11. The principal Act is amended by inserting, immediately after section 13J, the following sections:“Exemption of certain dividends of Singapore Exchange Derivatives Clearing Limited |
13K.—(1) Where any income of the Singapore Exchange Derivatives Clearing Limited has been exempted under section 13(1)(g), such income shall be credited to a special account to be kept by the company for the purposes of this section.(2) Section 13E shall apply, with the necessary modifications, in respect of any dividends paid out of the special account of the company. |
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Exemption of tax on gains or profits from company stock option scheme |
13L.—(1) Where a qualifying employee derives any gains or profits in any year of assessment by the exercise, assignment or release, after the expiry of the minimum vesting period, of any right or benefit granted on or after 1st April 2001 to acquire shares in any qualifying company or in its holding company under a company stock option scheme, there shall, subject to this section and section 13J(7) to (10), be exempt from tax —(a) | the first $2,000 of such gains or profits in that year of assessment as determined under subsection (2); and | (b) | 25% of any amount of such gains or profits in that year of assessment exceeding $2,000 as determined under subsection (2). |
(2) The amount of gains or profits referred to in subsection (1) is —(a) | where the price to be paid for the shares on the exercise, assignment or release of the right or benefit (referred to in this section as the exercise price) is equal to or exceeds the market value or, if it is not possible to determine such value, the net asset value of the shares at the time of the grant of the right or benefit, the amount as determined under section 10(5); or | (b) | where the exercise price of the shares are at a discount to the market value or, if it is not possible to determine such value, the net asset value of the shares at the time of the grant of the right or benefit, the amount as determined under section 10(5) less the amount of the discount. |
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(3) The exemption under this section shall not apply to any amount of gains or profits deemed to be income of a person under section 10(5) —(a) | to the extent that the amount, when aggregated with the amount of such deemed income previously derived by him and which qualifies for exemption under this section, exceeds $1 million; | (b) | which is derived by him on or after 1st January of the 10th year following the year in which he first derived such deemed income which qualified for exemption under this section; or | (c) | which is derived by him for the release of his right or benefit to acquire shares in any qualifying company or in its holding company by reason of his resignation or termination of his employment with the qualifying company due to misconduct. |
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(4) The Minister may make regulations to provide generally for giving full effect to or for carrying out the purposes of this section. |
(5) In this section, unless the context otherwise requires —“company stock option scheme”, in relation to a qualifying company or its holding company, means any scheme —(a) | which satisfies the requirement of the minimum vesting period; and | (b) | where any stock option under the scheme is offered to at least 50% of the employees of the qualifying company during any calendar year, which is ascertained in accordance with the formula |
| is the number of employees who are offered during a calendar year the right or benefit to acquire shares in the qualifying company or in its holding company and who are employees of that qualifying company at the time of such offer; |
| | is the number of employees of the qualifying company on the last day of that calendar year; |
| | is the number of part-time employees (other than non-executive directors) on the last day of that calendar year where the right or benefit to acquire shares in that qualifying company or in its holding company is not offered to any such employee for the whole of that calendar year, or nil where the right or benefit to acquire shares in that qualifying company or in its holding company is offered to any such employee during that calendar year; |
| | is the number of full-time employees with less than one-year’s service (other than non-executive directors) on the last day of that calendar year where the right or benefit to acquire shares in that qualifying company or in its holding company is not offered to any such employee for the whole of that calendar year, or nil where the right or benefit to acquire shares in that qualifying company or in its holding company is offered to any such employee during that calendar year; and |
| | is the number of employees engaged on contracts not exceeding 2 years (other than non-executive directors) on the last day of that calendar year where the right or benefit to acquire shares in that qualifying company or in its holding company is not offered to any such employee for the whole of that calendar year, or nil where the right or benefit to acquire shares in that qualifying company or in its holding company is offered to any such employee during that calendar year; |
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“holding company” has the same meaning as in section 5 of the Companies Act (Cap. 50); |
“minimum vesting period” has the same meaning as in section 13J; |
“part-time employee” means an employee of a company who is committed to work for not more than 30 hours per week (including any time he would be required to work but for injury, any official leave or such other similar event) for the company in which he is employed; |
“qualifying company” means a company incorporated or registered under the Companies Act which, at the time of the grant to its employees of any right or benefit to acquire its shares or that its holding company, carries on business in Singapore; |
“qualifying employee” means an employee of a qualifying company who, at the time of the grant to him of any right or benefit to acquire the shares of the company or the shares of its holding company, as the case may be, does not beneficially own, directly or indirectly, voting shares that confer the right to exercise or control the exercise of not less that 25% of the voting power in the qualifying company which grants the right or benefit to acquire its shares; |
“shares” includes stocks but does not include redeemable or convertible shares or shares of a preferential nature. |
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Exemption of income of charities |
13M.—(1) Subject to this section, there shall be exempt from tax the income of any charitable institution, trust or body of persons established for charitable purposes only.(2) For the purposes of this section —(a) | where a trade or business is carried on by any such charitable institution, trust or body of persons, the income derived from the trade or business shall be exempt from tax only if the income is applied solely for charitable purposes and —(i) | the trade or business is exercised in the course of the actual carrying out of a primary purpose of such institution, trust or body of persons; or | (ii) | the work in connection with the trade or business is mainly carried on by persons for whose benefit such institution, trust or body of persons was established; |
| (b) | the other income of any such charitable institution, trust or body of persons shall be exempt from tax only if it applies in any year of assessment for charities or charitable objects within Singapore not less than 80% of the amount of donations (in money or money’s worth) received by it and of other sums accrued to it in the preceding year unless the Comptroller otherwise permits; and | (c) | if any such charitable institution, trust or body of persons applies any amount of its income otherwise than in accordance with its charitable objects, the institution, trust or body of persons shall pay to the Comptroller tax on that amount of its income and a determination and assessment under this paragraph shall be treated as a notice of assessment and shall be subject to the provisions of Parts XVII and XVIII. |
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(3) For the purposes of subsection (2)(b), the amount of donations (in money or money’s worth) received by and other sums accrued to any such charitable institution, trust or body of persons for any year shall be ascertained by taking the aggregate in that year of —(a) | donations in cash received by it; | (b) | donations of properties received by it; | (c) | for the year of assessment 2002, donations of securities received by it in the period 1st January 2001 to 31st May 2001; | (d) | gains or profits from the disposal of properties or securities donated or acquired before 1st June 2001 and disposed of by it on or after 1st June 2001; | (e) | gains or profits from the disposal of properties donated to or acquired by it on or after 1st June 2001; | (f) | gains or profits from the disposal of securities acquired by it on or after 1st June 2001; | (g) | proceeds from the disposal of securities donated to it on or after 1st June 2001 (after providing for brokerage fees, legal fees and other costs directly related to the disposal); and | (h) | all other donations to it and its income (after providing for allowable deductions) not falling within paragraphs (a) to (g). |
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(4) For the purposes of subsection (3)(d), (e) and (f), the gains or profits from the disposal of properties or securities shall be calculated in accordance with the formula | is the sale price of the properties or securities at the date of disposal; |
| | is the amount of brokerage fees, legal fees and other costs directly related to the disposal of the properties or securities; and |
| | is the value of the properties or securities at the date of donation, or the cost of the properties or securities at the date of acquisition. |
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(5) For the purposes of subsection (3)(d), (f) and (g), any securities received or acquired on an earlier date shall be deemed to have been disposed of first. |
(6) Where the total of the gains, profits or proceeds in any year from the disposal of properties or securities in subsection (3)(d), (e), (f) and (g) is less than nil, it shall be deemed as nil. |
(7) For the purposes of determining the date of donation or acquisition of the shares in subsection (3) and the valuation or cost of such shares in subsection (4) —(a) | rights issues shall be deemed to have been acquired on the date the rights were exercised; and the cost in respect of each share after the exercise of the rights shall be the price paid for the acquisition of the shares; | (b) | bonus shares and shares arising from a share split (referred to in this section as split shares) shall be deemed to have been donated or acquired —(i) | where the original shares upon which the bonus shares or split shares are derived were donated or acquired before 1st June 2001, on 31st May 2001; | (ii) | where the original shares upon which the bonus shares or split shares are derived were acquired on or after 1st June 2001, on the date of acquisition of the original shares, |
and the value or cost in respect of each share after the bonus issue or the share split shall be determined in accordance with the formula |
| is the value of the shares at the date of donation, or the cost of the shares at the date of acquisition, as the case may be; and |
| | is the total number of the original shares, bonus shares and split shares; |
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| (c) | bonus shares and split shares shall be deemed to have been donated on the date of donation of the original shares where the original shares upon which the bonus shares or split shares are derived were donated on or after 1st June 2001. |
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(8) In this section —“disposal”, in relation to any properties or securities, means the assignment, sale, settlement or transfer of the properties or securities, whether by agreement or otherwise, and includes the creation of a trust in respect of the properties or securities but does not include the conversion of debt securities to equity securities where the conversion is in accordance with the terms and conditions of the issue of the debt securities; |
“land” includes land of any tenure wherever situated in Singapore, whether or not held apart from the surface, and buildings or parts thereof (whether completed or otherwise and whether divided horizontally, vertically or in any other manner) and tenements and hereditaments, coporeal and incorporeal, and any estate or interest therein; |
“properties” means gold bullion, real property, works of art, precious objects, antiques and other items that the Minister may by regulations prescribe but does not include securities; |
“real property” means any land and any interest, option or other right in or over any land; |
“securities” includes —(a) | debentures, stocks, shares, bonds or notes issued by any government or company; | (b) | any right or option in respect of any such debentures, stocks, shares, bonds or notes; and | (c) | units in any unit trust. |
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(9) The Minister may make regulations which are necessary or expedient for carrying out the purposes of this section.”. |
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