year of assessment shall, subject to paragraph (h), only be deducted against the income from offshore operating leasing but not against any other income for that year of assessment and any balance of the losses shall be available for deduction for any subsequent year of assessment in accordance with section 37 firstly against the income from offshore finance leasing and thereafter against the income from offshore operating leasing;
(h)	where the leasing company ceases to derive income from offshore finance leasing in the basis period for any year of assessment, any losses under section 37 in respect of such leasing shall firstly be deducted against the income from such leasing and any balance of the losses shall be available as a deduction against any other income in accordance with regulations made under subsection (3);
(i)	any losses incurred in respect of offshore operating leasing for any year of assessment shall, subject to paragraph (j), only be deducted against the income from offshore finance leasing but not against any other income for that year of assessment and any balance of the losses shall be available for deduction for any subsequent year of assessment in accordance with section 37 firstly against the income from offshore operating leasing and thereafter against the income from offshore finance leasing;
(j)	where the leasing company ceases to derive income from offshore operating leasing in the basis period for any year of assessment, any losses under section 37 in respect of such leasing shall firstly be deducted against the income from such leasing and any balance of the losses shall be available as a deduction against any other income in accordance with regulations made under subsection (3).”;

(b)

by deleting subsections (3) and (4) and substituting the following subsections:

“(3) The Minister may make regulations —

(a)	prescribing the manner and extent to which the allowances referred to in subsection (2)(c) or (e) or the losses referred to in subsection (2)(h) or (j) are to be deducted;
(b)	prescribing the manner and extent to which the allowance or loss referred to in subsection (7)(b) are to be deducted; and
(c)	generally for the determination of the income of a leasing company.

(4) Section 37B shall apply, with the necessary modifications, in relation to the deduction of allowances under section 19, 19A, 20, 21, 22 or 23 or losses under section 37 in respect of such part of the income of the leasing company as is subject to tax at the rate of tax under section 43(1)(a) and of such part of the income of the leasing company as is subject to tax at the concessionary rate of tax under this section; and for the purpose of such application any reference in section 37B to —

(a)	concessionary income shall be read as a reference to such part of the income of the leasing company as is subject to tax at the concessionary rate of tax under this section; and
(b)	normal income shall be read as a reference to such part of the income of the leasing company as is subject to tax at the rate of tax under section 43(1)(a).”;

(c)

by deleting the words “the Minister may by regulations prescribe” at the end of subsection (7)(b) and substituting the words “prescribed by regulations made under subsection (3)”; and

(d)

by deleting the full-stop at the end of subsection (8) and substituting a semi-colon, and by inserting immediately thereafter the following definitions:

“ “finance lease” has the same meaning as in section 10D(3);

“offshore finance leasing” means the offshore leasing of any machinery or plant under any finance lease;

“offshore operating leasing” means the offshore leasing of any machinery or plant, other than offshore finance leasing.”.

New section 43M

14. The principal Act is amended by inserting, immediately after section 43L, the following section:

“Concessionary rate of tax for credit rating agency

43M.—(1) Notwithstanding section 43, the Minister may by regulations provide that tax at the rate of 10% or such other concessionary rate shall be levied and paid for each year of assessment upon such income as the Minister may specify of an approved credit rating agency derived by it from the provision of such services as may be prescribed.

(2) Regulations made under subsection (1) may provide for the deduction of losses otherwise than in accordance with section 37(2).

(3) In this section, “credit rating agency” means a company carrying on the business in Singapore of providing credit rating services.”.

Miscellaneous amendments

15. The principal Act is amended by deleting the words “or 43L” wherever they appear in the following provisions and substituting in each case the words “, 43L or 43M”:

Sections 13B(1), (2) and (8), 13E(11)(b), 37B(7) and 44(17)(f)(ii).

Amendment of Fifth Schedule

16. Paragraph 1 of the Fifth Schedule to the principal Act is amended by deleting “$1,500” in sub-paragraphs (a) and (c) and substituting in each case “$2,000”.

Remission of tax

17.—(1) There shall be remitted the tax payable for the year of assessment 1997 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 $550 as determined by the Comptroller.

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