16 June 2015

Under section 15(1)(c) of the Income Tax Act (ITA), reinstatement costs (expenses incurred to reinstate premises to its original condition prior to vacating it at the end of the tenancy agreement) are not deductible as they are considered to be capital expenditure.

Following the Inland Revenue Authority of Singapore (IRAS)’s review of the tax treatment of reinstatement costs, deduction is now allowed under section 14(1) of the ITA where the costs incurred meet the following conditions:

• Costs claimed do not relate to provisions made under FRS 16 (i.e. expense has been incurred)
• Costs claimed are contractually provided for in the tenancy agreement and hence considered to be part of the costs of renting the property for use in the business in the first place, and
• The premises are not vacated due to cessation of business.

The update was made on 11 June 2015.

For further details, please refer to the IRAS website.

Source: IRAS