Income Tax (Amendment) Bill

Bill No. 42/1973

Read the first time on 11th July 1973.

An Act to amend the Income Tax Act (Chapter 141 of the Revised Edition).

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

Short title

1.—(1) This Act may be cited as the Income Tax (Amendment) Act, 1973.

(2) This Act shall, except as provided in subsection (3) of this section, have effect for the year of assessment 1973 and subsequent years of assessment.

(3) Section 10(a) of this Act shall have effect for the year of assessment 1972 and subsequent years of assessment; sections 5(a), 10(b) and 16 of this Act shall have effect for the year of assessment 1974 and subsequent years of assessment.

Amendment of section 2

2. Section 2 of the Income Tax Act (hereinafter referred to as “the principal Act”) is hereby amended by deleting the definition of “resident in Singapore” and substituting therefor the following: —

“ “resident in Singapore” —

(a)

in relation to an individual, means a person who, in the year preceding the year of assessment, resides in Singapore except for such temporary absences therefrom as may be reasonable and not inconsistent with a claim by such person to be resident in Singapore, and includes a person who is physically present or who exercises an employment (other than as a director of a company) in Singapore for 183 days or more during the year preceding the year of assessment; and

(b)

in relation to a company or body of persons, means a company or body of persons the control and management of whose business is exercised in Singapore;”.

Amendment of section 10

3. Section 10 of the principal Act is hereby amended —

(a)

by deleting paragraph (c) of subsection (2) thereof and substituting therefor the following: —

“(c)

the annual value of any place of residence provided by the employer and for the purposes of this paragraph —

(i)	if the place of residence is “premises” within the Control of Rent Act (Cap. 266) and is provided to a director of a company, or, if the remuneration received by a director of a company is less than the annual value of the premises, the full annual value shall be deemed to be gains or profits of the employment;
(ii)	except as provided in sub-paragraph (i) of this paragraph, if the annual value of the premises exceeds ten per cent of the gains or profits from the employment mentioned in paragraphs (a) and (b) of this subsection less the rent, if any, paid by the employee for the use of the premises, the excess shall be disregarded;
(iii)	where the premises are shared, “place of residence” means the part of the premises occupied by the person chargeable.”; and

(b)

by inserting immediately after subsection (4) thereof the following subsection: —

“(5) Any gains or profits directly or indirectly derived by any person by the exercise, assignment or release of a right or benefit whether granted in his name or in the name of his nominee or agent to acquire shares in a company shall, where the right or benefit is obtained by that person by reason of any office or employment held by him, be deemed to be income and for the purposes of this subsection —

(a)	such gains or profits shall be the price of the shares in the open market at the time of the exercise, assignment or release of the right or benefit, less the amount paid for such shares;
(b)	if it is not possible to determine the gains or profits under paragraph (a) of this subsection, the Comptroller may use the net asset value of the shares, less the amount paid for the shares, as the basis for determining the gains or profits; and
(c)	“shares” includes stocks.”.

Amendment of section 12

4. The principal Act is hereby amended by inserting immediately after subsection (5) of section 12 thereof the following subsection: —

“(6) Any income derived from loans where —

(a)	the interest is borne directly or indirectly by a person resident in Singapore or a permanent establishment in Singapore; or
(b)	the funds provided by such loans are brought into or used in Singapore,

shall be deemed to be derived in Singapore.”.

Amendment of section 13

5. Section 13 of the principal Act is hereby amended —

(a)

by deleting paragraph (g) of subsection (1) thereof and substituting therefor the following: —

“(g)

the income of any charitable institution or of any body of persons or trust established for charitable purposes only:

Provided that —

(a)

where a trade or business is carried on by any such institution, body of persons or trust, the income derived from such trade or business shall be exempt from tax only if such income is applied solely for charitable purposes and either —

(i)	the trade or business is exercised in the course of the actual carrying out of a primary purpose of such institution, body of persons or trust; or
(ii)	the work in connection with the trade or business is mainly carried on by persons for whose benefit such institution, body of persons or trust was established;

(b)

the institution, body of persons or trust applies in any year of assessment not less than eighty per cent of its income (after providing for allowable deductions) in the preceding year unless the Comptroller otherwise permits;

(c)

if the institution, body of persons or trust applies any amount of its income which, otherwise than in accordance with its charitable objects the institution, body of persons or trust shall pay to the Comptroller tax on that amount of its income and a determination and assessment under this sub-paragraph shall be treated as a notice of assessment and shall be subject to the provisions of Parts XI and XII of this Act;”;

(b)

by deleting the colon appearing at the end of paragraph (u) of subsection (1) thereof and substituting therefor a semi-colon and by inserting immediately thereafter the following paragraph: —

“(v)

interest received from such Asian Dollar Bonds issued in Singapore as may be approved in writing by the Minister if the interest is received by —

(i)	a non-resident individual; and
(ii)	a person, other than an individual, if that 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.”;

(c)

by deleting the proviso to subsection (1) thereof and substituting therefor the following: —

“(1A) Nothing in subsection (1) of this section shall be construed to exempt in the hands of the recipients any dividends, interest, bonuses, salaries or wages paid wholly or in part out of income so exempted.”;

(d)

by deleting subsection (2) thereof and substituting therefor the following: —

“(2) The Minister may, by notification in the Gazette, provide that the interest payable on any loan charged on the public revenue of Singapore or on any loan the use of which will, in his opinion, promote or enhance the economic or technological development of Singapore, shall subject to such conditions as he may impose be exempt from tax either generally or in respect of interest payable to certain classes of persons not resident in Singapore, and the interest shall as from the date and to the extent specified by the notification be exempt from tax.”;

(e)

by inserting immediately after the word “apply” appearing in the proviso to subsection (4) thereof the words “to the emoluments received by a director of a company or”; and

(f)

by inserting immediately after subsection (8) thereof the following subsection: —

“(9) Where any income is exempt from tax by virtue of an order made under subsection (7) of this section and the income is received by a company which is resident in Singapore, subsection (6) of section 13A of this Act shall apply, mutatis mutandis, to the company in respect of a distribution of dividends from the income as if the company were a shipping enterprise.”.

Amendment of section 13A

6. Section 13A of the principal Act is hereby amended by inserting immediately after the definition of “holding company” appearing in subsection (10) thereof the following definition: —

“ “income of a shipping enterprise” means the income derived by a shipping enterprise from the carriage of passengers, mails, livestock or goods by oceangoing ships to and from Singapore and includes income from the charter of such ocean-going ships;”.

Amendment of section 18

7. Section 18 of the principal Act is hereby amended —

(a)

by deleting the comma appearing at the end of paragraph (g) of subsection (1) thereof and substituting therefor the expression “; or”; and

(b)

by inserting immediately thereafter the following paragraph: —

“(h)	for the purposes of a trade in intensive pig and poultry production as may be approved by the Minister,”.

Amendment of section 23

8. Section 23 of the principal Act is hereby amended by renumbering the section as subsection (1) thereof and by inserting immediately thereafter the following subsections: —

“(2) No balance shall be added to and be deemed to form part of the corresponding allowance, if any, to be given to a company under subsection (1) of this section unless the Comptroller is satisfied that the shareholders of the company on the last day of the year in which the allowances arose were substantially the same as the shareholders of the company on the first day of the year of assessment in which such allowances would otherwise be available under this section and such a balance shall not be allowed in any subsequent year of assessment.

(3) For the purpose of subsection (2) 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.”.

Amendment of section 26

9. Section 26 of the principal Act is hereby amended by inserting immediately after the words “investment income” appearing in the third line of subsection (3) thereof the words “and the gains or profits realised on the sale of investments”.

Amendment of section 39

10. Section 39 of the principal Act is hereby amended —

(a)

by deleting paragraph (b) of subsection (1) thereof and substituting therefor the following: —

“(b)	a deduction, in respect of earned income, of one thousand dollars or the amount of the earned income whichever is the lesser.”;

(b)

by deleting paragraph (d) of subsection (2) thereof and substituting therefor the following: —

“(d)

maintained an unmarried child —

(i)	being under the age of sixteen years at any time during the year preceding the year of assessment; or
(ii)	receiving full-time instruction at any university, college, school or other educational institution; or
(iii)	serving under articles or indentures with a view to qualifying in a trade or profession,

there shall be allowed in respect of each such child according to his age among those eligible, a deduction in accordance with the Fifth Schedule to this Act;”;

(c)

by deleting sub-paragraph (ii) of the proviso to paragraph (e) of subsection (2) thereof and substituting therefor the following: —

“(ii)

no such deduction shall be allowed in excess of four thousand dollars;”; and

(d)

by deleting the full-stop appearing at the end of sub-paragraph (iv) of the proviso to paragraph (e) of subsection (2) thereof and substituting therefor a semi-colon and by inserting immediately thereafter the following sub-paragraph: —

“(v)	no such deduction shall be allowed unless the insurance company has an office or a branch in Singapore but this sub-paragraph shall not apply to any insurance contract entered into by an individual resident in Singapore prior to the coming into operation of this sub-paragraph.”.

Amendment of section 40C

11. Section 40C of the principal Act is hereby amended by inserting immediately after the word “Singapore” appearing at the end of the definition of “non-resident employee” in subsection (3) thereof the words “but excludes a director of a company”.

New section 43A

12. The principal Act is hereby amended by inserting immediately after section 43 thereof the following section: —

“Special rate of tax for specified income

43A.—(1) Notwithstanding the provisions of section 43 of this Act, the Minister may by regulations provide that tax at the rate of ten per cent or such other rate as may be specified in the regulations shall be levied and paid for each year of assessment upon such off-shore income as the Minister may determine of a financial institution derived by it from the operation of its Asian Currency Unit approved by the Minister.

(2) In this section “off-shore income” means income derived from loans made to persons outside Singapore to be used outside Singapore where the interest on such loans is not borne, directly or indirectly, by a person resident in Singapore or a permanent establishment in Singapore.”.

Amendment of section 45

13. Section 45 of the principal Act is hereby amended —

(a)

by deleting subsection (1) thereof and substituting therefor the following: —

“(1) Where a person is liable to pay to another person not known to him to be resident in Singapore an amount of interest which is chargeable to tax under this Act, the person paying the interest shall deduct therefrom tax at the rate of forty per cent on every dollar of such interest and shall forthwith render an account to the Comptroller of the amount so deducted and every such amount shall be a debt due from him to the Government and shall be recoverable in the manner provided by section 90 of this Act:

Provided that the Comptroller may give notice in writing to the person who pays such interest requiring that person to deduct and account for tax at a higher or lower rate than forty per cent on every dollar of such interest or to pay such interest without deduction of tax.

(2) Where any person fails to make a deduction which he is required to make under subsection (1) of this section, the amount which he fails to deduct shall be a debt due from him to the Government and shall be recoverable as such.”; and

(b)

by renumbering subsection (2) thereof as subsection (3).

Amendment of section 88

14. Section 88 of the principal Act is hereby amended by deleting paragraph (c) of subsection (1) thereof and substituting therefor the following: —

“(c)

notwithstanding the preceding provisions of this subsection if the amount of tax outstanding is not paid within sixty days of the imposition of the penalty as provided by paragraph (a) of this subsection, an additional penalty of one per cent of the tax outstanding shall be payable for each completed month that the tax remains unpaid, but the total additional penalty shall not exceed twelve per cent of the amount of tax outstanding;

(d)

penalties imposed under the preceding paragraphs shall not be deemed to be part of the tax paid for the purpose of claiming relief under any of the provisions of this Act.”.

Amendment of section 99

15. Section 99 of the principal Act is hereby amended —

(a)

by inserting immediately after subsection (1) thereof the following subsection: —

“(2) The Comptroller may authorise either generally or specifically an officer to sanction or compound any offence under sections 94, 95 and 96 of this Act.”; and

(b)

by renumbering subsection (2) thereof as subsection (3).

New Fifth Schedule

16. The principal Act is hereby amended by inserting immediately after the Fourth Schedule thereto the following Schedule: —

“FIFTH SCHEDULE

Section 39(2)(d)

1. Subject to the provisions of this Schedule if on or before 1st August, 1973, an individual has more than three children, the allowable deduction in respect of each such child shall be as follows: —

For the first child

$750.

For the second and third child

$500.

For the fourth and fifth child

$300.

2. Subject to the provisions of this Schedule if on or after 1st August, 1973, an individual has less than four children the allowable deduction in respect of each such child shall be as follows: —

For the first and second child

$750.

For the third child

$500.

3. No deduction shall be granted —

(a)	in respect of any child born on or after 1st August, 1973, if that child is the fourth or subsequent child;
(b)	under paragraph 2 of this Schedule in respect of any child for whom a deduction has at any time been allowed under paragraph 1 of this Schedule.

4. Where the Comptroller is satisfied that a sum exceeding the appropriate deduction was, during the year preceding the year of assessment, expended by an individual directly on the maintenance or education of any child or children elsewhere than in Singapore the allowable deduction shall be a sum equal to the total amount so expended but not exceeding double the amount of the appropriate deduction.

5. No deduction shall be allowed in respect of any child —

(a)	whose income (excluding income to which the child is entitled as the holder of a scholarship, bursary or similar educational endowment) for the year preceding the year of assessment exceeded the appropriate deduction otherwise allowable under this Schedule; or
(b)	who was engaged in any employment, other than under articles or indentures, or carried on or exercised a trade, business, profession or vocation, during the year preceding the year of assessment.

6. Where more than one individual is entitled to claim a deduction in respect of the same child, the deduction shall be apportioned in such manner as appears to the Comptroller to be reasonable.

7. Where a married woman has elected to be charged in her own name under subsection (4) of section 51 of this Act, the deduction to be apportioned under paragraph 6 of this Schedule shall not exceed the deduction which would have been allowed to her husband if he had wholly maintained the child during the year preceding the year of assessment and she had not elected for separate assessment.

8. Where a married woman who has elected to be charged in her own name under subsection (4) of section 51 of this Act is a specially qualified person, the deduction in respect of all eligible children under paragraph 2 of this Schedule if claimed by her only shall be increased as follows: —

For the first and second child $2,000 or 5% of her earned income whichever is the lesser.

For the third child $2,000 or 3% of her earned income whichever is the lesser.

9. The deduction allowable under paragraph 8 of this Schedule shall also be granted to a divorcee, a widow or a married woman living separately from her husband if she is a specially qualified person.

10. For the purposes of this Schedule —

“child”, in relation to an individual claiming a deduction, means a legitimate child, stepchild or child adopted in accordance with any written law relating to the adoption of children;

“specially qualified person” means a person who has obtained a degree from a university or equivalent institution or who is a member of a profession regulated by any written law or otherwise approved by the Minister and notified in the Gazette.”.

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