Sir, I have His Excellency s permission to move, "That the Bill be now read a Second time." This Bill has four principal aims: firstly, to assist the mining industry in Malaya; secondly, to afford an additional measure of relief to the rubber industry; thirdly, to simplify the provisions for the assessment of income from dividends; and, lastly, to enable the Comptroller to obtain a full disclosure of a person's total assets. Clause 3 is intended to give effect to the first aim. It is introduced in order to encourage the search for fresh mineral deposits in Malaya. Under the existing provisions of the Income Tax Ordinance, relief is allowable for moneys expended on the search for mineral deposits only where such expenditure is incurred; firstly, by a miner within the area of his existing lease, regardless of whether the prospecting is successful or otherwise; secondly, where the prospecting is successful and mining operations follow; thirdly, by a person carrying on a trade or business of prospecting for mineral deposits. The expenditure for which the present provisions of the Income Tax Ordinance do not give relief is expenditure on unsuccessful prospecting incurred outside the area of a miner's existing lease. It is considered that if relief for income tax purposes is given in respect of such expenditure, the discovery and development of the mineral deposits of Malaya will be assisted. The clause is designed to give such relief. It will be seen that, to qualify for relief, the prospecting expenditure must be lawfully incurred. This restriction has been inserted to ensure that only persons who are duly authorised to engage in prospecting shall be in a position to claim relief for their expenditure. With regard to the next aim, hon. Members will remember that one of the recommendations of the mission of enquiry into the rubber industry - the Mudie Mission - was that all new capital expenditure on estates should be written off for income tax purposes over a maximum period of ten years. Clause 4 is intended to implement that recommendation. The relief which may be claimed under the provisions of clause 4 is available to any person engaged in working a plantation. The word "plantation" is defined in Section 2 of the Income Tax Ordinance to mean any land used for the growing and harvesting of crops, and, accordingly, the relief proposed is equally available to the rubber, oil palm, rice, tea and cocoa industries. Qualifying expenditure will be divided into ten equal parts, and will be available for relief for each of the ten years of assessment following that in which the expenditure is incurred. Paragraph (3) of the clause makes provision for the allocation of the relief as between the vendor and the purchaser where land is sold, on which qualifying expenditure has been incurred. Thus, if the whole or part of an estate is sold within any ten-year period, the purchaser is entitled to claim, over the remaining years of the period, the same amount of relief as was allowed annually to the vendor, provided that the estate or part of the estate purchased continues to be used as a plantation. The relief afforded under the clause is generous, and it is considered reasonable that where the whole or part of an estate in respect of which relief has been given is sold or transferred for a consideration, the vendor should pay tax on any sum which he recovers in respect of his expenditure. The proviso to the clause introduces two safeguards for the taxpayer where the whole or part of an estate is sold. Firstly, the sum recovered on which the vendor is required to pay tax is restricted to the amount of the allowances which he has obtained under the clause. Secondly, the taxpayer is given the option of having any sum so recovered treated as income of the year of receipt, or spread evenly over such of the previous years of assessment as are in date for additional assessment. Paragraph (2) of the clause provides that capital expenditure on the acquisition of land, machinery and plant shall not qualify for relief. In the case of machinery and plant, the existing rates of depreciation, which have been prescribed by the Malayan Board of Income Tax, are considered to be adequate, but Section 19 of the Ordinance gives any taxpayer, who is dissatisfied with these rates, the right to approach the Comptroller with a request that higher rates should be allowed. Land used as a plantation is not considered to be a deteriorating asset and, for that reason, is excluded from relief under the clause. A few words on the provisions of paragraph (6) of clause 4 may be of assistance to hon. Members. Under the existing provisions of the Income Tax Ordinance, capital expenditure incurred on the construction of industrial buildings and structures on plantations qualifies for relief as follows - an initial allowance of ten per cent is given together with annual allowances at the rate of two per cent for a maximum period of 45 years. No relief is due for expenditure on clearing new areas or for original planting. The whole cost of replanting, on the other hand, which means the replacement of the crop on any area of land by a similar or by an approved crop on the same area of land, is allowable as a deduction in computing profits as and when incurred. The provisions of paragraph (6) of clause 4 of the Bill do not interfere with the existing treatment of replanting expenditure. The provisions do, however, enable expenditure on clearing new areas and on original planting to qualify for relief over a ten-year period; furthermore, the provisions are more generous in the case of industrial buildings and structures in that relief may now be claimed over a maximum period of ten years instead of over the existing maximum of 45 years. The third aim is carried out in clauses 5 and 6 of the Bill. Clause 5 is designed to remove the complicated provisions applicable where shareholdings giving rise to dividends are acquired or are sold by making all income from dividends assessable on the basis of the amount received in the preceding year. At present, when a holding of shares is acquired, dividends received during the first or second year of assessment may be assessed to tax more than once, and the tax deducted from such dividends by the paying company may require to be set off for the purposes of collection or repaid to the taxpayer more than once. On the other hand, when a holding of shares is sold, the provisions of subsection (7) of Section 31 of the Income Tax Ordinance have the effect that the dividends received in the second last, or the third last, year of assessment are not assessed to tax at all. Over the period during which shares are held, the taxpayer may be assessed in a greater amount than the aggregate dividends he has received. The provisions of clause 5 will ensure that over the period during which shares are held the taxpayer is assessed only on the exact amount of dividends received. Clause 6 is intended to meet the request of several members of the accountancy profession for a more simple procedure in the deduction of tax from dividends paid to shareholders. The practical difficulties encountered in the operation of the existing provisions of Section 40 are referred to in the Objects and Reasons attached to the Bill. The broad principle underlying the new clause is that every company resident in the Colony is entitled to deduct tax from dividends paid to shareholders, regardless of whether or not the company itself has chargeable income for the year of assessment in which any dividend is paid, provided that the tax so deducted from the dividends reaches the Revenue. For this purpose, the excess of any tax paid on previous profits over the tax deducted from previous dividends is available, along with the tax payable for the year of assessment in which the dividend is paid, to frank the tax deducted from the current dividend; but where there is no such excess, the deficiency must be made good by a direct payment to the Comptroller of Income Tax. In effect, two running totals will be kept for each company. One will be the total of tax paid each year on the company's income for all years of assessment from the date of the introduction of income tax in 1948. The other will be the total of tax deducted from dividends in the same period. Provided that the total of tax paid exceeds the total of tax deducted, the company will be in perfect safety in deducting tax from its dividends, and only where the tax deducted exceeds the tax paid will the company be required to make up the difference by a direct payment. This procedure is perfectly reasonable when one bears in mind that the tax deducted from a dividend is available for set-off or for repayment when the relevant dividend is assessed on the shareholder. Furthermore, it is thought that the procedure will prove to be of assistance to directors and to company secretaries, since they will no longer be uncertain whether they are entitled to deduct tax on paying a dividend. The opportunity has been taken to remove from Section 40 the restriction whereby the rate of tax at which a company is entitled to deduct tax from dividends is reduced by any Double or Empire Tax Relief received by the company. The amount of Double or Empire Tax received by any single company is comparatively small, and the effect of reducing the rate at which companies may deduct tax - at present 30 per cent - to take account of such relief, is to bring into existence percentages, for example, 29.18%, 28.97%, which are troublesome to compute and difficult to explain to shareholders. The removal of the restriction will result in the total of tax paid by any company receiving Double or Empire Tax Relief being correspondingly reduced for the purposes of comparison with the total of tax deducted from the dividends paid. The four amendments which I have mentioned have been considered by the Malayan Board of Income Tax who have advised that they should be introduced with effect from the first of January, 1956. The Federation Government has also accepted this advice and proposes to include the same amendments in the Income Tax Bill which is to be introduced into the Federal Legislative Council this month. Hon. Members will no doubt be aware that one or two points have been raised during the past few days by the accountancy profession in regard to the operation of sub-clause (6) of clause 6 of the Bill to which I have just referred. These objections were concerned with certain results which, it was felt, might flow where a company had a surplus of tax paid as at 31st December, 1955. It was thought that, where dividends had been paid partly out of profits which had not suffered Singapore tax, or where a dividend had been paid during the period when the rate deductible was 20 per cent only, the provision for grossing up at 30 per cent would have the effect of reducing arbitrarily the credit balance of tax in hand. These points have since been discussed with representatives of the accountancy profession, and it is proposed to amend the sub-clause in Committee in such a way as to remove any possibility of these difficulties arising. The question of what should be done about companies which, in the past, had deducted tax from dividends in excess of the tax paid on their profits was also raised, and I am able to reinforce the assurance which has been given to the accountancy representatives that no action be taken in such cases. In other words, such companies will start afresh as from the year of assessment 1956. The assurance which I have just given was recommended by and agreed to at the meeting of the Malayan Board of Income Tax at which the amendments embodied in this Bill were discussed. Clause 7 seeks to introduce a new section - Section 6lA - into the Income Tax Ordinance. In the course of the debate on the Income Tax (Amendment) Bill, 1953, a Select Committee was appointed in 1953 to examine and report to the Legislative Council on that Bill. The Select Committee recommended - their Report is in Council Paper No. 73 of 1953 - that all the clauses of the Bill should be accepted with the exception of clause 8 which sought to introduce two new sections into the Ordinance, namely, Sections 61A and 61B. Clause 8 of the 1953 Bill containing these sections was accordingly deleted from the Bill as enacted. It is not intended to reintroduce the provisions of Section 61B. Government is of the opinion, however, that the proposed new Section 61A, which is contained in clause 7 of the Bill, is essential if the attack on evasion is to be seriously pressed. The clause gives the Comptroller statutory authority to require from any taxpayer a statement containing particulars of all bank accounts, assets and any other facts bearing upon his income tax liability. The statement is intended to enable the Comptroller to compare the growth of the tax-payer's wealth over a period with his declared income in the same period. I would assure hon. Members that the section will be used only by the Comptroller or by senior officers of the Investigation Unit in cases where fraud is suspected. The section will not be used to require statements of wealth from all and sundry, and the honest tax-payer need have no fear that the new powers will be used indiscriminately to compel him to supply information about his private affairs. The fact that the provisions of clause 7 in the present Bill were enacted in the Federation Income Tax (Amendment) Ordinance, 1953, and are in the meantime omitted from the Singapore Income Tax Ordinance has proved a source of embarrassment to the officers working in the Investigation Unit in Singapore. This Unit has recently been strengthened by the addition of three officers from the Board of Inland Revenue in the United Kingdom, and I feel sure hon. Members will agree that Government is right in seeking to give the Comptroller and to these officers the weapon of the additional powers contained in clause 7 to ensure that the battle against tax evaders is effectively waged. As I have already said, the honest citizen need have no fear of the additional powers: only the evader need have cause for alarm, and he is undeserving of the sympathy of Members of this House. In this connection, with this new clause 61A, it may possibly be argued that since clause 69 (1) of the main Ordinance limits the Comptroller's power to raise additional assessment to a period of six years from the year of assessment in respect of which tax is due, logically clause 61A should limit the Comptroller s power to call for a statement of banking accounts, etc. to the same period. This argument appears to overlook the fact that clause 69 (1) refers, in the main, to straightforward additional assessments whereas clause 61A is aimed at evaders of tax. It also overlooks the fact that the proviso to clause 69 (1) already recognises the fact that the Comptroller should have the power to pursue an evader of tax to the limits of the Income Tax Ordinance, that is, to the first year of assessment under the Ordinance. In these circumstances, no justification can be seen for attempting to limit the exercise of the Comptroller's powers under clause 61A to a period of six years preceding the year in which evasion is first suspected. It must not be forgotten that this clause refers to evaders of tax and not to honest citizens who have nothing to fear from this clause. I should also point out that a clause similar to the new clause 61A has been in operation in the Federation since 1953, and no need has been felt there to alter the date from 1st January, 1947. Again, it may be argued that since taxpayers had the right, under Section 31(1), to choose 1948 as the basis year for the year of assessment 1948, it should be made clear in clause 6lA that, for taxpayers who so opted, the critical date for purposes of clause 61A should be 1st January, 1948, and not 1st January, 1947. Here again, I must say that the Comptroller must have power to pursue evaders throughout the whole period of the Income Tax Ordinance, and I should be unwilling to agree that any amendment should be made in this respect. As I have repeated before, the honest taxpayer has nothing to fear from this clause. Lastly, Sir, clause 8 provides for certain consequential amendments to the main Ordinance and these are described in detail in the Schedule. Sir, I beg to move. Question proposed.