Income Tax (Amendment No. 2) Bill

Bill No. 42/1989

Read the first time on 29th November 1989.

An Act to amend the Income Tax Act (Chapter 134 of the 1985 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 No. 2) Act 1989.

(2) Sections 12 and 20(b) shall have effect for the year of assessment 1989 and subsequent years of assessment.

(3) Section 16(a) and (c) shall be deemed to have come into operation on 1st January 1989.

(4) Sections 2 and 3(b) shall be deemed to have come into operation on 17th February 1989.

(5) Sections 9, 10, 11, 13, 17(a) and 20(a) and (d) shall have effect for the year of assessment 1990 and subsequent years of assessment.

Amendment of section 13A

2. Section 13A(6)(e) of the Income Tax Act (referred to in this Act as the principal Act) is amended by deleting the words “debited to such account” and substituting the words “which are exempt from tax under this section”.

Amendment of section 13B

3. Section 13B of the principal Act is amended —

(a)	by deleting the words “or 43E” in subsections (1), (2) and (8)(a) and substituting in each case the words “, 43E or 43F”; and
(b)	by deleting the words “debited to the account” in subsection (5) and substituting the words “which are exempt from tax under this section”.

Amendment of section 14

4. Section 14 of the principal Act is amended —

(a)

by deleting the word “and” at the end of sub-paragraph (i)(G) of the proviso to subsection (1)(e);

(b)

by inserting, immediately after the words “1st April 1986” in sub-paragraph (i)(H) of the proviso to subsection (1)(e), the words “and before 1st July 1988”;

(c)

by deleting the comma at the end of sub-paragraph (i)(H) of the proviso to subsection (1)(e) and substituting a semi-colon, and by inserting immediately thereafter the following sub-paragraphs:

“(I)	commencing on or after 1st July 1988 and before 1st July 1989 shall not exceed 12%;
(J)	commencing on or after 1st July 1989 shall not exceed 15%,”;

(d)

by deleting the word “and” at the end of subsection (4)(b); and

(e)

by deleting the full-stop at the end of paragraph (c) of subsection (4) and substituting the word “; and”, and by inserting immediately thereafter the following paragraph:

“(d)

a motor car registered as a business service passenger vehicle for the purposes of the Road Traffic Act [Cap. 276] which is —

(i)	used principally for instructional purposes; and
(ii)	acquired during or after the basis period for the year of assessment 1989 by a person who carries on the business of providing driving instruction and who holds a driving school or driving instructor’s licence issued under that Act.”.

New section 14H

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

“Expenditure on building modifications for benefit of disabled employees

14H.—(1) Subject to subsections (2) and (3), where any person being the owner or lessee of any premises and carrying on a trade, business or profession at those premises has incurred, on or after 1st January 1989, approved expenditure on any addition or alteration to those premises for the purpose of facilitating the mobility or work of any disabled employee, there shall, in ascertaining the income of that person for the basis period during which the expenditure was incurred, be allowed as a deduction an amount equal to that expenditure.

(2) Where any person has been allowed a deduction under subsection (1), no deduction shall be allowed under any other provision of this Act in respect of the expenditure for which the deduction was allowed.

(3) Where a person has been allowed a deduction or deductions under this section amounting to $100,000, whether for one or more years of assessment, no further deduction shall be allowed to that person under this section.

(4) For the purposes of this section, “approved” means approved by the Minister or such other person as he may appoint.”.

Amendment of section 19

6. Section 19(2C) of the principal Act is amended —

(a)

by deleting the words “3 tons” in the fourth line and substituting the words “3,000 kilograms”;

(b)

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

(c)

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

“(d)

a motor car registered as a business service passenger vehicle for the purposes of the Road Traffic Act [Cap. 276] which is —

(i)	used principally for instructional purposes; and
(ii)	acquired during or after the basis period for the year of assessment 1989 by a person who carries on the business of providing driving instruction and who holds a driving school or driving instructor’s licence issued under that Act.”.

Amendment of section 19A

7. Section 19A(4)(b)(iii) of the principal Act is amended by deleting the words “3 tonnes” and substituting the words “3,000 kilograms”.

Amendment of section 35

8. Section 35 of the principal Act is amended by deleting subsection (2A) and substituting the following subsection:

“(2A) Notwithstanding any other provisions of this Act, where any dividend derived from Singapore by any person is assessed to tax on a basis period ending on a date other than 31st December, any such dividend —

(a)	derived during the period from 1st January 1985 to 31st December 1985 shall be treated as his statutory income for the year of assessment 1986 and be charged to tax at the rate applicable to him for that year of assessment;
(b)	derived during the period from 1st January 1988 to 31st December 1988 shall be treated as his statutory income for the year of assessment 1989 and be charged to tax at the rate applicable to him for that year of assessment.”.

Amendment of section 37

9. Section 37 of the principal Act is amended —

(a)

by deleting the full-stop at the end of paragraph (c)(ix) of subsection (2) and substituting a semicolon, and by inserting immediately thereafter the following paragraph:

“(d)	an amount equivalent to the value of any gift of a computer (including computer software and peripherals) approved by the Minister and made by any company in the year preceding the year of assessment to a prescribed educational or research institution in Singapore.”; and

(b)

by deleting the words “and (c)” in subsection (2A) and substituting the words “, (c) and (d)”.

Amendment of section 39

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

(a)

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

(b)

by deleting the proviso to paragraph (d) and substituting the following proviso:

“Provided that in the case of any unmarried child incapacitated from maintaining himself by reason of physical or mental infirmity whose income was not more than $1,500 in that year and in respect of whom —

(i)	the deduction allowable under the Fifth Schedule is less than $2,500, the deduction shall be increased to $2,500;
(ii)	no deduction is allowable under the Fifth Schedule, there shall be allowed a deduction of $2,500;”;

(c)

by deleting “$1,000” in the fifteenth line of paragraph (f) and substituting “$2,500”;

(d)

by deleting “$750” in paragraph (g)(iii) and substituting “$1,500”; and

(e)

by deleting “$750” in the thirteenth line of paragraph (g) and substituting “$2,500”.

Amendment of section 42

11. Section 42 of the principal Act is amended by deleting subsection (5) and substituting the following subsection:

“(5) Notwithstanding Part B of the Second Schedule, in respect of the chargeable income of a person other than an individual, the rate of tax applicable to that person on every dollar of his chargeable income shall be 32% where the effective rate of tax arrived at by dividing the income tax chargeable on his chargeable income by the amount of that income exceeds 32%:

Provided that for the years of assessment 1988 and 1989, the reference to 32% in this subsection shall be read as a reference to 33%.”.

Repeal and re-enactment of section 42A

12. Section 42A of the principal Act is repealed and the following section substituted therefor:

“Rebate for third and fourth child of the family

42A.—(1) Where an individual resident in Singapore in the year of assessment has a legitimate third child of the family born to him on or after 1st January 1987 or a legitimate fourth child of the family born to him on or after 1st January 1988, there shall, in respect of each child, be allowed for the year of assessment immediately following the year of birth of each child —

(a)	a rebate of $20,000 against the tax payable by that individual; but where more than one individual is entitled to claim such rebate in respect of that child, the rebate shall be apportioned between them in such proportion as they may agree, or, in the absence of any agreement, in such manner as appears to the Comptroller to be reasonable;
(b)	a rebate against the tax payable by a married woman, who has elected to be charged in her own name under section 51(4), of a sum equal to 15% of her earned income assessed for that year of assessment:

Provided that —

(i)	where full effect cannot be given to the rebate by reason of an insufficiency of the tax payable for that year of assessment, the balance of the unabsorbed rebate shall be available for deduction against the tax payable for the year of assessment immediately following that year of assessment and so on for the next 3 subsequent years of assessment;
(ii)	where the fourth child is born within 5 years of the birth of the third child and full effect cannot be given to the rebate in respect of the fourth child by reason of an insufficiency of the tax payable for that year of assessment, the rebate or balance, if any, of the unabsorbed rebate shall be available for deduction against the tax payable for up to 5 years of assessment immediately following the last year of assessment in which the rebate in respect of the third child may be allowed under sub-paragraph (i);
(iii)	where the third or fourth child in respect of whom a rebate is allowable under this section is adopted by another person within 5 years of his birth, the rebate or balance, if any, of the unabsorbed rebate shall not be available for deduction against the tax payable for any year of assessment following the year in which the child is adopted;
(iv)	where a person is entitled to a rebate under paragraph (a) or (b) and his marriage is dissolved by divorce or annulment within 5 years of the birth of the third or fourth child, the rebate or balance, if any, of the unabsorbed rebate shall not be available for deduction against the tax payable for any year of assessment following the year of the order of divorce or annulment.

(2) For the purposes of this section —

“third child of the family” means a child of the family being a citizen of Singapore at the time of his birth or within 12 months thereafter and who has at the time of his birth two other siblings who are members of the same household and who are citizens of Singapore at that time;

“fourth child of the family” means a child of the family being a citizen of Singapore at the time of his birth or within 12 months thereafter and who has at the time of his birth 3 other siblings who are members of the same household and who are citizens of Singapore at that time;

“sibling” means a brother or sister and includes a step-brother or step-sister, or a brother or sister adopted in accordance with any written law relating to adoption.”.

Amendment of section 43

13. Section 43 of the principal Act is amended —

(a)

by deleting “33%” in paragraphs (a) and (b) and substituting in each case “32%”; and

(b)

by renumbering the section as subsection (1) of that section, and by inserting immediately thereafter the following subsection:

“(2) For the years of assessment 1987 to 1989, the reference in subsection (1) to 32% shall be read as a reference to 33%.”.

Amendment of section 43D

14. Section 43D of the principal Act is amended by deleting subsection (1) and substituting the following subsection:

“(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 a member of the Singapore International Monetary Exchange —

(a)

derived from transactions in gold bullion or in any commodity or financial futures on any approved exchange or in any approved market with —

(i)	an Asian Currency Unit of a financial institution;
(ii)	another member of the Exchange;
(iii)	a person who is neither a resident of nor has a permanent establishment in Singapore; or
(iv)	a branch office outside Singapore of a company resident in Singapore;

(b)

derived on or after 1st January 1989 from transactions in any petroleum futures on any approved exchange with an oil trading company approved under section 43F,

and those regulations may provide for the deduction of losses otherwise than in accordance with section 37(2).”.

New section 43F

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

“Concessionary rate of tax for oil trading company

43F.—(1) Notwithstanding section 43, the Minister may by regulations provide that tax at the rate of 10% or such other concessionary rate be levied and paid for each year of assessment upon such income as the Minister may specify of an approved oil trading company derived on or after 1st January 1989 from such transactions in petroleum, petroleum products or petroleum futures as may be prescribed, and those regulations may provide for deduction of losses otherwise than in accordance with section 37(2).

(2) For the purposes of this section —

“approved” means approved by the Minister or such person as he may appoint;

“oil trading company” means a company carrying on a business of trading in petroleum, petroleum products or petroleum futures.”.

Amendment of section 44

16. Section 44 of the principal Act is amended —

(a)

by deleting “33%” in subsection (1) and substituting “32%”;

(b)

by deleting subsection (11) and substituting the following subsection:

“(11) Notwithstanding anything in this Act, where tax on any dividend paid in 1989 has been deducted at the rate of 33% —

(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 32% 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 33% 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 1990 and deemed to be a part thereof.”; and

(c)

by deleting the words “or 43E” in subsection (12)(f)(i) and substituting the words “, 43E or 43F, or section 19B of the Economic Expansion Incentives (Relief from Income Tax) Act [Cap. 86]”.

Amendment of section 45

17. Section 45 of the principal Act is amended —

(a)

by deleting “33%” wherever it appears in subsection (1) and substituting in each case “32%”; and

(b)

by inserting, immediately after subsection (7), the following subsection:

“(8) Notwithstanding subsection (1), tax shall be deducted at the rate of 33% on every dollar of every payment made on or after 1st January 1989 which would be assessable for the years of assessment 1987, 1988 and 1989 on the person receiving the payment.”.

Amendment of section 46

18. Section 46 (2) of the principal Act is amended —

(a)	by deleting “1986” and substituting “1989”; and
(b)	by deleting “40%” and substituting “33%”.

Amendment of section 78

19. Section 78 (1) of the principal Act is amended by deleting the words “a period of 3 years” in the fifth and sixth lines and substituting the words “such period as may be determined by the Minister”.

Amendment of Fifth Schedule

20. The Fifth Schedule to the principal Act is amended —

(a)

by deleting “$750” in paragraph 1(a) and substituting “$1,500”;

(b)

by deleting the full-stop at the end of sub-paragraph (b) of paragraph 1, and by inserting immediately thereafter the following sub-paragraph:

“

$1,500.

”;

(c)

by deleting the words “paragraph 7(b)” in paragraph 2 and substituting the words “paragraphs 1(c), 7(d) and 7(e)”; and

(d)

by deleting paragraph 7 and substituting the following paragraph:

“7. Where a married woman who has elected to be charged in her own name under section 51(4) has passed at one sitting the examination for the General Certificate of Education with at least 3 subjects at ordinary level or has equivalent or higher educational qualification, the following deductions shall be allowable to her only:

Under the age of 12 years on the first day of the year preceding the year of assessment

Of the age of 12 years or above on the first day of the year preceding the year of assessment

(a)	First eligible child

5% of her earned income, in addition to the appropriate deduction allowable under paragraph 1, subject to a maximum of $15,000

5% of her earned income, in addition to the appropriate deduction allowable under paragraph 1, subject to a maximum of $10,000;

(b)	Second eligible child

15% of her earned income, in addition to the appropriate deduction allowable under paragraph 1, subject to a maximum of $15,000

10% of her earned income, in addition to the appropriate deduction allowable under paragraph 1, subject to a maximum of $10,000;

(c)	Third eligible child

20% of her earned income, in addition to the appropriate deduction allowable under paragraph 1, subject to a maximum of $15,000

15% of her earned income, in addition to the appropriate deduction allowable under paragraph 1, subject to a maximum of $10,000;

(d)	Fourth child (other than an adopted child) of the family who is born in 1987

$1,500 and 25% of her earned income, subject to a maximum of $15,000

$1,500 and 15% of her earned income, subject to a maximum of $10,000;

(e)	Fourth child (other than an adopted child) of the family who is born on or after 1st January 1988

25% of her earned income, in addition to the appropriate deduction allowable under paragraph 1, subject to a maximum of $15,000

15% of her earned income, in addition to the appropriate deduction allowable under paragraph 1, subject to a maximum of $10,000.

”;

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