2 December 2013
The Income Tax (Amendment) Act 2013, passed by Parliament on 21 October 2013 and assented to by the President on 5 November 2013, was published in the Government Gazette, Electronic Edition, on 28 November 2013.
The Act amends the Income Tax Act (Cap. 134, 2008 revised edition) and makes a consequential amendment to the Economic Expansion Incentives (Relief from Income Tax) Act (Cap. 86, 2005 revised edition). Some of the amendments to the Income Tax Act include:
- Sec 2 (Interpretation) — Subsection (1) is amended by introducing a definition for the term “information subject to legal privilege” which is used in the amended sec 65B (Power of Comptroller to obtain information) and new sec 105L (Provision of information to Comptroller).
- Sec 6 (Official secrecy) — Subsection (3) is amended to enable documents and information to be disclosed in a prosecution for an offence under the Act, and not just for an offence that relates to income tax.
- Sec 10 (Charge of income tax) — A new subsection (2)(ca) provides that with effect from year of assessment 2015, the taxable benefit of any place of residence provided by an employer to his employee will be the annual value of that place less the rent paid by the employee.
- Sec 10C (Excess provident fund contributions, etc., deemed to be income) — New subsections (5A) and (5B) provide for the increase in the maximum amount of employer contribution to an employee’s Medisave account that is not treated as income of the employee to S$1,500 per employer per year beginning with 2013. The cap of S$1,500 applies on a per contributor, per recipient basis.
- Sec 13 (Exempt income) — A new subsection (1)(jd) is inserted to increase the maximum amount of voluntary cash contribution by a prescribed person to the Medisave account of a self-employed individual that may be exempt from tax to S$1,500 per prescribed person per year beginning with 2013. In addition, subsection (1)(zd) is amended to clarify that it only applies to deposits held in Singapore and the term “approved bank” in subsection (16) is redefined so as to remove the need for the Minister for Finance to approve such banks on a case-by-case basis.
- Sec 14 (Deductions allowed) — Subsection (4) is amended to disapply the limitation under subsections (3) and (3A) on the deduction that may be allowed for motor car expenses, to a foreign registered car used exclusively outside Singapore, with effect from year of assessment 2014. In addition, new subsections (1)(fb) and (1)(fc) are inserted to increase the maximum deduction allowable to:
(i) an employer for his contribution to the Medisave account of an employee to S$1,500 per employee per year beginning with 2013; and
(ii) a prescribed person for his voluntary contribution to the Medisave account of a self-employed individual to S$1,500 per individual per year beginning with 2013, respectively.
- Sec 14J (Further deduction for expenditure on research and development of new financial activities) is repealed.
- A new sec 14W (Deduction for expenditure on licensing intellectual property rights) provides for an enhanced deduction for expenditure in the form of licence fees incurred on licensing by a taxpayer from another person of any intellectual property rights other than trademark or software user rights.
- Sec 19 (Initial and annual allowances for machinery or plant) — Subsection (4) is amended to disapply the limitation under subsection (3) on the amount of allowances that may be given for capital expenditure on a motor car, to a foreign registered car used exclusively outside Singapore which is acquired in the basis period for the year of assessment 2014 or after.
- Sec 21 (Replacement of machinery or plant) — Sec 21 allows a taxpayer to set off a balancing charge from the disposal of an item of machinery or plant against the cost of a new item. Subsection (5) is amended to limit the cost of the new foreign registered car used exclusively outside Singapore, which is acquired in the basis period for the year of assessment 2014 or after, to S$35,000.
- Sec 37I (Cash payout under Productivity and Innovation Credit Scheme) — This section is amended to enable a tax deduction under the new sec 14W (Deduction for expenditure on licensing intellectual property rights) to be converted at the election of taxpayer into a cash payout under that section. Only expenditure that qualifies for a deduction under sec 14R, 14S and 14T may be converted into a cash payout.
- A new sec 37IA (Productivity and Innovation Credit bonus) provides for the payment of a Productivity and Innovation Credit (PIC) bonus, based on certain expenditures which improve productivity or help innovation and are incurred in the combined basis periods for the years of assessment 2013 to 2015.
- A new sec 37IB (Modification of sections 37I and 37IA in their application to partnership) clarifies how sec 37I and 37IA are to apply if the person qualifying for the cash payout or PIC bonus is a partnership.
- Sec 43 (Rate of tax upon companies and others) — Subsection (5) is amended to provide that a non-resident individual or firm must make an irrevocable option for his net professional or vocational income to be taxed at 20% (instead of the gross amount of such income being taxed at 15%) by the 15th day of the second month following the month in which the payment of the income is liable to be made to the individual or firm. In addition, new subsections (11) to (13) clarify what does not constitute a “qualifying company”.
- Sec 43O (Concessionary rate of tax for cyber trading) is repealed following the withdrawal of the Approved Cyber Trader scheme from 25 February 2013.
- A new sec 92D (Remission of tax of companies for years of assessment 2013, 2014 and 2015) provides for a tax rebate of 30% on the tax payable (excluding final withholding tax levied on income under sec 43(3), (3A) and (3B)) by companies for the years of assessment 2013 to 2015. This is subject to a cap of S$30,000 for each year of assessment.
For the full details, please refer to the Singapore Statutes Online.
Source: Government Gazette
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