Income Tax (Amendment) Bill

Bill No. 18/1969

Read the first time on 15th October 1969.
An Act to amend the Income Tax Ordinance (Chapter 166 of the 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, 1969, and shall come into operation on the 1st day of January 1970.
(2)  Save as otherwise provided, this Act shall have effect for the year of assessment 1970 and subsequent years of assessment.
Amendment of section 6
2.  Section 6 of the Income Tax Ordinance (hereinafter in this Act referred to as “the Ordinance”) is hereby amended by inserting immediately after subsection (8) thereof the following new subsection: —
(9)  Notwithstanding anything contained in this section, the Comptroller may furnish to the Manager of the Central Provident Fund Board any information which may be required by the Manager of the said Board in the performance of his duties, or may permit such access to any records or documents as may be necessary for such purpose.”.
Amendment of section 13
3.  Section 13 of the Ordinance is hereby amended —
(a)by deleting the colon appearing at the end of paragraph (s) of subsection (1) thereof and substituting therefor a semi-colon;
(b)by inserting immediately thereafter the following new paragraphs: —
(t)the income derived on or after the 20th day of August 1968, from interest on monies held on deposit in an approved bank in Singapore by —
(i)a non-resident individual; and
(ii)a person, other than an individual, if such person does not, by himself or in association with others, carry on a business in Singapore, and does not have a permanent establishment in Singapore;
(u)any interest derived on or after the first day of January, 1968, by any person from the deposit of monies with the Savings Bank constituted under the Post Office Savings Bank Ordinance (Cap. 106):”; and
(c)by inserting immediately after subsection (5) thereof the following new subsections: —
(6)  For the purposes of this section —
“approved bank” means a bank in Singapore approved by the Minister by order published in the Gazette;
“permanent establishment” means a fixed place where a business may be wholly or partly carried on and in particular includes —
(a)a place of management;
(b)a branch;
(c)an office;
(d)a factory;
(e)a workshop;
(f)a mine, oil well, quarry or other place of extraction of natural resources;
(g)a building site, a construction or assembly project; and
(h)a farm or plantation.
(7)  The Minister may by order exempt from tax the income received by a person resident in Singapore from such sources in any country outside Singapore (other than a country with which an arrangement for the avoidance of double taxation remains in effect) as may be specified in the order.
(8)  Any order made under subsection (7) of this section may be either general or specific and may prescribe the conditions subject to which the tax shall be exempted and the manner in which application for exemption is to be made.”.
New section 13A
4.  The Ordinance is hereby amended by inserting immediately after section 13 thereof the following new section: —
Exemption of shipping profits
13A.—(1)  (a)  There shall be exempt from tax the income of a shipping enterprise derived or deemed to be derived on or after the first day of January, 1969, from the operation of Singapore ships as hereinafter provided.

(b)Such exemption shall be backdated to the date of provisional registration if the owner has subsequently obtained a permanent certificate of registration in respect of the ship.

(2)  A shipping enterprise shall maintain separate accounts for the income derived or deemed to be derived from the operation of each Singapore ship:
Provided that where expenses have been incurred by a shipping enterprise which are not directly attributable to a Singapore ship the Comptroller may allocate as expenses such amounts which might reasonably and properly have been incurred in the normal course of its business in respect of such ship:
And provided further that in determining the income of a shipping enterprise the capital allowances provided for in sections 16, 17, 18, 19, 20, 21 and 22 of this Ordinance shall be duly taken into account notwithstanding that no claim for such allowances has been made.
(3)  Where a shipping enterprise has in respect of the operation of Singapore ships incurred a loss for any year such loss shall be available as a deduction as provided for in subsection (2) of section 37 of this Ordinance.
(4)  The Comptroller shall for each year of assessment issue to a shipping enterprise a statement showing the amount of income derived from the operation of Singapore ships by the shipping enterprise; and Parts XI and XII of this Ordinance (relating to objections and appeals) and any rules made under this Ordinance shall apply mutatis mutandis as if such statement were a notice of assessment.
(5)  Subject to subsection (8) of this section where any statement issued under subsection (4) of this section has become final and conclusive, the amount of income shown therein shall not form part of the statutory income of a shipping enterprise for the year of assessment to which the statement relates and shall be exempt from tax:
Provided that the Comptroller may, before such statement has become final and conclusive, treat a specified amount of the income of a shipping enterprise as exempt from tax pending such statement becoming final and conclusive.
(6)  The following provisions shall apply to a shipping enterprise resident in Singapore: —
(a)as soon as any amount of income of the shipping enterprise is exempted under subsection (5) of this section, such amount shall be credited to an account to be kept by the shipping enterprise for the purpose of this section;
(b)where such account is in credit at the date on which any dividends are paid by the shipping enterprise out of income which has been exempted, an amount equal to such dividends or to such credit, whichever is the lesser, shall be debited to such account;
(c)so much of the amount of any dividends debited to such account as are received by a shareholder in the shipping enterprise shall, if the Comptroller is satisfied with the entries in such account, be exempt from tax in the hands of such shareholder;
(d)any dividends debited to such account shall be treated as having been distributed to the shareholders of the shipping enterprise or any particular class of such shareholders in the same proportions as such shareholders were entitled to payment of the dividends giving rise to the debit;
(e)section 44 of this Ordinance shall not apply to any dividends or part thereof debited to such account;
(f)where an amount has been received by way of dividends from the shipping enterprise by a shareholder and such amount is exempt from tax under this section, if that shareholder is a holding company any dividends paid by such holding company to its shareholders, to the extent that the Comptroller is satisfied that those dividends are paid out of such amount, shall be exempt from tax in the hands of those shareholders; and section 44 of this Ordinance shall not apply to any such dividend or part thereof.
(7)  A shipping enterprise shall deliver to the Comptroller a copy of the accounts referred to in subsections (2) and (6) of this section made up to any date specified by him whenever called upon to do so by notice in writing.
(8)  Notwithstanding the foregoing provisions of this section, where it appears to the Comptroller that —
(a)any income of a shipping enterprise which has been exempt; or
(b)any dividend (including a dividend paid by a holding company to which paragraph (f) of subsection (6) of this section applies) exempted in the hands of any shareholder,
ought not to have been so exempt, the Comptroller may at any time within twelve years from the date of the statement referred to in subsection (4) of this section —
(i)make such assessment or additional assessment upon the shipping enterprise or any such shareholder as may appear to be necessary in order to make good any loss of tax; or
(ii)direct the shipping enterprise to debit its account kept in accordance with subsection (6) of this section with such amount as the circumstances may require.
(9)  Parts XI and XII of this Ordinance (relating to objections and appeals) and any rules made under this Ordinance shall apply mutatis mutandis as if an assessment or a direction under subsection (8) of this section were a notice of assessment.
(10)  For the purposes of this section —
“holding company” means a company which holds not less than fifty per cent beneficial interest in the issued shares of a shipping enterprise;
“shipping enterprise” means any company owning or operating Singapore ships;
“Singapore ship” means a ship in respect of which a permanent certificate of registry has been issued under any written law in Singapore relating to merchant shipping.
(11)  Nothing in this section shall affect the operation of section 27 of this Ordinance in ascertaining the income of a non-resident person owning or operating Singapore ships.”.
Repeal of section 14B
5.  Section 14B of the Ordinance is hereby repealed.
Repeal and re-enactment of section 35
6.  Section 35 of the Ordinance is hereby repealed and the following substituted therefor: —
Basis for computing statutory income
35.—(1)  Save as provided in this section, the income of any person for each year of assessment (hereinafter referred to as the “statutory income”) shall be the full amount of his income for the year preceding the year of assessment from each source of income.
(2)  Where the Comptroller is satisfied that any person usually makes up the accounts of a trade, business, profession or vocation carried on or exercised by him, to some day other than that immediately preceding any year of assessment, he may direct that the statutory income from that source be computed on the amount of gains or profits of the year ending on that day in the year preceding the year of assessment.
(3)  Where the statutory income of any person from a trade, business, profession or vocation has been computed by reference to an account made up to a certain day, and such person fails for any reason whatsoever to make up an account to the corresponding day in the year following, the statutory income from the trade, business, profession or vocation both of the year of assessment in which such failure occurs and of the two years of assessment following shall be computed on such basis as the Comptroller in his discretion thinks fit.
(4)  Where in the case of any trade, business, profession or vocation it is necessary in order to arrive at the income of any year of assessment or other period, to divide and apportion to specific periods the income of any period for which accounts have been made up, or to aggregate such income or any apportioned parts thereof, it shall be lawful to make such a division, and apportionment or aggregation, and any apportionment under this section shall be made in proportion to the number of days in the respective periods, unless the Comptroller, having regard to any special circumstances, otherwise directs.
(5)  The statutory income of an executor of a deceased person for any year of assessment shall be the income of the estate administered by such executor computed in accordance with the provisions of subsections (1) to (4) of this section:
Provided that in the case of an estate administered in Singapore a deduction shall be allowed in respect of any income included in the computation of the statutory income which is received by, distributed to or applied to the benefit of any beneficiary of the estate before the 31st day of March in the year next following the year of assessment.
(6)  The statutory income of any beneficiary of such estate shall be the amount so received by, or distributed to him, or applied to his benefit during the year preceding the year of assessment.
(7)  The statutory income of a trustee (not being the trustee of an incapacitated person) for any year of assessment shall be computed in accordance with the provisions of subsections (1) to (4) of this section.
(8)  The statutory income for any year of assessment of any beneficiary under a trust shall be that share of the statutory income of the trustee for that year of assessment which corresponds to the share of the trust income to which such beneficiary is entitled for the year preceding the year of assessment.
Cessation of source of income commenced before 1st January, 1969
35A.—(1)  The provisions of this section shall only apply to any trade, business, profession, vocation or employment (except subsidiary employment which had not been treated as a new source on commencement) which commenced before the 1st day of January 1969.
(2)  Subject to subsection (3) of this section, where a person permanently ceases to carry on or exercise any trade, business, profession, vocation or employment to which this section applies, his statutory income therefrom shall be —
(a)as regards the year of assessment in which the cessation occurs, the amount of the income of that year;
(b)as regards the year of assessment preceding that in which cessation occurs, the amount of income as computed in accordance with the provisions of section 35 of this Ordinance, or the amount of income of that year, whichever is the greater.
(3)  Subsection (2) of this section shall not apply to a company which ceases to carry on any trade or business on or after the 15th day of October 1969, where such trade or business or part thereof is transferred to or carried on by any person as that person’s trade or business, whether with or without any alteration.
(4)  For the purposes of this section where a change occurs in a partnership of persons carrying on any trade, business or profession by reason of retirement or death, or the dissolution of the partnership as to one or more of the partners, or the admission of a new partner, every such person which is not a company shall be deemed to cease to carry on that trade, business or profession as from the date the change occurs.
Special provisions in respect of new sources of income in 1968 and 1969
35B.—(1)  Where a person has commenced any source of income in 1969, his statutory income from that source shall not be chargeable to tax for the year of assessment 1969.
(2)  Where a person has commenced any trade, business, profession, vocation or employment in 1968 any election made by such person to be assessed for the years of assessment 1969 and 1970 on his actual income for those years shall have no effect in respect of the year of assessment 1970.”.
Amendment of section 36
7.  Section 36 of the Ordinance is hereby amended by deleting subsection (2) thereof.
Amendment of section 37
8.  Section 37 of the Ordinance is hereby amended —
(a)by deleting paragraph (a) of subsection (2) thereof and substituting therefor the following: —
(a)the amount of a loss incurred by that person during any year preceding the year of assessment in any trade, business, profession or vocation, which, if it had been a profit would have been assessable under this Ordinance, and which has not been allowed against his statutory income of a prior year:
Provided that a deduction under this subsection shall be made as far as possible from the statutory income of the first year of assessment after the year in which such loss was incurred, and, so far as it cannot be so made, then from the statutory income of the next year of assessment, and so on;”;
(b)by deleting paragraph (b) of subsection (2) thereof;
(c)by deleting subsection (3) thereof and substituting therefor the following: —
(3)  For the purposes of subsection (2) of this section the loss incurred during any year shall be computed, where the Comptroller so decides, by reference to the year ending on a day in such year which would have been adopted under subsection (2) of section 35 of this Ordinance for the computation of the statutory income of the following year of assessment if a profit had arisen.”; and
(d)by adding immediately after subsection (4) thereof the following new subsections: —
(5)  Notwithstanding anything contained in subsection (2) of this section, the amount of any loss incurred by a company in any trade or business shall be disregarded unless the Comptroller is satisfied that the shareholders of the company on the last day of the year in which the loss was incurred were substantially the same as the shareholders of the company on the first day of the year of assessment in which such loss would otherwise be deductible under subsection (2) of this section.
(6)  A loss disregarded under subsection (5) of this section shall not be allowed in any subsequent year of assessment.
(7)  For the purposes of subsection (5) of this section —
(a)the shareholders of a company at any date shall not be deemed to be substantially the same as the shareholders at any other date unless, on both those dates, not less than fifty per cent of the paid-up capital of the company was held by or on behalf of the same persons, nor unless, on both those dates, not less than fifty per cent of the nominal value of the allotted shares in the company were held by or on behalf of the same persons; and
(b)shares in a company held by or on behalf of another company shall be deemed to be held by the shareholders of the last-mentioned company, and shares held by or on behalf of the trustee of the estate of a deceased shareholder or by or on behalf of the person entitled to those shares as beneficiaries under the will or any intestacy of a deceased shareholder shall be deemed to be held by that deceased shareholder.”.
Repeal of section 40A
9.  Section 40A of the Ordinance is hereby repealed.
New section 46A
10.  The Ordinance is hereby amended by inserting immediately after section 46 thereof the following new section: —
Special allowance for interest received as trading receipts
46A.—(1)  A person who on or after the first day of January, 1969, receives as trading receipts interest on any bonds, securities, stock or fund specified in the Fifth Schedule to this Ordinance shall be entitled to a credit of one-half of the tax chargeable on the gross amount of such interest:
Provided that the credit shall not exceed the total amount of tax payable by him for that year of assessment on the gross amount of such interest which has been brought to charge.
(2)  The Minister may, by order published in the Gazette, add to or amend the Fifth Schedule to this Ordinance.”.
Amendment of section 68
11.  Section 68 of the Ordinance is hereby amended by inserting immediately after subsection (7) thereof the following new subsections: —
(8)  Where any person ceases or is about to cease being a partner, and such person is likely to be chargeable to tax in Singapore, the partners present in Singapore shall, unless it is impracticable to do so, give one month’s notice in writing to the Comptroller before such person ceases to be a partner, stating the name and address of such person and the expected date of such person ceasing to be a partner:
Provided that the Comptroller may accept such shorter notice as he may deem reasonable.
(9)  Where any partner is leaving or intending to leave Singapore for any period exceeding three months and is likely to be chargeable to tax in Singapore, the partners present in Singapore shall, unless it is impracticable to do so, give one month’s notice in writing to the Comptroller of the expected date of departure of such partner:
Provided that the Comptroller may accept such shorter notice as he may deem reasonable:
And provided further that this subsection shall not apply in the case of a partner who is required in the course of his business to leave Singapore at frequent intervals.
(10)  Where any person who has ceased or is about to cease being a partner in Singapore has monies due or payable to him from the partnership, the partners present in Singapore shall not, without the written permission of the Comptroller, pay such monies or any part thereof to such person.”.
New section 72A
12.  The Ordinance is hereby amended by inserting immediately after section 72 thereof the following new section: —
Advance assessments
72A.—(1)  Notwithstanding the provisions of section 72 of this Ordinance, where —
(a)in any year of assessment a person ceases to carry on a trade, business, profession, vocation or employment; or
(b)the Comptroller is of the opinion that any person possessing a source of income is about to leave Singapore and is likely to cease to possess that source in the year of assessment in which he leaves Singapore or in the following two years,
the Comptroller may make such assessment or additional assessments as may be necessary to bring to charge the full amount of the income from all sources derived or to be derived by such person up to the year in which the source of income ceases or is likely to cease.
(2)  Where the income of a person is ascertained under the provisions of section 27 of this Ordinance, the Comptroller may make an assessment in respect of any income of such person within the year in which the income is deemed to accrue.
(3)  Where the statutory income of any person has been computed under subsection (2) of section 35 of this Ordinance, the Comptroller may, if he thinks fit, as soon as may be after the end of such accounting period make an assessment in respect of the income of that person for the year of assessment following that in which such accounting period ends.
(4)  Where the Comptroller has exercised his powers to make an advance assessment under this section, such assessment shall be made on the assumption that —
(a)the provisions of this Ordinance in force during the year of assessment in which such assessment is made will continue in force for the year of assessment for which such assessment is made; and
(b)if such person so assessed is an individual, the personal circumstances of that person will be the same in the year of assessment as they were when such assessment is in fact made:
Provided, however, that if it appears to the Comptroller that by reason of such assumption an advance assessment so made has become less favourable to that person than it would have been if made under the provisions of subsection (1) of section 35 of this Ordinance, he shall amend such assessment as to him seems reasonable:
And provided further that nothing in this section shall affect the Comptroller’s right to make any additional assessment due to any change of circumstances and without prejudice to the generality of section 73 of this Ordinance.”.
Amendment of section 91
13.  Section 91 of the Ordinance is hereby amended by inserting immediately after subsection (4) thereof the following new subsections: —
(5)  Any partner who fails to comply with the provisions of subsection (10) of section 68 of this Ordinance shall be liable to pay the amount of the tax which by reason of such failure cannot be recovered from the person who has ceased to be a partner:
Provided that the liability of a remaining partner under this subsection shall not exceed the amount paid by such partner in contravention of the said subsection (10).
(6)  Nothing in subsection (5) of this section shall preclude a partner paying any amount of tax under that subsection from recovering such amount from the person who has ceased to be a partner.”.
Amendment of section 93
14.  Section 93 of the Ordinance is hereby amended by inserting immediately after subsection (3) thereof the following new subsections: —
(4)  Where an order or decision by the Board of Review or by any court gives rise to any claim for a refund of tax, the Comptroller may, where he has given written notice of his intention to appeal against such order or decision, withhold the refund until such time as the appeal is finally determined.
(5)  Where a refund is withheld under subsection (4) of this section, the Comptroller shall pay interest at the rate of five per centum per annum with effect from the date of the order or decision appealed against on the amount of refund ultimately determined to be due as a result of any appeal.”.
New Fifth Schedule
15.  The Ordinance is hereby amended by inserting immediately after the Fourth Schedule thereto the following new Schedule: —
FIFTH SCHEDULE
(Section 46A).
Name of bond, securities, stock or fund.
5% Tax Free Registered Stock 1968.
% Tax Free Registered Stock 1968.
% Tax Free Bearer Bonds 1968.
”.