SUMMARY TABLE ON PROPOSED NON-BUDGET CHANGES TO
THE INCOME TAX ACT
s/n.
1
2
Legislative
Changes
Brief Description of Legislative Changes
Amendment
to Income
Tax Act
[Clause in
Income Tax
Amendment
Bill]
Refinement to
tax deductible
donation rules
There is currently lack of consistency in how the
deduction is apportioned against exempt income.
We propose to amend the Act such that with
effect from Year of Assessment (“YA”) 2013,
the Government will not attribute donations to
tax exempt income. All donations will thus be
deducted only against taxable income. This also
enhances donors’ tax savings from the deduction
for their donations and can encourage
philanthropy.
Sections
13H, 13V, 37,
37B and 37M
[Clauses 6,
10, 29, 30 and
34]
Enhancement
to CPF
Minimum Sum
Topping-Up
(“MSTU”)
Scheme
Miscellaneous
amendments
Sections 13,
13O, 13P,
13U, 13W,
13X and 13Y
[Clause 51]
Economic
Expansion
Incentives
(Relief from
Income Tax)
Act – section
97M
[Clause 52]
The Minimum Sum Topping-Up Scheme has Section 39
been progressively liberalised over the years in [Clause 35]
terms of the benefactors/beneficiaries, tax relief
and top-up limits. This proposed amendment
liberalises the Minimum Sum Topping-Up
Scheme by extending tax relief for cash top-ups
made to parents-in-law and grandparents-in-law.
1
s/n.
3
Legislative
Changes
Brief Description of Legislative Changes
Amendment
to Income
Tax Act
[Clause in
Income Tax
Amendment
Bill]
Tax exemption
of receipt of
Workfare
payments
The various Workfare payments (i.e. Workfare Section 13
Income Supplement payouts, Workfare Bonus [Clause 3]
Scheme payouts, the Workfare Special Payment,
and the Workfare Special Bonus) are intended to
supplement the income of lower-wage workers
and encourage them to stay at work.
The amendment exempts Workfare payments
from tax in the hands of the recipients.
4
Tax exemption
of National
Service
Recognition
Award
The National Service Recognition Award was Section 13
announced in 2010 to provide sustained [Clause 3]
recognition to Singapore citizens who serve
National Service. The total value of the National
Service Recognition Award, paid out in three
tranches, is between $9,000 and $10,500 for each
National Serviceman by the time he completes
his Operationally Ready NS training cycle. The
first tranche is deposited in the serviceman's Post
Secondary Education Account while the second
and third tranches are paid into the CPF accounts
The proposed amendment exempts NSmen from
tax on the National Service Recognition Award
granted to them in recognition of their National
Service.
5
1
Extension
of
2
the
0 tax
treatment of
Scottish
Limited
Partnership
(SLP) members
of Lloyd’s
syndicate to the
Limited
Liability
To achieve parity of treatment across different Section 26A
partnership members of Lloyd’s syndicate, the [Clause 24]
current tax treatment for Lloyd’s SLP members
will be extended to Lloyd’s LLP members1. The
LLP members of Lloyd’s syndicate will be
taxed, at the partnership level, at the non-resident
non-individual tax rate without any partial tax
exemption. They may also be eligible for the tax
incentives applicable to insurance companies
(i.e. concessionary tax rate or tax exemption for
qualifying income from insurance and
Currently, only LLPs registered in the UK can be members of Lloyd’s syndicate.
2
s/n.
Legislative
Changes
Brief Description of Legislative Changes
Partnership
(LLP)
members
reinsurance business, and the tax deduction for
special reserve of approved general insurer),
subject to meeting the incentive conditions.
Amendment
to Income
Tax Act
[Clause in
Income Tax
Amendment
Bill]
These proposed changes will take effect from
YA 2008, which was the time when Lloyd’s
syndicate first admitted LLP members.
6
7
8
Introduction of
review date for
tax deduction
for expenditure
incurred for
R&D projects
approved by
EDB under
section 14E
Section 14E was introduced in Budget 1980 to Section 14E
grant deduction for selective R&D projects [Clause 16]
approved by the Economic and Development
Board (“EDB”). Section 14E confers up to a
200% deduction for expenditure incurred on
approved R&D projects. There is currently no
review date for Section 14E.
Alignment of
tax treatment
for financial
instruments (on
revenue
account) with
the new
accounting
standards for
small entities
With effect from 1 Jan 2011, eligible entities Section 34A
may prepare their financial accounts using the [Clause 25]
Singapore Financial Reporting Standards (FRS)
for Small Entities.
Extension of
the
International
Arbitration Tax
Incentive
The International Arbitration Tax Incentive was Section 13V
introduced in 2007 to encourage the provision of [Clause 10]
international arbitration services in Singapore. It
grants a 50% tax exemption on the incremental
qualifying income derived by approved law
A review date of 31 Mar 2015 for the deduction
is introduced to allow us to review the incentive
in a timely manner.
With the adoption of the Singapore Financial
Reporting Standards for Small Entities, small
entities will be given the option to align their tax
treatment for their financial instruments on
revenue account, with the new accounting
treatment so as to ease their compliance. This
change is similar to the option that was given to
companies when FRS39 was introduced.
3
s/n.
Legislative
Changes
Brief Description of Legislative Changes
Amendment
to Income
Tax Act
[Clause in
Income Tax
Amendment
Bill]
firms from international arbitration cases heard
in Singapore. The incentive expired on 30 June
2012.
The incentive will be extended, with
enhancements,
for
another
5
years.
Enhancements include expanding the scope of
qualifying income to include income from cases
which, if not for the case having been settled,
would have been heard in Singapore.
9
Enhancement
to tax
deduction
regime for
donations
Amendments are made to allow tax deduction to Section 37
(a) donations for specified purposes; and (b) [Clause 29]
donations with benefits-in-return to the donor or
persons related to the donor.
(a) Donations for specified purposes
A donation for specified purposes is one where
the donor states conditions as to the purposes for
which his donation can be applied. All donations
for specified purposes will be eligible for 250%
tax deduction if the following requirements are
satisfied:
(i) Except where the recipient is the
Government, the specified purpose
advances an object of the recipient that
is set out in its governing instruments;
(ii) None of the specified purposes must be
to advance the interests (whether
directly or indirectly) of a particular
race, belief or religion;
(iii) The specified purpose should not
advance the interests of particular
individuals or companies; and
(iv) If the specified purpose cannot be
fulfilled, the recipient should be
authorised to apply it to advance other
4
s/n.
Legislative
Changes
Brief Description of Legislative Changes
Amendment
to Income
Tax Act
[Clause in
Income Tax
Amendment
Bill]
charitable objectives in its governing
instruments; and
(v) The donation must be made to a
qualifying recipient of tax deductible
donations.
(b) Donations with benefits-in-return to the
donor or parties related to the donor
It is common to receive some benefit for
donations made to qualifying recipients. The
donations net of the value of the benefit received
will be eligible for 250% tax deduction.
The basis of determining the value of the benefit
will be determined through consultation and
provided for in the subsidiary legislation.
10
Refinement to
Working
Mother’s Child
Relief
One of the conditions of claiming Working Fifth
Mother’s Child Relief is that the child has to be a Schedule
Singapore citizen as at 31 December of the year. [Clause 50]
As a result, working mothers whose child had
passed away before 31 December of the year will
not be able to claim the relief.
The change seeks to remove the unintended
effect of the “as at 31 Dec” condition so that
working mothers will be able to claim Working
Mother’s Child Relief on a child who has passed
away in the year preceding the relevant YA.
11
Provision of
powers for
Minister for
Finance to
delegate his
authority to
approve an
amalgamation
of companies
under section
The tax framework under Section 34C is Section 34C
intended to give effect of tax neutrality to [Clause 26]
qualifying amalgamations as if there is no
cessation of the existing businesses by the
amalgamating companies (and hence no
acquisition of new businesses by the
amalgamated company), and all assets and
liabilities that exist prior to the amalgamation are
transferred and vested in the amalgamated
company.
5
s/n.
Legislative
Changes
Brief Description of Legislative Changes
Amendment
to Income
Tax Act
[Clause in
Income Tax
Amendment
Bill]
34C
A qualifying amalgamation is defined as any
amalgamation of companies that are made
pursuant to section 215F of the Companies Act,
section 14A of the Banking Act, and such other
amalgamation of companies as the Minister may
approve.
To facilitate the processing of applications made
for an amalgamation to be treated as a qualifying
amalgamation under section 34C, the definition
of “qualifying amalgamation” will be amended
to allow Minister to delegate his authority to
such person as the Minister may appoint.
12
Repeal of
certain
provisions
related to
imputation
system
With the abolition of the imputation system, and
the move to one-tier corporate income tax
system, provisions relating to tax treatment for
exempt dividends ceased to have effect from 1
Jan 2008. Certain of these sections are repealed,
with consequential changes made to section 107
of the Income Tax Act. The other provisions will
be repealed in due course.
Sections
13, 13I, 13K
and 107
[Clauses 3, 7,
8 and 48]
13
Removal of
certain tax
provisions
relating to
Hindu Joint
Family
With the removal of registration of a Hindu Joint
Family in the Business Registration Act in 2002,
it is no longer possible to register a Hindu Joint
Family locally. Accordingly, the Income Tax Act
is amended to align with the Business
Registration Act.
Sections
2, 26A, 35,
36, 37, 39, 42,
43, 61, 63 and
Second
Schedule
[Clauses 2,
24, 27, 28, 29,
35, 36, 37, 45,
46 and 49]
14
Refinement to
tax
deductibility of
voluntary
contributions
Eligible companies (SEP principals e.g. taxi Section 14
companies) are allowed tax deduction on [Clause 12]
qualifying voluntary contributions made by them
to the Medisave Accounts of SEPs (e.g. taxi
hirers). The SEPs are also exempted from tax on
6
s/n.
Legislative
Changes
Brief Description of Legislative Changes
made by an
eligible
company to the
Medisave
Account of a
Self Employed
Person (“SEP”)
these contributions.
To qualify for tax
deduction, a voluntary contribution made by an
eligible company to the Medisave Account of a
SEP needs to be tax exempt income of the SEP.
Amendment
to Income
Tax Act
[Clause in
Income Tax
Amendment
Bill]
This amendment allows a voluntary contribution
made by an eligible company to the Medisave
Account of a SEP to be tax deductible without a
requirement for it to be tax exempt income of the
SEP, subject to conditions.
7