REPUBLIC OF SINGAPORE
GOVERNMENT GAZETTE
ACTS SUPPLEMENT
Published by Authority

NO. 1]Friday, January 29 [1988

The following Act was passed by Parliament on 13th January 1988 and assented to by the President on 21st January 1988:—
Income Tax (Amendment) Act 1988

(No. 1 of 1988)


I assent.

WEE KIM WEE
President.
21st January 1988.
Date of Commencement: 29th January 1988
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) Act 1988.
(2)  Sections 3, 5 and 9 shall have effect for the year of assessment 1987 and subsequent years of assessment.
(3)  Section 8(a) shall have effect for the year of assessment 1989 and subsequent years of assessment.
(4)  Sections 10 and 19 shall have effect for the year of assessment 1988 and subsequent years of assessment.
(5)  Section 12 (except for subsections (10) and (12)(b) of that section) shall be deemed to have come into operation on 1st January 1987.
Amendment of section 6
2.  Section 6(8) of the Income Tax Act (referred to in this Act as the principal Act) is amended —
(a)by inserting, immediately after the words “Comptroller of Property Tax” in the second and third lines, the words “, the Chief Valuer or the Commissioner of Stamp Duties”; and
(b)by inserting, immediately after the word “Comptroller” in the fourth line, the words “, Chief Valuer or Commissioner of Stamp Duties”.
Amendment of section 10
3.  Section 10 of the principal Act is amended by deleting the full-stop at the end of subsection (9) and substituting a colon, and by inserting immediately thereafter the following proviso:
Provided that this subsection shall not apply to royalties or payments received in respect of any work published in any newspaper or periodical.”.
Amendment of section 13
4.  Section 13 of the principal Act is amended by inserting, immediately after the word “therefrom” in subsection (1) (j), the words “, except that any withdrawal from an approved fund other than the Central Provident Fund would have been authorised under the Central Provident Fund Act or any regulations made thereunder if it had been a withdrawal from the Central Provident Fund”.
Amendment of section 16
5.  Section 16 of the principal Act is amended by inserting, immediately after subsection (3B), the following subsections:
3C.  For the purposes of application to any industrial building or structure used for the purposes of a project for the promotion of the tourist industry (other than a hotel) in Singapore and approved by the Minister under section 18(1)(k) —
(a)the reference to 25% in subsection (1) shall be read as a reference to 20%;
(b)the reference to 3% in subsections (2) and (3) and in the sixteenth line of section 18(5) shall be read as a reference to 2%; and
(c)the reference to capital expenditure in subsections (1) and (2) shall not include any capital expenditure incurred before 1st January 1986.
3D.  Notwithstanding anything in sections 16 and 17, where a person carrying out a project for the promotion of the tourist industry approved by the Minister under section 18(1)(k) fails to comply with any condition imposed by the Minister, the Minister may revoke the approval and thereupon the Comptroller may at any time within 12 years from the date of the revocation make such assessment or additional assessment upon the person as may appear necessary in order to recover any tax which ought to have been paid by that person if any allowances under those sections had not been made to him.”.
Amendment of section 18
6.  Section 18 (1) of the principal Act is amended —
(a)by deleting the word “or” in paragraph (i); and
(b)by deleting the comma at the end of paragraph (j) and substituting the word “; or”, and by inserting immediately thereafter the following paragraph:
(k)for the purposes of a project for the promotion of the tourist industry (other than a hotel) in Singapore and approved by the Minister subject to such conditions as he may impose,”.
Repeal and re-enactment of section 33
7.  Section 33 of the principal Act is repealed and the following section substituted therefor:
Comptroller may disregard certain transactions and dispositions
33.—(1)  Where the Comptroller is satisfied that the purpose or effect of any arrangement is directly or indirectly —
(a)to alter the incidence of any tax which is payable by or which would otherwise have been payable by any person;
(b)to relieve any person from any liability to pay tax or to make a return under this Act; or
(c)to reduce or avoid any liability imposed or which would otherwise have been imposed on any person by this Act,
he may, without prejudice to such validity as it may have in any other respect or for any other purpose, disregard or vary the arrangement and make such adjustments as he considers appropriate, including the computation or recomputation of gains or profits, or the imposition of liability to tax, so as to counteract any tax advantage obtained or obtainable by that person from or under that arrangement.
(2)  In this section, “arrangement” means any scheme, trust, grant, covenant, agreement, disposition, transaction and includes all steps by which it is carried into effect.
(3)  This section shall not apply to —
(a)any arrangement made or entered into before the commencement of the Income Tax (Amendment) Act 1988; or
(b)any arrangement carried out for bona fide commercial reasons and had not as one of its main purposes the avoidance or reduction of tax.”.
Amendment of section 39
8.  Section 39 of the principal Act is amended —
(a)by inserting, immediately after paragraph (d) of subsection (2), the following paragraph:
(da)incurred delivery and hospitalisation expenses in respect of a legitimate 4th child born to him on or after 1st January 1988 and maintained by him, there shall be allowed a deduction against his earned income of the amount of such expenses or $3,000, whichever is the less:
Provided that where more than one individual is entitled to claim such deduction, the deduction shall be apportioned between the individuals in question in such proportion as they agree, or, in the absence of such agreement, in such proportion as appears to the Comptroller to be reasonable;”; and
(b)by inserting, immediately after subsection (3), the following subsections:
(4)  In the case of an individual resident in Singapore in the year of assessment who is a citizen or permanent resident in Singapore and who, in the year preceding the year of assessment, has paid money in accordance with section 17A of the Central Provident Fund Act (Cap. 36) to his or his parent’s retirement account, there shall be allowed a deduction of the amount of such payments made on or after 1st April 1987 or $6,000, whichever is the less:
Provided that —
(a)the total deduction allowed under this subsection in respect of any amount paid by a person to his and his parent’s retirement accounts shall not exceed such amount as may be prescribed;
(b)where more than one person is entitled to claim such deduction in respect of the same parent, the deduction shall be apportioned in such manner as appears to the Comptroller to be reasonable.
(5)  For the purposes of subsection (4), a claim for deduction shall only be granted if the claim contains such particulars and is supported by such proof as the Comptroller may require.”.
Amendment of section 42
9.  Section 42 of the principal Act is amended —
(a)by inserting, immediately after the words “subsection (2)” in subsection (1), the words “or subsection (4)”; and
(b)by inserting, immediately after subsection (3), the following subsection:
(4)  Where dividends are received by any institution, authority, person or fund specified in the First Schedule and such dividends are not exempt under section 13(1)(e), the gross amount of the dividends shall be taxed at the same rate as is applicable to a company.”.
New section 42A
10.  The principal Act is amended by inserting, immediately after section 42, the following section:
Rebate for third child of the family born on or after 1st January 1987
42A.—(1)  An individual resident in Singapore in the year of assessment who has a legitimate child born to him on or after 1st January 1987 being a third child of the family at the time of birth and a citizen of Singapore at the time of birth or within 12 months thereafter, there shall be allowed for the year of assessment immediately following the year of birth of that child —
(a)a rebate of $20,000 against the tax payable by such 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 three subsequent years of assessment;
(ii)where the third 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;
(iii)where a person who 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 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 —
(a)a child is a third child of the family if at the time of his birth he has two other brothers or sisters, or a brother and sister, who are members of the same household and who are citizens of Singapore at that time;
(b)a brother or sister under paragraph (a) includes a step brother or sister, or a brother or sister adopted in accordance with any written law relating to adoption.”.
Repeal and re-enactment of section 43A
11.  Section 43A of the principal Act is repealed and the following section substituted therefor:
Concessionary rate of tax for Asian Currency Unit, Fund Manager and securities company
43A.—(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 —
(a)a financial institution derived by it from the operation of its Asian Currency Unit;
(b)a Fund Manager;
(c)a company whose business includes dealing in securities and which is licensed as a dealer under the Securities Industry Act (Cap. 289) or is exempted from holding a dealer’s licence under that Act,
approved by the Minister or such person as he may appoint.
(2)  Regulations made under subsection (1) may provide for exemption from tax of any income referred to in that subsection and for deductions otherwise than in accordance with section 37(2).”.
Amendment of section 44
12.  Section 44 of the principal Act is amended by deleting subsections (3), (4), (5), (6) and (6A) and substituting the following subsections:
(3)  Upon payment of a dividend by a company in any year of assessment —
(a)where such dividend is the first dividend paid in that year of assessment and where the amount of tax deducted under subsection (1) exceeds the aggregate of the balance, if any, on 1st January of that year of assessment and any tax assessed during the period from 1st January of that year of assessment to the day before the date of payment of the dividend; or
(b)where such dividend is the second or subsequent dividend paid in that year of assessment and where the amount of tax deducted under subsection (1) exceeds the aggregate of the balance, if any, after the preceding dividend and any tax assessed during the period from the date of the payment of the preceding dividend to the day before the date of payment of the second or subsequent dividend,
a charge equal to the amount of such excess shall be paid to the Comptroller within 14 days from the date of payment of the dividend, and any amount of tax which remains unpaid on that date shall, notwithstanding section 86, be paid immediately to the Comptroller.
(4)  Where upon the payment of any dividend the aggregate of the balance, if any, after the date of payment of the preceding dividend and any tax assessed during the period from that date to the day before the date of payment of the first-mentioned dividend exceeds the tax deducted under subsection (1) from the first-mentioned dividend, the excess shall be carried forward as a balance to be set off against the tax de at the rate deductible at the date of payment 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 such dividend or part thereof as tax;
(b)where any dividend has been paid and any amount of the charge referred to in subsection (3) or any amount of tax payable referred to in subsection (3) or (6) is not paid within 14 days from the date of payment of that dividend or by 31st December of the year in which the dividend is paid, whichever is the later, the dividend shall be chargeable to tax on the basis of the net amount received by the shareholder;
(c)in relation to any company, the balance on 1st January of the year of assessment 1987 shall be the balance on the last day of the year of assessment 1986 computed in accordance with section 44(3) before the commencement of the Income Tax (Amendment) Act 1988;
(d)in relation to any company, the balance on 1st January of any year of assessment subsequent to the year of assessment 1987 shall be the aggregate of —
(i)the balance carried forward after the payment of the last dividend in the preceding year of assessment as computed in accordance with subsection (4); and
(ii)any tax assessed during the period from the date of the payment of that dividend to the end of the preceding year of assessment;
(e)in determining under subsection (3) or (6) the amount of tax assessed and not paid, any payment made to the Comptroller shall be applied first to the payment of any penalties before the payment of tax;
(f)tax assessed excludes —
(i)tax assessed at the rate of 10% or such other concessionary rate as may be prescribed under section 43A, 43C, 43D or 43E; and
(ii)tax in respect of any year of assessment prior to the year of assessment 1987;
(g)where any assessment in respect of —
(i)the year of assessment 1987 or subsequent years of assessment was made before 1st January 1987, it shall be deemed to have been made on that date;
(ii)the year of assessment 1986 or prior years of assessment was made on or after 1st January 1987, it shall be dealt with in accordance with section 44 before the commencement of the Income Tax (Amendment) Act 1988;
(h)any balance or tax assessed which has been taken into account for the purpose of determining the charge or balance under subsection (3) or (4) upon the payment of any dividend shall be regarded as having been utilized for that purpose notwithstanding that no set-off has been allowed in respect of that dividend under section 46(3).”.
Amendment of section 45A
13.  Section 45A of the principal Act is amended by deleting the words “section 12 (7)” wherever they appear and substituting in each case the words “section 12 (6) or (7)”.
Amendment of section 46
14.  Section 46 of the principal Act is amended by inserting, immediately after subsection (2), the following subsection:
(3)  Notwithstanding subsection (1), if any amount of the charge referred to in section 44(3) or any amount of tax payable referred to in section 44(3) or (6) is not paid within 14 days from the date of payment of any dividend to which the charge or tax relates or by 31st December of the year in which the dividend is paid, whichever is the later, no set-off against tax under subsection (1) shall be allowed in respect of the whole of the dividend.”.
Amendment of section 86
15.  Section 86 of the principal Act is amended by deleting the words “section 42 or 43” and substituting the words “the provisions of this Act”.
Amendment of section 88
16.  Section 88 (1) of the principal Act is amended by inserting, immediately after the word “outstanding” at the end of paragraph (c), the words “, and the provisions of this Act relating to the collection and recovery of tax shall apply to the collection and recovery of such additional penalty”.
Amendment of section 93
17.  Section 93 (1) of the principal Act is amended by deleting the full-stop at the end of paragraph (b) of the proviso and substituting a semi-colon, and by inserting immediately thereafter the following paragraph:
(c)any refund to be made under this section shall be reduced by the amount of charge or additional charge which has not been utilized for set off under section 44(9) on the date the refund arises, and where the amount of such charge or additional charge exceeds the amount to be refunded no refund shall be made under this section.”.
Amendment of section 94
18.  Section 94 (2A) of the principal Act is amended by deleting the words “section 63 or 65C” and substituting the words “section 63, 65C or 71”.
Amendment of Fifth Schedule
19.  The Fifth Schedule to the principal Act is amended —
(a)by deleting paragraphs 1, 2 and 3 and substituting the following paragraphs:
1.  Subject to the provisions of this Schedule, the allowable deduction to an individual in respect of each of his eligible children shall be as follows:
(a)For the 1st, 2nd and 3rd child $750
(b)For the 4th and 5th child if born before 1st August 1973 $300.
2.  Subject to paragraph 7(b), no deduction shall be granted under any paragraph of this Schedule in respect of a child born on or after 1st August 1973 if that child is the fourth or subsequent child.”;
(b)by deleting the words “or 2, as the case may be” in the last line of paragraph 4;
(c)by deleting the words “paragraph (6)” in paragraph (7) and substituting the words “paragraph (5)”;
(d)by renumbering paragraphs 4 to 7 as paragraphs 3 to 6, respectively;
(e)by deleting paragraph 8 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 deductions in respect of —
(a)the first 3 eligible children shall be as follows:
(i)for the first child 5% of her earned income, in addition to the appropriate deduction allowable under paragraph 1, subject to a maximum of $10,000;
(ii)for the second child 10% of her earned income, in addition to the appropriate deduction allowable under paragraph 1, subject to a maximum of $10,000;
(iii)for the third child 15% of her earned income, in addition to the appropriate deduction allowable under paragraph 1, subject to a maximum of $10,000; and
(b)in respect of a child, other than an adopted child, born on or after 1st January 1987 being the fourth child of the family, a deduction of $750 and 15% of her earned income, subject to a maximum of $10,000.”;
(f)by deleting the words “paragraph (8)” wherever they appear in paragraphs (9) and (10)(b) and substituting in each case the words “paragraph (7)”;
(g)by deleting the full-stop at the end of sub-paragraph (b) of paragraph 10 and substituting a semi-colon, and by inserting immediately thereafter the following sub-paragraph:
(c)where any question arises as to the ranking of any child for the purpose of any deduction to be granted under this Schedule, it shall be determined by the Comptroller whose decision shall be final.”; and
(h)by renumbering paragraphs 9 and 10 as paragraphs 8 and 9, respectively.