8 September 2011

A streamlined e-Tax Guide which provides details on the computation of income from the business of making investments based on the provisions of section 10E of the Income Tax Act (ITA) from the Year of Assessment (YA) 1996 has been issued by IRAS.

Under section 10E, in determining the income of a company, trustee of a property trust or a partner of an LLP or LP derived from any business of the making of investments, the deduction of any outgoings or expenses and capital allowances are limited to the income derived from investments which produce income in that YA. The balance of any outgoings or expenses and  capital allowances [except for industrial building allowance (IBA)], which cannot be set-off in that YA shall be disregarded. The term “investments” is defined in section 10E(2) as “securities, immovable properties and immovable property-related assets”.

This e-Tax guide is a consolidation of four previous e-Tax guides on section 10E:

a) “Determination of taxable income derived by a company from its business of the making of investments – Section 10E of the Singapore Income Tax Act (ITA)” published on 22 Jan 1996.

b) “Section 10E of the Singapore Income Tax Act – Addendum to  the administrative practice note published on 22 Jan 1996” published on 30 Jun 1997.

c) “Determination of taxable income derived by a company from its business of letting service apartments – applicability of Section 10E of the Income Tax Act” published on 31 Dec 1997.

d) “Section 10E of the Income Tax Act (Addendum to Practice Notes 1996/IT/2, 1997/IT/3 and 1997/IT/5)” published on 4 May 2005.

The application of section 10E and outline of the administrative procedures are now outlined in the latest e-Tax Guide, “Ascertainment of Income from the Business of Making Investment”.

Source: This article was extracted from the Inland Revenue Authority of Singapore (IRAS) website. Visit http://www.iras.gov.sg/ for more information.