Clause 4

by inserting, immediately after section 10G, the following section:“Ascertainment of income from business of hiring out motor cars or providing driving instruction10H.—

Notwithstanding any other provisions of this Act, in determining the income derived by any person for any year of assessment from any business of hiring out motor cars or of providing driving instruction using motor cars, the following provisions shall apply:

any outgoings and expenses incurred in respect of that business for that year of assessment and allowable under this Act shall only be deducted against the income derived from that business and any excess of such outgoings and expenses over such income shall not be available as a deduction against any other income of the person for that year of assessment and any subsequent year of assessment; and

the allowances under sections 19, 19A, 20, 21 and 22 relating to that business for that year of assessment shall only be available as a deduction against the income derived from that business and any excess of such allowances over such income shall not be available as a deduction against any other income of the person for that year of assessment and any subsequent year of assessment.(2) In this section, “motor car” means a car which is constructed or adapted for the carriage of not more than 7 passengers exclusive of the driver and the weight of which unladen does not exceed 3,000 kilograms.”;

by inserting, immediately after section 10H, the following sections:“Reduction of share capital10I.—

This section shall, subject to sections 10J and 10K, apply where a company resident in Singapore reduces its share capital and the reduction of share capital involves a payment to any shareholder of the company.(2) Where the reduction of share capital is made out of the contributed capital of the company, and a payment is made to any shareholder of the company pursuant to such reduction, the payment to the shareholder shall not be regarded as a payment of dividend by the company to the shareholder, and an amount equal to the payment shall be debited to the contributed capital account referred to in subsection (5)(c)(i).(3) Where the reduction of share capital is not made out of the contributed capital of the company, and a payment is made to any shareholder of the company pursuant to such reduction, the payment to the shareholder shall be deemed to be a dividend paid by the company to the shareholder on the date of the payment, and the provisions relating to the payment of dividends under this Act and the Economic Expansion Incentives (Relief from Income Tax) Act (Cap. 86) shall apply, with the necessary modifications, to the dividend deemed to be paid.(4) Where the dividend deemed to be paid under subsection (3) is a dividend to which section 44 applies, the amount of dividend deemed to be paid by the company to the shareholder shall be deemed to be of such a gross amount as after deduction of tax at the rate deductible at the date of payment would be equal to the amount of payment made by the company to the shareholder.(5) For the purposes of this section —

the share capital of a company shall include any share premium or capital redemption reserve which is treated as paid-up share capital of the company for the purpose of any reduction of share capital made by the company;

the contributed capital of a company as at any date shall be the aggregate of the amounts received by the company, whether in cash or in the form of other valuable consideration, for the shares it had issued up to that date reduced by —

the aggregate of the amounts of any payment made to any shareholder of the company pursuant to any reduction of share capital by the company up to that date which had not been treated as a payment of dividends for the purpose of this Act;

the aggregate of the amounts of any payment made to any shareholder of the company pursuant to any redemption of shares by the company up to that date which had not been treated as a payment of dividends for the purpose of this Act; and

the aggregate of the amounts of any other payment made to any shareholder of the company pursuant to any return of share capital up to that date which had not been treated as a payment of dividends for the purpose of this Act;

in relation to the first reduction of its share capital made on or after 18th November 1998 by any company, the contributed capital of the company immediately before the first reduction —

shall be credited to an account (referred to in this section as the contributed capital account) to be kept by the company for the purposes of this section; and

where the aggregate of the amounts of any payment referred to in paragraph (b)(i), (ii) and (iii) exceeds the aggregate of the amounts received by the company, whether in cash or in the form of other valuable consideration, for the shares it had issued before the first reduction, the amount to be credited to the contributed capital account shall be deemed to be zero;

where any share is issued by a company subsequent to the first reduction of its share capital referred to in paragraph (c), any amount received by the company, whether in cash or in the form of other valuable consideration, for the shares it had issued shall be credited to the contributed capital account;

where a company redeems any redeemable shares subsequent to the first reduction of its share capital referred to in paragraph (c) and section 10K does not apply to that redemption, any payment made to any shareholder for the purpose of that redemption shall be debited to the contributed capital account where the payment is not treated as a payment of dividends for the purpose of this Act;

where any reduction of share capital of a company was made before 18th November 1998 for the purposes of or in connection with a scheme for the reconstruction of any company or companies or the amalgamation of 2 or more companies and such scheme resulted in the transfer of assets of the first-mentioned company, whether directly by that company or indirectly through its shareholders, to another company in exchange for shares in the transferee company, the consideration equal to the value of the assets received by the transferee company for the shares issued shall, notwithstanding paragraph (b), not form part of the contributed capital of the transferee company where the payment made by the first-mentioned company pursuant to the reduction of its share capital was —

not treated as a payment of dividend to the shareholder of the first-mentioned company for the purpose of this Act; and (ii)more than the contributed capital of the first-mentioned company immediately before the reduction of its share capital; (g)where paragraph (f) is applicable to the contributed capital of a transferee company, the contributed capital of the first-mentioned company under that paragraph after the reduction of its share capital shall, notwithstanding paragraph (b), not be reduced by the payment made by the first-mentioned company for the reduction of its share capital; and

any amount applied by a company in paying up unissued shares of the company to be issued to shareholders of the company as fully or partly paid bonus shares shall not be regarded as receipts by the company from the issue of shares.(6) A company shall deliver to the Comptroller a copy of the contributed capital account made up to any date specified by the Comptroller whenever called upon to do so by notice in writing.Shares buyback10J.—

Where a company resident in Singapore purchases or otherwise acquires shares issued by it from any shareholder of the company (referred to in this section as a buyback), for the purposes of this section —

the buyback constitutes a market purchase if the purchase of the shares is made on a stock exchange; and

the buyback constitutes an off-market purchase if the purchase of the shares is made otherwise than on a stock exchange.(2) Where a company undertakes a buyback described in subsection (1), any payment made by the company to any shareholder for the buyback shall, to the extent that the payment is made out of contributed capital of the company, not be regarded as a payment of dividend by the company to the shareholder, and an amount equal to the payment shall be debited to the contributed capital account kept by the company under section 10I(5)(c) (i).(3) Where a company undertakes a buyback described in subsection (1), any payment made by the company to any shareholder for the buyback shall, to the extent that the payment is not made out of the contributed capital of the company, be deemed to be —

a dividend paid by the company on the date of the payment, and the provisions relating to payment of dividends under this Act and the Economic Expansion Incentives (Relief from Income Tax) Act (Cap. 86), shall apply, with the necessary modifications, to the dividend deemed to be paid;

subject to prescribed conditions, a dividend received by the shareholder where the buyback —

is a market purchase transacted through a special trading counter set up on the Stock Exchange of Singapore which enables a shareholder to know that the purchaser of his shares is the company undertaking the market purchase; or

is an off-market purchase made in accordance with an equal access scheme authorised in advance by the company at a general meeting of the company.(4) Where the dividend deemed to be paid by a company under subsection (3)(a) is a dividend to which section 44 applies, the amount of dividend so paid by the company and the amount of dividend deemed to be received by the shareholder under subsection (3)(b) shall be deemed to be of such a gross amount as after deduction of tax at the rate deductible at the date of payment would be equal to the amount of payment made by the company to the shareholder.(5) Where any payment made by a company to any shareholder for a buyback is not deemed to be a dividend received by the shareholder under subsection (3)(b), no set-off under section 46 shall be allowed to the shareholder in respect of the payment.(6) Where a shareholder sells his shares to the company through a special trading counter purchase or in an off-market purchase referred to in subsection (3)(b) and has remaining shares in the company immediately after the sale —

no deduction shall be allowed to him in respect of the costs he incurred to acquire the shares he sold to the company; and

the cost of each such remaining shares held by the shareholder shall be ascertained by the formula where Ais the aggregate cost of all shares in the company held by the shareholder immediately preceding the buyback of his shares; andNis the number of remaining shares in the company held by the shareholder after the buyback of his shares.(7) For the purposes of this section —

the contributed capital of a company has the same meaning as in section 10I(5)(b);

where a company undertakes a buyback to which subsection (2) applies and the buyback is effected before any reduction of its share capital to which section 10I applies or any redemption of shares to which section 10K applies, section 10I(5)(c), (d) and (e) shall apply, with the necessary modifications, for the purpose of the buyback and any reference in that section to the first reduction shall be read as a reference to the buyback;

“equal access scheme” means a scheme which satisfies all the following conditions:

the offers under the scheme are to be made to every person who holds shares to purchase or acquire the same percentage of their shares;

all the persons mentioned in sub‑paragraph (i) have a reasonable opportunity to accept the offers made to them; and

the terms of all the offers are the same except that there shall be disregarded —

differences in consideration attributable to the fact that the offers relate to shares with different accrued dividend entitlements;

differences in consideration attributable to the fact that the offers relate to shares with different amounts remaining unpaid; and

differences in the offers introduced solely to ensure that each shareholder is left with a whole number of shares.”; and

by inserting, immediately after section 10J, the following section:“Shares redemption10K.—

This section shall apply where a company resident in Singapore redeems from its shareholders any redeemable shares issued after 6th July 1999.(2) Where a company redeems any redeemable shares to which this section applies, any payment made by the company to any shareholder from whom the shares are redeemed shall —

where the payment is provided for out of contributed capital of the company, not be regarded as a payment of dividend by the company to the shareholder, and an amount equal to the payment shall be debited to the contributed capital account kept by the company under section 10I(5)(c)(i);

where the payment is not provided for out of contributed capital of the company —

be deemed to be a dividend paid by the company on the date of the payment, and the provisions relating to the payment of dividends under this Act and the Economic Expansion Incentives (Relief from Income Tax) Act (Cap. 86), shall apply, with the necessary modifications, to the dividend deemed to be paid;

notwithstanding sub-paragraph (i), not be deemed to be a dividend received by the shareholder.(3) Where the dividend deemed to be paid under subsection (2)(b)(i) is a dividend to which section 44 applies, the amount of dividend deemed to be so paid by the company shall be deemed to be of such a gross amount as after deduction of tax at the rate deductible at the date of payment would be equal to the amount of payment made by the company to the shareholder.(4) No set-off under section 46 shall be allowed to any shareholder in respect of any payment made by a company to the shareholder for the redemption of his redeemable shares.(5) For the purposes of this section —

the contributed capital of a company has the same meaning as in section 10I(5)(b); and

where a company redeems any redeemable shares to which this section applies and the redemption is effected before any reduction of its share capital to which section 10I applies or any buyback to which section 10J(2) applies, section 10I(5)(c), (d) and (e) shall apply, with the necessary modifications, for the purpose of the redemption and any reference in that section to the first reduction shall be read as a reference to the redemption.”.