In the Budget 2020 Statement on 18 February 2020, it was announced that property tax rebate will be granted to owners of qualifying non-residential properties to ease the cost pressure of certain industries which are more badly affected by the COVID-19 outbreak. As part of the Resilience Budget announced on 26 March 2020, the property tax rebate previously announced is now enhanced, by increasing the amount of rebate and covering more types of properties. With the enhancement, owners of qualifying properties will be granted rebates of up to 100% on their property tax payable for the period of 1 January 2020 to 31 December 2020.

The Government introduced new legislation on 7 April 2020. Under the new legislation, property owners are obliged to pass on to their tenants the full amount of property tax rebate received for each property tax account that is attributable to the tenanted property. Further details will be made known on the Inland Revenue Authority of Singapore’s (IRAS) website in mid-April 2020.

The table below shows the property tax rebate announced in Budget 2020 as well as the enhanced property tax rebate announced in the Resilience Budget.

	Property Tax Payable for	Property Tax Rebate as Announced in Budget 2020	Enhanced Property Tax Rebate
A.	Hotel room or function room of a hotel registered under the Hotels Act	30%	100%
B.	Serviced apartment or serviced apartment function room
C.	Premises of the following that are used or intended to be used for Meetings, Incentive Travel, Conventions and Exhibitions (MICE): Suntec Singapore Convention and Exhibition Centre; Singapore EXPO; and Changi Exhibition Centre.
D.	All the premises of the following: Changi Airport; Singapore Cruise Centre; Marina Bay Cruise Centre Singapore; and Tanah Merah Ferry Terminal.	15%
E.	Premises that are used or intended to be used as: Backpackers’ hostel, boarding house, guest house or students’ hostel that is not a hotel; Hotel that is not a registered hotel; Shop or warehouse retail building; Restaurant; Sports and recreation building; Amusement centre; Cinema or theatre; Medical clinic, hospital, nursing home, hospice, place of rehabilitation or convalescent home; Childcare centre or kindergarten; School; Driving school; Purpose-built workers’ dormitory; or Tourist attraction.
F.	All the premises of the following: Marina Bay Sands; and Resorts World Sentosa. The above rates in (A) – (E) do not apply to Marina Bay Sands and Resorts World Sentosa.	10%	60%
G.	Other non-residential properties. Some examples are: Premises used for an industrial or agricultural purpose Offices Business or science park Petrol station Warehouse	0%	30%
The above property Tax Rebate does not apply to any other premises or part of any premises used or intended to be used for any residential purpose or as a facility for the exclusive use of residents of residential premises. No property tax rebate shall be given to vacant land or land under redevelopment.

IRAS will send out the rebate notices by 31 May 2020. Owners of qualifying properties can expect to receive their refunds by 30 June 2020.

 

The Deputy Prime Minister and Minister for Finance, Mr Heng Swee Keat, unveiled additional support measures to ease cash flow for taxpayers in the Resilience Budget announced on 26 March 2020. One of the measures is the automatic deferment of income tax payments as explained below.

Businesses
For companies, the Corporate Income Tax (CIT) payments that are due in the months of April, May, and June 2020 will be deferred for three months and collected in July, August, and September 2020 respectively. It is crucial to note that the automatic deferment of CIT payments will complement the automatic extension of additional two months interest-free instalments on ECI as announced in the Unity Budget 2020 on 18 February 2020. An example to illustrate the deferment of CIT payments is provided below:

Example

Company A’s financial year-end is in December and had e-filed its Estimated Chargeable Income (ECI) for the Year of Assessment (YA) 2020 on 15 January 2020 with a CIT payable of S$9,000. Accordingly, the number of instalment plans availed to Company A for its ECI is twelve and the revised instalment plan for Company A’s ECI tax payable for YA 2020 is as follows:

Note: The example illustrated above has taken into account the two relief measures (i.e. automatic extension of interest-free instalment of 2 months for payment of CIT on ECI and CIT rebate of 25% of the CIT payable (capped at S$15,000) for YA 2020) as announced in the Unity Budget on 18 February 2020.

Individual taxpayers can opt to defer their income tax payments due in May, June and July 2020 by signing up for the deferment option by 31 July 2020. The application can be made online here: https://form.gov.sg/5d5ce149c0a8230012d27118.

This deferment does not apply to non-Singapore citizen employees who have sought tax clearance and employees of foreign employers.

Once the request to defer the payment is approved, the new arrangement shall supersede any due date indicated on the Notice of Assessment.

If the taxpayer is paying his or her income tax by GIRO, there will be no GIRO deduction in May, June and July 2020. The income tax deduction will resume in August, September or October 2020 and the end-date of the instalment plan will be extended by 3 months.

For taxpayers settling their income tax liabilities in one lump sum payment, the payment will be deferred by three months.

The Inland Revenue Authority of Singapore (IRAS) has updated its webpage on the Tax Treatment of Business Expenses to reflect the change in the tax treatment of withholding tax (WHT) on the interest payments borne by companies on behalf of non-residents, taking effect from Year of Assessment 2020.

In general, a company (“payer”) will be required to withhold tax on interest paid to a non-resident. In certain instances, the withholding tax on the interest may be borne by the payer on behalf of a non-resident.

Contractual Obligation to bear the WHT

Where the payer is contractually obligated to bear the tax for the non-resident, the withholding tax borne will be treated as part of the interest paid. The interest expense (inclusive of the withholding tax borne on behalf of the non-resident) is deductible if the loan is taken up to finance income-producing assets.

No Contractual Obligation to bear the WHT

IRAS has advised that if there is no contractual obligation for the payer to bear the tax on behalf of the non-resident, the withholding tax borne by the payer will not be treated as part of the interest paid. The tax deductibility of the withholding tax borne on behalf of the non-resident will then depend on the purpose of the loan.

If the loan is taken up for revenue purposes (e.g. to finance the purchase of trading stock), the withholding tax expense will be deductible in the hands of the payer as it is a revenue expense. On the other hand, if the loan is taken up to finance capital assets, the payer will not be able to claim a tax deduction on the withholding tax expense because it is a capital expenditure of the payer.

Withholding tax expense is also not a prescribed borrowing cost that is specifically deductible under the Income Tax Act.

For further information, please refer to IRAS’ website.

Source: Inland Revenue Authority of Singapore.

Generally, premiums on insurance policies taken out by an employer on employees are tax deductible if the beneficiaries of those insurance policies are the employees, or if the employer has the contractual obligation to pass the payout to the employees or their next-of-kin. This is on the basis that the premiums paid are a staff benefit.

Where the beneficiary of an insurance policy is the employer and there is
no contractual obligation to pass the insurance payout to the employees or their next-of-kin, the employer will be seen to have taken out the insurance policy to acquire a capital asset and premiums paid on those insurance policies shall not be tax deductible. There are certain exceptions to this rule, for example, where the insurance policy is a keyman insurance to cover loss of profit due to the demise or incapacity of a key employee of the business.

Revised Tax Position
The IRAS recently updated its website to change the tax treatment of premiums paid on group term life and personal accident insurance policies.

With effect from YA 2019, premiums paid on group term life or personal accident insurance policies are tax deductible to the employer even if the employer is the named beneficiary to the policy and there is no contractual obligation to pass the payout to the employees or their next-of-kin.

The IRAS made this revision after having received feedback from businesses that group term life and personal accident policies are usually purchased as staff benefits and employers are named as beneficiaries only for administrative convenience. Given that there is no contractual obligation to pass the payout to the employees or their next-of-kin, any payout received by the employer from the above-mentioned group insurance policies will be taxable in full to the employer. However, the employer will be allowed a tax deduction on the insurance payout to the extent it is disbursed to the employee. Such payouts received by the employee will be taxable to him or her unless specifically exempted under the Income Tax Act. In the same update by the IRAS, premiums paid on group insurance which provides for a cash surrender or investment/ saving value was included in the list of examples of insurance premiums that are capital in nature and not deductible.

Where an employer provides accommodation to its employees in respect of employment exercised in Singapore, the accommodation provided is a benefit and is taxable in the hands of the employees. The current formula, last revised and effective since YA
2015, to compute accommodation benefits (excluding hotels) is as follows:

• The Annual Value (AV) of the property less total annual rent paid by the employee. Where AV is not available, the value will be the market rent paid by the employer (including those for furniture and fittings) less the rent paid by the employee;
• plus 40% of the AV if the property is partially furnished or 50% of the AV if the property is fully furnished.

The AV is the estimated gross annual rent of the property if it were to be rented out, excluding furniture, furnishings and maintenance fees. Currently, employers are allowed to use the actual market rent paid for the accommodation to compute the value of the accommodation benefits if it is administratively more convenient to do so and in cases
where the AV is unavailable.

The Income Tax (Amendment) Act 2018 passed by Parliament on 2 October 2018 revises the default basis in computing the taxable value of accommodation to the actual rent paid by the employer instead of AV. Only in situations where the actual rent paid is not available (for example if the employer owns the property) or the IRAS is not satisfied that the actual rent paid is reflective of the market rent, the AV or other reasonable value as deemed by IRAS will apply. The change is effective from YA 2020.