Clause 26

by inserting, immediately after the words “Subject to this section” in subsection (1), the words “and section 37IC”;

by deleting subsection (4) and substituting the following subsections:“(4) Subject to this section and section 37IC, for the purpose of ascertaining the income of a person carrying on a trade or business during the basis period for the year of assessment 2016, 2017 or 2018, there shall be allowed in respect of all his trades and businesses, in addition to the deduction allowed under section 14 or 14D (as the case may be), a deduction for expenditure incurred during the basis period for the purposes of those trades and businesses on the licensing from another person of any qualifying intellectual property rights that is computed in accordance with the following formula:where A is —

for the year of assessment 2016, the lower of the following:

such expenditure incurred during the basis period for that year of assessment;

$1,200,000;

for the year of assessment 2017, the lower of the following:

such expenditure incurred during the basis period for that year of assessment;

the balance after deducting from $1,200,000 the lower of the amounts specified in paragraph (a)(i) and (ii); and

for the year of assessment 2018, the lower of the following:

such expenditure incurred during the basis period for that year of assessment;

the balance after deducting from $1,200,000 the lower of the amounts specified in paragraph (a)(i) and (ii), and the lower of the amounts specified in paragraph (b)(i) and (ii).(4A) Notwithstanding anything in this section or section 19B, where a person has, during the basis period for any year of assessment between the years of assessment 2016 and 2018 (both years inclusive), incurred both expenditure on the licensing from another person of any qualifying intellectual property rights and expenditure on the acquisition of any intellectual property rights, the aggregate of the expenditure which may be given a deduction under subsection (4) and the expenditure which may be given an allowance under section 19B(1BAA) shall not exceed —

in the case of the year of assessment 2016, the lower of the following:

the aggregate of all such expenditure;

$1,200,000;

in the case of the year of assessment 2017, the lower of the following:

the aggregate of all such expenditure;

the balance after deducting from $1,200,000 the lower of the amounts specified in paragraph (a)(i) and (ii); and

in the case of the year of assessment 2018, the lower of the following:

the aggregate of all such expenditure;

the balance after deducting from $1,200,000 the lower of the amounts specified in paragraph (a)(i) and (ii), and the lower of the amounts specified in paragraph (b)(i) and (ii).(4B) In subsections (4) and (4A) —

if the person does not carry on any trade or business during the basis period for any one year of assessment between the years of assessment 2016 and 2018 (both years inclusive), the references to “$1,200,000” in the paragraphs of those subsections applicable to the other 2 years of assessment shall be substituted with “$800,000”;

if the person does not carry on any trade or business during the basis periods for any 2 years of assessment between the years of assessment 2016 and 2018 (both years inclusive), the references to “$1,200,000” in the paragraphs of those subsections applicable to the remaining year of assessment shall be substituted with “$400,000”; and

to avoid doubt —

if the person does not carry on any trade or business during the basis period for the year of assessment 2016, no deduction shall be made from the substituted amount in subsection (4)(b)(ii) or (c)(ii) of the lower of the amounts specified in subsection (4)(a)(i) and (ii), or from the substituted amount in subsection (4A)(b)(ii) or (c)(ii) of the lower of the amounts specified in subsection (4A)(a)(i) and (ii); and

if the person does not carry on any trade or business during the basis period for the year of assessment 2017, no deduction shall be made from the substituted amount in subsection (4)(c)(ii) of the lower of the amounts specified in subsection (4)(b)(i) and (ii), or from the substituted amount in subsection (4A)(c)(ii) of the lower of the amounts specified in subsection (4A)(b)(i) and (ii).(4C) For the purposes of subsections (1) and (4), where an individual carrying on a trade or business through 2 or more firms (excluding partnerships) has, during the basis period for any year of assessment between the years of assessment 2013 and 2018 (both years inclusive), incurred expenditure on the licensing from another person of any qualifying intellectual property rights in respect of such firms for the purposes of his trade or business, the deductions that may be allowed to him for that expenditure in respect of all his trades and businesses shall not exceed the amount computed in accordance with subsection (1) or (4) (as the case may be) for that year of assessment.”;

by deleting the words “subsections (1) and (2)” in subsection (5) and substituting the words “subsections (1), (2), (4) and (4A)”;

by deleting “2015” in subsection (5) and substituting “2018”; and

by deleting the words “subsection (1) or (2)” in subsection (5) and substituting the words “subsection (1), (2), (4) or (4A)”.