Economic Expansion Incentives (Relief from Income Tax) Act 1967 · 2020 Revised Edition · Part 8 · Investment Allowances
45. Crediting of investment allowance
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Where in the basis period for a year of assessment a company has incurred fixed capital expenditure, the company is to be given for that year of assessment an investment allowance in respect of such amount of the fixed capital expenditure as qualifies for the investment allowance under the terms and conditions of its certificate and in accordance with section 44.
company
“company” means any company incorporated or registered in accordance with the provisions of any written law relating to companies;
Despite subsection (1), no investment allowance may be given to a company for an approved project from which relevant income of the company is derived.
approved project
“approved project” means a project approved by the Minister under section 43(2);
Where any investment allowance is given to a company for an approved project from which only normal income of the company is derived, the investment allowance is to be credited to an account to be called a “normal investment allowance account” which must be kept by the company for the purposes of this Part.
normal income
“normal income” means income subject to tax at the rate of tax under section 43(1)(a) of the Income Tax Act 1947;
Where any investment allowance is given to a company for an approved project from which only concessionary income of the company is derived, the investment allowance is to be credited to an account to be called a “concessionary investment allowance account” which must be kept by the company for the purposes of this Part.
concessionary income
“concessionary income” means income subject to tax at the concessionary rate of tax under section 43A, 43C, 43D, 43E, 43F, 43G, 43H, 43I, 43J, 43K, 43L, 43M, 43N, 43O, 43P, 43Q, 43R, 43S, 43T, 43U, 43V, 43W or 43X of the Income Tax Act 1947, or the regulations made under any of those provisions, as the case may be;
Where a company derives both normal income and concessionary income at the same time from an approved project, the investment allowance is to be credited wholly to the normal investment allowance account or wholly to the concessionary investment allowance account as the Minister may direct.
normal investment allowance account
“normal investment allowance account” means an account kept by a company for the purpose of calculating the amount of normal investment allowance granted under this Part;
Despite subsections (1) to (5), where a company has incurred, on or after 1 January 1996, fixed capital expenditure for a project approved under section 43(1)(e), the Minister may, if the Minister is satisfied that it is expedient in the public interest to do so, direct that an investment allowance be given to the company for such expenditure, and the investment allowance is to be credited into a normal investment allowance account.
fixed capital expenditure
“fixed capital expenditure” means capital expenditure to be incurred on an approved project by a company on the following items that are used for carrying out the project —(a)factory building (excluding land) in Singapore and, in relation to any project under section 43(1)(b), (c), (d), (f), (g) or (k), includes a building or structure specially designed for carrying out the project;(b)the acquisition of any know-how or patent rights; and(c)any new productive equipment (and, subject to the approval of the Minister, any secondhand productive equipment) to be used in Singapore and, in relation to any project under section 43(1)(h), (i) or (k), includes any productive equipment to be used outside Singapore as approved under section 43(3);
Despite section 47, as from the relevant date, where the income of a company which is derived from an approved project is subject to tax as concessionary income instead of as normal income —
subject to paragraph (d), any balance in the normal investment allowance account at the end of the basis period for the year of assessment before the transitional year may only be used for deduction against the chargeable normal income of the company for the transitional year;
where the company has incurred any fixed capital expenditure before the relevant date, any investment allowance given to the company for the fixed capital expenditure is to be credited to the normal investment allowance account;
where the company has incurred any fixed capital expenditure on or after the relevant date, any investment allowance given to the company for the fixed capital expenditure is to be credited to the concessionary investment allowance account; and
the normal investment allowance account for the transitional year is to be debited with the amount of chargeable normal income for the transitional year not exceeding the credit in that account; and any remaining balance in that account for that year is to be debited from that account and credited to the concessionary investment allowance account for use against the chargeable concessionary income of the company for the transitional year and subsequent years of assessment.
Despite section 47, as from the relevant date, where the income of a company which is derived from an approved project is subject to tax as normal income instead of as concessionary income —
subject to paragraph (d), any balance in the concessionary investment allowance account at the end of the basis period for the year of assessment before the transitional year may only be used for deduction against the chargeable concessionary income of the company for the transitional year;
where the company has incurred any fixed capital expenditure before the relevant date, any investment allowance given to the company for the fixed capital expenditure is to be credited to the concessionary investment allowance account;
where the company has incurred any fixed capital expenditure on or after the relevant date, any investment allowance given to the company for the fixed capital expenditure is to be credited to the normal investment allowance account; and
the concessionary investment allowance account for the transitional year is to be debited with the amount of chargeable concessionary income for the transitional year not exceeding the credit in that account; and any remaining balance in that account for that year is to be debited from that account and credited to the normal investment allowance account for use against the chargeable normal income of the company for the transitional year and subsequent years of assessment.
Despite section 47(4), where the Comptroller is satisfied that a company has permanently ceased to derive any concessionary income in the basis period for any year of assessment —
Comptroller
“Comptroller” means the Comptroller of Income Tax appointed under the Income Tax Act 1947;
the concessionary investment allowance account is to be debited with the amount of chargeable concessionary income of the company for that year of assessment not exceeding the credit in that account;
any remaining balance in the concessionary investment allowance account is to be debited from that account; and
an adjusted amount of any remaining balance referred to in paragraph (b) is to be credited to the normal investment allowance account for use against the chargeable normal income of the company for that year of assessment and subsequent years of assessment, and for this purpose “adjusted amount” means the amount ascertained in accordance with the formulawhere Ais the amount of any remaining balance referred to in paragraph (b);Bis the concessionary rate of tax for that year of assessment at which the concessionary income is subject to tax; andCis the rate of tax under section 43(1)(a) of the Income Tax Act 1947 for that year of assessment.
In this section —
“relevant date” means the date in the basis period relating to any transitional year on which the income of an approved project is subject to tax as concessionary income instead of as normal income, or vice versa;
“transitional year” means any year of assessment relating to the basis period in which the income of an approved project is from the relevant date subject to tax as concessionary income instead of as normal income, or vice versa.[69