Income Tax Act 1947 · 2020 Revised Edition · Part 5 · Deductions Against Income
14MA. Deduction for new shares issued by holding company under employee equity‑based remuneration scheme
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Where —
in the basis period for the year of assessment 2026 or any subsequent year of assessment —
a company issues new shares; or
a special purpose vehicle that was issued new shares of a company (whether or not those shares were issued in that basis period) transfers those shares,to a person (called in this section an employee) under a stock option scheme or a share award scheme by reason of any office or employment held in Singapore by that employee in a subsidiary of the company; and
payment by the subsidiary for the shares issued or transferred to the employee has become due and payable,then the subsidiary is allowed a deduction of an amount mentioned in subsection (2) in the year of assessment relating to the basis period in which paragraph (a) or (b) occurs, whichever is later.
The amount of deduction under subsection (1) is the lower of —
the amount paid or payable by the subsidiary for the shares, less any amount paid or payable by the employee for the shares to the extent the secondmentioned amount has not been deducted from the firstmentioned amount; and
the value of the shares at the time of issue under subsection (1)(a)(i) or transfer under subsection (1)(a)(ii) (as the case may be) of the shares to the employee, less any amount paid or payable by the employee for the shares.
For the purpose of subsection (2)(b), the value of the shares is —
the price of the shares in the open market; or
if it is not possible to determine that price, the net asset value of the shares at the time of their issue under subsection (1)(a)(i) or transfer under subsection (1)(a)(ii) (as the case may be) to the employee.
For the purpose of this section, shares are issued or transferred to an employee when the employee acquires the legal and beneficial interest in the shares.
No deduction is allowed to a subsidiary under this section if a deduction has already been allowed to the subsidiary under any other provision of this Act in respect of the shares issued or transferred to the employee.
In this section —
“group of companies” means 2 or more companies each of which is either a holding company or subsidiary of the other or any of the others;
company
“company” means any company incorporated or registered under any law in force in Singapore or elsewhere;
“shares” includes stocks but does not include redeemable or convertible shares or shares of a preferential nature;
“special purpose vehicle” means a trustee of a trust (when acting in such capacity) that is set up solely for the administration of a stock option scheme or share award scheme under which shares in one company within a group of companies to which both the company and subsidiary mentioned in subsection (1) belong, are to be used for the remuneration of a person by reason of any office or employment held by that person in a company within that group of companies.