Income Tax (Amendment) Bill

This Act may be cited as the Income Tax (Amendment) Act 2009.

Section 35 shall be deemed to have come into operation on 1st April 2008.

Section 5(a) shall be deemed to have come into operation on 1st October 2008.

Sections 7(c), 20 and 23 shall be deemed to have come into operation on 22nd January 2009.

Section 14 shall be deemed to have come into operation on 1st April 2009.

Sections 2 and 27 shall be deemed to have come into operation on 4th May 2009.

Sections 25 and 33(c), (d) and (e) shall be deemed to have come into operation on 1st July 2009.

Sections 10, 11, 12 and 15 shall come into operation on 1st January 2010.

Sections 22 and 33(i) and (j) shall have effect for the year of assessment 2006 and subsequent years of assessment.

Sections 21, 26, 28(b), 29 (except in relation to section 37E(4A) and (8A)) and 30 (except in relation to section 37F(9A)) shall have effect for the years of assessment 2009 and 2010.

Section 5(c) shall have effect for the year of assessment 2009 and subsequent years of assessment.

Sections 3, 32, 33(a), (b), (f) and (k), 34, 36(a), 37, 39 and 40 shall have effect for the year of assessment 2010 and subsequent years of assessment.

Section 31 shall have effect for the year of assessment 2011 and subsequent years of assessment.

This Act may be cited as the Income Tax (Amendment) Act 2009.

Section 35 shall be deemed to have come into operation on 1st April 2008.

Section 5(a) shall be deemed to have come into operation on 1st October 2008.

Sections 7(c), 20 and 23 shall be deemed to have come into operation on 22nd January 2009.

Section 14 shall be deemed to have come into operation on 1st April 2009.

Sections 2 and 27 shall be deemed to have come into operation on 4th May 2009.

Sections 25 and 33(c), (d) and (e) shall be deemed to have come into operation on 1st July 2009.

Sections 10, 11, 12 and 15 shall come into operation on 1st January 2010.

Sections 22 and 33(i) and (j) shall have effect for the year of assessment 2006 and subsequent years of assessment.

Sections 21, 26, 28(b), 29 (except in relation to section 37E(4A) and (8A)) and 30 (except in relation to section 37F(9A)) shall have effect for the years of assessment 2009 and 2010.

Section 5(c) shall have effect for the year of assessment 2009 and subsequent years of assessment.

Sections 3, 32, 33(a), (b), (f) and (k), 34, 36(a), 37, 39 and 40 shall have effect for the year of assessment 2010 and subsequent years of assessment.

Section 31 shall have effect for the year of assessment 2011 and subsequent years of assessment.

Section 2(1) of the Income Tax Act (referred to in this Act as the principal Act) is amended by inserting, immediately after the definition of “limited liability partnership”, the following definition:“ “limited partnership” means a limited partnership registered or formed under any law in force in Singapore or elsewhere;”.

Section 10 of the principal Act is amended —

by deleting paragraphs (d) and (e) of subsection (6) and substituting the following paragraph:“(d)notwithstanding paragraphs (a) and (c), any gains or profits derived by him by any exercise of a right or benefit to acquire shares in any company listed on the Singapore Exchange shall be computed in accordance with the following formula:where Ais —

if the shares are not treasury shares, the price of the shares in the open market at the last transaction on the date on which the shares are first listed on the Singapore Exchange after the acquisition of the shares by him; and (ii) if the shares are treasury shares, the price of the shares in the open market at the last transaction on the date an appropriate entry is made in the Depository Register by the Central Depository (Pte) Ltd to effect the acquisition of the treasury shares by him; andBis the amount paid for such shares;”; and

by deleting subsection (11).

The principal Act is amended by inserting, immediately after section 10E, the following section:“Ascertainment of income from certain public-private partnership arrangement10F.—

Where —

a contract is entered into on or after the date of commencement of section 4 of the Income Tax (Amendment) Act 2009 between the Government or any approved statutory body and any person under a public-private partnership arrangement; and

the contract is or contains a finance lease recognised as such by the lessor in accordance with FRS 17 read with INT FRS 104, the Government or the approved statutory body being the lessee and the person being the lessor,then —

notwithstanding any provisions under Part VI, the allowances under section 16, 17, 19, 19A, 20, 21, 22 or 23 in respect of any industrial building or structure, or any machinery or plant, which is a subject of that finance lease, shall not be made to the person, but to the Government or the approved statutory body, as the case may be; and

the person shall not be assessed to tax on that part of the lease payment under that finance lease that is attributable to repayment of principal.

In this section —“approved” means approved by the Minister or such person as he may appoint;“FRS 17” and “INT FRS 104” mean the financial reporting standards known as Financial Reporting Standard 17 (Leases) and Interpretation of Financial Reporting Standard 104 (Determining whether an arrangement contains a lease), respectively, issued by the Accounting Standards Council under the Accounting Standards Act (Cap. 2B).”.

Section 10L of the principal Act is amended —

by inserting, immediately after subsection (6), the following subsections:“(6A) Where an SRS member —

made his first withdrawal under subsection (3)(b); and

subsequently made one or more contributions to his SRS account during the period from 1st October 2008 to 31st December 2008 (both dates inclusive),then —

any withdrawal made under subsection (3)(b) prior to the date of the first of his contributions referred to in paragraph (b) shall be disregarded for the purpose of determining the period referred to in subsection (5); and

the date of his first withdrawal made under subsection (3)(b) after the date of the first of his contributions referred to in paragraph (b) shall be deemed to be the date he made his first withdrawal under subsection (3)(b) for the purpose of determining the period referred to in subsection (5).

Where an SRS member —

had made one or more withdrawals under subsection (3)(b) of all the funds standing to his SRS account and had closed his SRS account (referred to in this subsection as the first SRS account); and

subsequently opened another SRS account during the period from 1st October 2008 to 31st December 2008 (both dates inclusive) (referred to in this subsection as the second SRS account),then —

the reference to the date he made his first withdrawal under subsection (3)(b) for the purpose of determining the period referred to in subsection (5) shall be read as a reference to the date he makes his first withdrawal after he opened the second SRS account; and

for the purposes of subsection (1) and section 39(2)(o), both the first SRS account and the second SRS account shall be deemed to be the same account as if the first SRS account had never been closed.”;

by deleting the words “and closed” in subsection (13) and substituting the words “and subsequently closed”; and

by inserting, immediately after subsection (13), the following subsection:“(14) In this section, unless the context otherwise requires —

a reference to an SRS member making a contribution to his SRS account includes his employer making a contribution to that account on his behalf; and

a reference to a contribution of an SRS member to his SRS account includes a contribution by his employer to that account on his behalf.”.

Section 12 of the principal Act is amended —

by inserting, immediately after subsection (6), the following subsection:“(6A) Subsection (6) shall not apply to any payment for —

any arrangement, management or service relating to any loan or indebtedness, where such arrangement, management or service is performed outside Singapore for or on behalf of a person resident in Singapore or a permanent establishment in Singapore by a non-resident person who —

in the event the non-resident person is not an individual, is not incorporated, formed or registered in Singapore; and

in any event —

does not by himself or in association with others, carry on a business in Singapore and does not have a permanent establishment in Singapore; or

carries on a business in Singapore (by himself or in association with others) or has a permanent establishment in Singapore, but the arrangement, management or service is not performed through that business carried on in Singapore or that permanent establishment; and

any guarantee relating to any loan or indebtedness, where the guarantee is provided for or on behalf of a person resident in Singapore or a permanent establishment in Singapore by a guarantor who is a non-resident person who —

in the event the non-resident person is not an individual, is not incorporated, formed or registered in Singapore; and

in any event —

does not by himself or in association with others, carry on a business in Singapore and does not have a permanent establishment in Singapore; or

carries on a business in Singapore (by himself or in association with others) or has a permanent establishment in Singapore, but the giving of the guarantee is not effectively connected with that business carried on in Singapore or that permanent establishment.”; and

by inserting, immediately after subsection (7), the following subsection:“(7A) Subsection (7) shall not apply to any payment for —

the rendering of assistance or service in connection with the application or use of scientific, technical, industrial or commercial knowledge or information, where such rendering of assistance or service is performed outside Singapore for or on behalf of a person resident in Singapore or a permanent establishment in Singapore by a non-resident person who —

in the event the non-resident person is not an individual, is not incorporated, formed or registered in Singapore; and

in any event —

does not by himself or in association with others, carry on a business in Singapore and does not have a permanent establishment in Singapore; or

carries on a business in Singapore (by himself or in association with others) or has a permanent establishment in Singapore, but the rendering of assistance or service is not performed through that business carried on in Singapore or that permanent establishment; and

the management or assistance in the management of any trade, business or profession, where such management or assistance is performed outside Singapore for or on behalf of a person resident in Singapore or a permanent establishment in Singapore by a non-resident person who —

in the event the non-resident person is not an individual, is not incorporated, formed or registered in Singapore; and

in any event —

does not by himself or in association with others, carry on a business in Singapore and does not have a permanent establishment in Singapore; or

carries on a business in Singapore (by himself or in association with others) or has a permanent establishment in Singapore, but the management or assistance is not performed through that business carried on in Singapore or that permanent establishment.”.

Section 13 of the principal Act is amended —

by deleting the word “and” at the end of subsection (1)(zl);

by deleting the full-stop at the end of paragraph (zm) of subsection (1) and substituting the word “; and”, and by inserting immediately thereafter the following paragraph:“(zn)any Government cash grant payable to an employer in 2009 under the Jobs Credit Scheme.”; and

by inserting, immediately after subsection (8), the following subsections:“(8A) There shall be exempt from tax —

any income derived on or before 21st January 2009 from any source outside Singapore and received in Singapore during the period from 22nd January 2009 to 21st January 2010 (both dates inclusive) (referred to in this subsection as the specified period) by —

any person, not being an individual, resident in Singapore; or

any individual resident in Singapore through a partnership in Singapore; and

any dividend received in Singapore during the specified period, being dividend paid during the specified period by a company not resident in Singapore out of any income derived by that company on or before 21st January 2009, by —

any person, not being an individual, resident in Singapore who —

is not a partner of a limited liability partnership in Singapore; and

beneficially owns directly more than 50% of the total number of issued ordinary shares of that non-resident company as at 21st January 2009;

any individual resident in Singapore who beneficially owns directly more than 50% of the total number of issued ordinary shares of that non-resident company as at 21st January 2009, being dividend he receives through a partnership in Singapore (other than any limited liability partnership) of which he is a partner; or

any person, whether or not an individual, who is a partner of a limited liability partnership in Singapore and whose effective ownership through the limited liability partnership (by virtue of section 36A) of the issued ordinary shares of that non-resident company as at 21st January 2009 is more than 50% of the total number of those shares.

For the purpose of subsection (8A)(b)(iii), the effective ownership of the partner of a limited liability partnership of the issued ordinary shares of the non-resident company as at 21st January 2009 shall be ascertained in accordance with the formulawhere Ais the percentage of the income of the limited liability partnership to which the partner is entitled as at 21st January 2009; andBis the percentage of the total number of issued ordinary shares of that non‑resident company as at 21st January 2009 beneficially owned directly by that limited liability partnership.

No exemption from tax shall be granted to any person under subsection (8A) unless the Comptroller is satisfied that the exemption would be beneficial to the person resident in Singapore.

A person shall furnish to the Comptroller, in such form and manner and within such reasonable time as the Comptroller may determine, such information relating to income exempted under subsection (8A) as the Minister may direct the Comptroller to obtain for any statistical or research purpose.”.

Section 13C of the principal Act is amended by inserting, immediately after subsection (2), the following subsection:“(3) This section shall not apply to —

a trustee of a trust fund that is constituted on or after 1st April 2014; or

a trustee of a trust fund that —

is constituted before 1st April 2014; and

is not a prescribed trust fund at any time before that date.”.

Section 13CA of the principal Act is amended —

by deleting subsection (6) and substituting the following subsections:“(6) Notwithstanding subsections (2) and (4), where —

income of any prescribed person, being a company or the trustee of a trust fund, has been exempt from tax under subsection (1) in any year of assessment;

a person, either alone or together with his associates, beneficially owns on the relevant day —

if the prescribed person is a company, any issued securities of the prescribed person; or (ii)if the prescribed person is the trustee of a trust fund, any part of the trust fund; and

the person mentioned in paragraph (b) is a non-bona fide entity,then the person mentioned in paragraph (b) shall not be liable to pay the penalty referred to in subsection (2) or (4); but a person (referred to in this section as the liable person) who —

beneficially owns on the relevant day equity interests of the person mentioned in paragraph (b); and

is not himself a non-bona fide entity,shall be liable to pay to the Comptroller, in such manner and within such reasonable time as may be determined by the Comptroller, a penalty to be computed in accordance with the formula specified in subsection (6A) if, and only if, the total of —

the value of the equity interests of the prescribed person or of the trust fund for which the prescribed person is the trustee (as the case may be) that are beneficially owned by the liable person on the relevant day; and

the value of the equity interests of the prescribed person or of the trust fund for which the prescribed person is the trustee (as the case may be) that are beneficially owned by the associates of the liable person on the relevant day,exceeds the prescribed percentage of the total value of all the equity interests of the prescribed person or of the trust fund (as the case may be) on that day.

The formula for the penalty referred to in subsection (6) shall be as follows:where Ais the percentage which the value of the equity interests of the prescribed person or of the trust fund for which the prescribed person is the trustee (as the case may be) beneficially owned on the relevant day by the liable person bears to the total value of all equity interests of the prescribed person or of the trust fund on the relevant day;Bis the amount of income of the prescribed person as reflected in the audited account of the prescribed person for the basis period relating to that year of assessment; andCis the tax rate applicable to that year of assessment as specified in section 43(1)(a) (if the prescribed person is a company) or 43(1)(c) (if the prescribed person is a trustee of a trust fund).

Subsection (3) or (5) (whichever is applicable) shall apply, with the necessary modifications, to the liable person as it applies to a relevant owner or relevant beneficiary as if the reference to subsection (2) or (4) (as the case may be) is a reference to subsection (6).”;

by deleting the words “subsection (6)” in subsection (7) and substituting the words “subsections (6)(i), (A) and (B) and (6A)”;

by inserting, immediately after subsection (7), the following subsection:“(7A) Subsection (7) shall also have effect for the purpose of determining, under subsections (6)(A) and (B) and (6A), the beneficial ownership of a person in the equity interests of a trust fund for which a prescribed person is a trustee, with the following modifications:

the reference in subsection (7)(b) to the equity interests of another person (when applied to that trust fund) shall be read as the equity interests in that fund;

the reference in the definition of B under subsection (7) to the value of equity interests of the second level entity beneficially owned by the first level entity (when applied to that trust fund) shall be read as the value of the part of the trust fund beneficially owned by the first level entity;

the reference in the definition of B under subsection (7) to the total value of all equity interests of the second level entity (when applied to that trust fund) shall be read as the total value of the trust fund.”;

by deleting the word “or” at the end of paragraph (a) of the definition of “equity interest” in subsection (9) and by inserting immediately thereafter the following paragraph:“(aa)in relation to a trust fund for which a prescribed person is a trustee, any part of the trust fund; or”;

by deleting the words “subsection (2) or (4)” in the definition of “relevant day” in subsection (9) and substituting the words “subsection (2), (4) or (6)”; and

by inserting, immediately after subsection (9), the following subsection:“(10) This section shall not apply to —

a company or trustee of a trust fund, as the case may be, that is incorporated or constituted on or after 1st April 2014; or

a company or trustee of a trust fund, as the case may be, that —

is incorporated or constituted before 1st April 2014; and

is not a prescribed person at any time before that date.”.

Section 13J(10) of the principal Act is amended by deleting paragraph (a) of the definition of “qualifying employee” and substituting the following paragraph:“(a)is committed to work —

where the time of the grant is before 1st January 2010 —

at least 30 hours per week for the company; or

where he is committed to work less than that number of hours, at least 75% of his total working time per week for the company; and

where the time of the grant is on or after 1st January 2010 —

at least the number of hours per week referred to in section 66A(1) of the Employment Act (Cap. 91) for the company; or

where he is committed to work less than that number of hours, at least 75% of his total working time per week for the company; and”.

Section 13L(5) of the principal Act is amended by deleting the definition of “part-time employee” and substituting the following definition:“ “part-time employee” means an employee of a company who is committed to work —

where the time of grant is before 1st January 2010, for not more than 30 hours per week (including any time he would be required to work but for injury, any official leave or such other similar events) for the company; or

where the time of grant is on or after 1st January 2010, for not more than the number of hours per week referred to in section 66A(1) of the Employment Act (Cap. 91) (including any time he would be required to work but for injury, any official leave or such other similar events) for the company;”.

Section 13M(7) of the principal Act is amended by deleting paragraph (a) of the definition of “qualifying employee” and substituting the following paragraph:“(a)is committed to work —

where the time of the grant is before 1st January 2010 —

at least 30 hours per week for the company; or

where he is committed to work less than that number of hours, at least 75% of his total working time per week for the company; and

where the time of the grant is on or after 1st January 2010 —

at least the number of hours per week referred to in section 66A(1) of the Employment Act (Cap. 91) for the company; or

where he is committed to work less than that number of hours, at least 75% of his total working time per week for the company; and”.

Section 13R of the principal Act is amended —

by deleting the words “16th February 2011” in subsection (2) and substituting the words “31st March 2014”;

by deleting subsection (5) and substituting the following subsections:“(5) Notwithstanding subsection (3), where —

income of any approved company has been exempt from tax under subsection (1) in any year of assessment;

a person, either alone or together with his associates, beneficially owns on the relevant day any issued securities of the approved company; and

the person mentioned in paragraph (b) is a non-bona fide entity,then the person mentioned in paragraph (b) shall not be liable to pay the penalty referred to in subsection (3); but a person (referred to in this section as the liable person) who —

beneficially owns on the relevant day equity interests of the person mentioned in paragraph (b); and

is not himself a non-bona fide entity,shall be liable to pay to the Comptroller, in such manner and within such reasonable time as may be determined by the Comptroller, a penalty to be computed in accordance with the formula specified in subsection (5A), if, and only if, the total of —

the value of the equity interests of the approved company beneficially owned by the liable person on the relevant day; and

the value of the equity interests of the approved company beneficially owned by the associates of the liable person on the relevant day,exceeds the prescribed percentage of the total value of all the equity interests of the approved company on that day.

The formula for the penalty referred to in subsection (5) shall be as follows:where Ais the percentage which the value of the equity interests of the approved company beneficially owned on the relevant day by the liable person bears to the total value of all equity interests of the approved company on the relevant day;Bis the amount of income of the approved company as reflected in the audited account of the approved company for the basis period relating to that year of assessment; andCis the tax rate applicable to that year of assessment as specified in section 43(1)(a).

Subsection (4) shall apply, with the necessary modifications, to the liable person as it applies to a relevant owner as if the reference to subsection (3) is a reference to subsection (5).”;

by deleting the words “subsection (5)” in subsection (6) and substituting the words “subsections (5)(i), (A) and (B) and (5A)”; and

by deleting the words “subsection (3)” in the definition of “relevant day” in subsection (8) and substituting the words “subsection (3) or (5)”.

The principal Act is amended by inserting, immediately after section 13W, the following section:“Exemption of income of approved persons arising from funds managed by fund manager in Singapore13X.—

Subject to such conditions as may be prescribed by regulations, there shall be exempt from tax such income as the Minister may by regulations prescribe of any approved person arising from funds managed in Singapore by any prescribed fund manager.

Approval under subsection (1) may be granted during the period from 1st April 2009 to 31st March 2014 (both dates inclusive).

Where the income of any approved person is not exempt from tax under this section, sections 13C, 13CA and 13R shall not apply to that income notwithstanding anything in those provisions.

Regulations made under subsection (1) may —

provide for the determination of the amount of income of any approved person to be exempt from tax;

provide for the deduction of expenses, allowances, losses and donations of any approved person otherwise than in accordance with this Act;

where the approved person is a partner of an approved limited partnership, provide for the recovery of tax from him in a case where the exemption ought not to have been allowed to that partner due to non-compliance with any condition imposed on the partnership, including the deeming of a specified amount as income of the partner for the year of assessment in which the Comptroller discovers the non-compliance of the condition; and

make provision generally for giving full effect to or for carrying out the purposes of this section.

In this section —“approved” means approved by the Minister or such person as he may appoint;“approved CPF unit trust” has the same meaning as in section 35(14);“approved person” means any approved company, any partner of an approved limited partnership or any trustee of an approved trust fund;“designated unit trust” means any unit trust designated under section 35(14);“real estate investment trusts” has the same meaning as in section 43(10);“trust fund” does not include any trust that is a pension or provident fund approved by the Comptroller under section 5, approved CPF unit trust, designated unit trust and real estate investment trust.”.

Section 14J of the principal Act is amended by inserting, immediately after subsection (5), the following subsection:“(5A) No approval or extension of approval shall be granted under this section on or after 1st January 2010.”.

Section 14Q of the principal Act is amended by inserting, immediately after subsection (3), the following subsections:“(3A) Notwithstanding subsection (3), for the purposes of subsection (1) and subject to subsections (7), (8) and (9), where the renovation or refurbishment expenditure is incurred during the basis period relating to the year of assessment 2010 or 2011, a deduction is allowed for the year of assessment 2010 or 2011, as the case may be, for the full amount of the renovation or refurbishment expenditure so incurred, unless a person elects for the deduction to be allowed in accordance with subsection (3).

An election made by a person under subsection (3A) shall be irrevocable.”.

Section 18(1) of the principal Act is amended by deleting the words “sections 16 and 17” and substituting the words “sections 10F, 16 and 17”.

Section 19(3) of the principal Act is amended by inserting, immediately after the words “section 19A(1)” wherever they appear, the words “or (1B)”.