2 July 2012
In Budget 2012, it was announced that tax concessions on collective impairment provisions will be extended for three years till Year of Assessment (YA) 2016 or YA 2017. On 29 June 2012, IRAS released an updated e-Tax Guide with the Budget 2012 changes incorporated.
Banks may claim tax deduction for collective impairment provisions made under MAS Notice 612, subject to caps as stipulated under section 14I of the Income Tax Act. Similarly, finance companies and merchant banks may claim tax deduction for collective impairment provisions made under MAS Notice 811 and MAS Notice 1005 respectively. These tax concessions will expire after YA 2013 or YA 2014, depending on the financial year end of the taxpayer.
To encourage banks to maintain adequate levels of impairment allowances, the tax concessions will be extended for a further three years till YA 2016 or YA 2017. All other existing terms and conditions of the scheme apply.
The e-Tax Guide further explains the changes to the treatment of financial assets and liabilities for income tax purposes arising from the adoption of FRS 39 for accounting purposes.
Source: This article was extracted from the Inland Revenue Authority of Singapore (IRAS) website. Visit www.iras.gov.sg for more information.