Singapore legislation
Regulation 5A
of Income Tax (Deduction for Acquisition of Shares of Companies) Regulations 2012
Regulation 5A
Conditions for deductions for acquisitions under section 37L(4A)(a) and (b) of Act
Subregulation 1
The prescribed conditions for the purposes of section 37L(16E) of the Act are that —
the target company is, in accordance with paragraph (3), considered an associate of the acquirer within the meaning of FRS 28, SFRS(I) 1-28 or SFRS for Small Entities, as amended from time to time; and
subject to paragraph (2), at least one director of any of the following companies is the acquirer’s nominee in accordance with paragraphs (4) and (5):
the target company;
a subsidiary that —
is wholly owned by the target company either directly, or indirectly through one or more intermediate companies;
carries on a trade or business in Singapore or elsewhere on the date of the qualifying acquisition mentioned in section 37L(4A)(a) or (b) of the Act, as the case may be; and
has in its employment at least 3 employees at all times during the period of 12 months immediately before that date;
a company that is wholly owned (either directly, or indirectly through one or more intermediate companies) by the target company, and that wholly owns (either directly, or indirectly through one or more intermediate companies) the subsidiary mentioned in sub-paragraph (ii).
Subregulation 2
The requirement in paragraph (1)(b) is not satisfied by nominating an individual who, at the time of the nomination, is already a director of —
the target company mentioned in paragraph (1)(b)(i);
the subsidiary mentioned in paragraph (1)(b)(ii); or (c)the company mentioned in paragraph (1)(b)(iii),as the case may be.
Subregulation 3
For each year of assessment set out in the first column of the following table, the requirement in paragraph (1)(a) must be satisfied throughout the period set out opposite that year of assessment in the second column of the table:First column Second columnYear of Assessment PeriodYear of assessment for the basis period in which the date of the qualifying acquisition mentioned in section 37L(4A)(a) of the Act falls Between the date of that acquisition and the last day of the basis period (both inclusive).Year of assessment for any subsequent basis period The whole basis period.
Subregulation 4
The requirement in paragraph (1)(b) must be satisfied —
as soon as possible after the date of the qualifying acquisition mentioned in section 37L(4A)(a) of the Act; and
in any case no later than the date by which the acquiring company must submit the return of its income for the year of assessment relating to the basis period in which the acquisition falls or any later date that the Comptroller may allow.
Subregulation 5
For each year of assessment set out in the first column of the following table, the requirement in paragraph (1)(b) must be satisfied throughout the period set out opposite that year of assessment in the second column of the table:First column Second columnYear of Assessment PeriodYear of assessment for the basis period in which the date the requirement is satisfied in accordance with paragraph (4) (called in this regulation the initial date) falls Between the initial date and the last day of the basis period (both inclusive).Year of assessment for any subsequent basis period The whole basis period.
Subregulation 6
The requirement in paragraph (1)(b) is treated as satisfied throughout a period mentioned in paragraph (5) even though at any time during that period, the acquirer’s nominee (including any replacement for the nominee) ceases to be a director of the company mentioned in paragraph (1)(b)(i), (ii) or (iii) (as the case may be), if the acquirer satisfies the Comptroller that —
there is reasonable cause for the cessation; and
(unless the Comptroller in a particular case determines that such replacement is not possible) the acquirer has made reasonable efforts to replace the director with another nominee for the remaining period.
Subregulation 7
The conditions in paragraph (1) do not apply to any year of assessment if during the basis period for that year of assessment —
the acquiring company or its acquiring subsidiary makes a further acquisition of ordinary shares in the target company;
the acquiring company and its acquiring subsidiaries own together in total more than 50% of the total number of ordinary shares in the target company as a result of the acquisition mentioned in sub-paragraph (a); and
such total ownership in sub-paragraph (b) remains at more than 50% of the total number of ordinary shares in the target company between the date of the acquisition mentioned in sub-paragraph (a) and the last day of that basis period (both inclusive).
Subregulation 8
The conditions in paragraph (1) do not apply to any year of assessment subsequent to the year of assessment mentioned in paragraph (7) if, during the basis period for the firstmentioned year of assessment, the total ownership of ordinary shares in the target company of the acquiring company and its acquiring subsidiaries remains at more than 50% of the total number of ordinary shares in the target company for the whole basis period.