26. The principal Act is amended by inserting, immediately after section 37D, the following sections:“Carry-back of capital allowances and losses |
37E.—(1) Subject to the provisions of this section, a person may deduct any qualifying deduction for any year of assessment against his assessable income for the immediate preceding year of assessment.(2) Qualifying deductions shall be deducted in the following order:(a) | any allowance specified in subsection (9)(a); and | (b) | any loss specified in subsection (9)(b). |
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(3) The amount of qualifying deduction to be deducted for any year of assessment is the lower of —(a) | the amount of qualifying deduction available for deduction for that year of assessment; and | (b) | the assessable income of the person for the immediate preceding year of assessment. |
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(4) Subject to the provisions of this section, section 37B shall apply, with the necessary modifications, to the deduction of any qualifying deduction by any company for any year of assessment against its assessable income for the immediate preceding year of assessment, where applicable, as if the income for the immediate preceding year of assessment is income for that year of assessment, and for the purpose of such application, any reference in section 37B(2) and (3) to —(a) | unabsorbed allowances, losses or donations shall be read as a reference to qualifying deductions; | (b) | corresponding allowances, losses or donations shall be read as a reference to allowances or losses; and | (c) | chargeable income of the company shall be read as a reference to assessable income for the immediate preceding year of assessment of the company. |
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(5) The amount of qualifying deduction to be deducted for any year of assessment shall not exceed $100,000; and in the case of a company shall be determined by the formula | is any amount deducted against assessable income subject to tax at the rate of tax specified in section 43(1) (a); and |
| | is any amount deducted against assessable income subject to tax at any concessionary rate of tax divided by the adjustment factor for that concessionary rate of tax. |
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(6) Any person deducting any qualifying deduction for any year of assessment against his assessable income for the immediate preceding year of assessment under this section shall notify the Comptroller and make an election to make such deduction —(a) | in the case of an individual, not later than 30 days from the date of service of the notice of assessment on him; and | (b) | in the case of any other person, not later than the time of lodgment of his return of income for the year of assessment, |
or within such further time as the Comptroller may allow. |
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(7) Any election made under subsection (6) shall be irrevocable and shall be accompanied by such particulars as the Comptroller may require. |
(8) Where the Comptroller discovers that any deduction made under this section against the assessable income of any person for any year of assessment is or has become excessive, he may make an assessment on the person on the amount, which, in his opinion, ought to have been charged to tax in that year of assessment within 7 years after the expiration of that year of assessment. |
(9) For the purposes of this section, subject to sections 35, 37 and 37B, qualifying deductions, in relation to any person, for each year of assessment, are —(a) | any allowance falling to be made under section 16, 17, 19, 19A, 19B, 19C, 19D or 20 that is in excess of the person’s income from all sources chargeable to tax for that year of assessment and is not transferred under section 37C or 37D; and | (b) | any loss incurred by the person in any trade, business, profession or vocation which is not deducted for that year of assessment because of insufficiency of statutory income of the person and is not transferred under section 37C or 37D. |
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(10) Notwithstanding subsection (9), any loss deemed to be a loss incurred from a trade or business for the purpose of section 97V of the Economic Expansion Incentives (Relief from Income Tax) Act (Cap. 86) shall not be deductible. |
(11) Notwithstanding subsection (9), any allowance specified in subsection (9)(a) made to a person for any year of assessment shall not be deductible against assessable income for the immediate preceding year of assessment if the person did not carry on that trade, business or profession in the basis period for the immediate preceding year of assessment. |
(12) Notwithstanding subsection (9), any allowance specified in subsection (9)(a) made to or any loss specified in subsection (9)(b) incurred by a company for any year of assessment shall not be deductible against income for the immediate preceding year of assessment unless the Comptroller is satisfied that the shareholders of the company on the first day of the year in which the allowances arose or in which the loss was incurred, as the case may be, were substantially the same as the shareholders of the company on the last day of the immediate preceding year of assessment. |
(13) For the purposes of subsection (12) —(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 50% of the total number of issued shares of the company are held by or on behalf of the same persons; | (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 | (c) | 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. |
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(14) For the purpose of subsection (13)(a), where any part of a share of a shareholder is not fully paid up, there shall be disregarded a proportion equal to | is the amount that has not been paid in respect of the share; and |
| | is the total amount payable in respect of the share. |
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(15) The Minister or such person as he may appoint may, where there is a substantial change in the shareholders of a company and he is satisfied that such change is not for the purpose of deriving any tax benefit or obtaining any tax advantage, exempt that company from the provisions of subsection (12). |
(16) Upon an exemption under subsection (15), any allowance specified in subsection (9)(a) made to or any loss specified in subsection (9)(b) incurred by a company may only be deducted against the profits from the same trade or business of the company in respect of which the allowance was made or the loss was incurred. |
(17) In this section —“adjustment factor”, in relation to a concessionary rate of tax, means the factor ascertained in accordance with the formula | is the rate of tax specified in section 43(1) (a); and |
| | is the concessionary rate of tax; |
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“assessable income” means —(a) | in relation to a company, assessable income of the company as determined under section 37 after deducting any investment allowance under Part X of the Economic Expansion Incentives (Relief from Income Tax) Act (Cap. 86) and any deductions claimed under section 37C; | (b) | in relation to an individual, assessable income of the individual as determined under section 37 after deducting any deductions claimed under section 37D; and | (c) | in relation to any other person, assessable income of the person as determined under section 37; |
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“concessionary rate of tax” means any rate of tax lower than the rate specified in section 43(1)(a) in accordance with —(a) | any order made under section 13(12); or | (b) | the regulations made under section 13H, 43A, 43C (in respect of those relating to offshore general insurance business only), 43D, 43E, 43F, 43G, 43H, 43I, 43J, 43K, 43L, 43N, 43O, 43P, 43Q, 43R, 43S, 43T or 43U, as the case may be. |
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(18) This section shall not apply to any company to which section 10E applies. |
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Carry-back of capital allowances and losses between spouses |
37F.—(1) Subject to the provisions of this section, an individual may transfer any qualifying deduction for any year of assessment to a spouse living with him or her who has claimed any qualifying deduction under this section against her or his assessable income for the immediate preceding year of assessment.(2) Qualifying deductions shall be transferred to a claimant spouse in the following order:(a) | any allowance specified in subsection (10)(a); and | (b) | any loss specified in subsection (10)(b). |
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(3) The amount of qualifying deduction for any year of assessment to be transferred by a transferor to a claimant spouse is the lower of —(a) | the amount of qualifying deduction available for transfer for that year of assessment; and | (b) | the assessable income of the claimant spouse for the immediate preceding year of assessment. |
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(4) The amount of qualifying deduction for any year of assessment to be transferred by a transferor to a claimant spouse shall not exceed an amount equal to | is any amount deducted by the transferor against his or her assessable income for the immediate preceding year of assessment under section 37E. |
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(5) No transfer shall be allowed under subsection (1) in any year of assessment if the transferor has assessable income for the immediate preceding year of assessment but no claim for relief has been made under section 37E. |
(6) No transfer shall be allowed under subsection (1) in any year of assessment if the claimant spouse has assessable income for the year of assessment but no transfer of any qualifying deduction from the transferor to the claimant spouse has been made under section 37D. |
(7) Any individual transferring or claiming a qualifying deduction under this section shall notify the Comptroller and make an election to transfer or claim qualifying deductions, as the case may be, not later than 30 days from the date of the service of the notice of assessment on the individual or his or her spouse, whichever is the later. |
(8) An election made by an individual under subsection (7) shall be irrevocable and shall be accompanied by such particulars as the Comptroller may require. |
(9) Where the Comptroller discovers that any transfer of qualifying deduction under this section against the assessable income of a claimant spouse for any year of assessment is or has become excessive, he may make an assessment on the claimant spouse on the amount, which, in his opinion, ought to have been charged to tax in that year of assessment within 7 years after the expiration of that year of assessment. |
(10) For the purposes of this section, subject to sections 35 and 37, qualifying deductions, in relation to an individual, for each year of assessment, are —(a) | any allowance falling to be made under section 16, 17, 19, 19A, 19C, 19D or 20 that is in excess of the individual’s income from all sources chargeable to tax for that year of assessment and is not deducted under section 37E or transferred under section 37D; and | (b) | any loss incurred by the individual in any trade, business, profession or vocation which is not deducted for that year of assessment because of insufficiency of statutory income of the individual and is not deducted under section 37E or transferred under section 37D. |
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(11) Notwithstanding subsection (10), any loss deemed to be a loss incurred from a trade or business for the purpose of section 97V of the Economic Expansion Incentives (Relief from Income Tax) Act (Cap. 86) shall not be transferable. |
(12) Notwithstanding subsection (10), any allowance specified in subsection (10)(a) made to a transferor for any year of assessment shall not be transferable if the transferor did not carry on that trade, business or profession in the basis period for the immediate preceding year of assessment. |
(13) In this section, “assessable income”, in relation to an individual, means assessable income of the individual as determined under section 37 after deducting any deductions claimed under sections 37D and 37E.”. |
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