Tag: Income Tax (Amendment) Bill

Public consultation sought by MOF on changes to the Income Tax Act

On By taxsgIn General News

24 July 2012

The Ministry of Finance (MOF) is seeking public consultation on the draft Income Tax (Amendment) Bill 2012. The proposed changes relate primarily to the changes as announced in the 2012 Budget Statement, as well as reviews made to the tax policies and administration.

Key changes resulting from Budget 2012 include:

  • Provision of one-off SME cash grant capped at $5,000
  • Enhancement to the Productivity and Innovation Credit (“PIC”) Scheme
  • Provision of certainty of non-taxation of gains on disposal of equity investments, and
  • Enhancements to the Earned Income Relief of up to $8,000 and $12,000 for the elderly and handicapped persons respectively.

Changes from ongoing review of the tax system:

  • Alignment of tax treatment with the new accounting standards for small entities, and
  • Enhancement to CPF Minimum Sum Topping-Up Scheme where deductions will be allowed on cash top-ups made under Minimum Sum Topping-Up accounts of parents-in-law and grandparents-in-law.

The consultation paper and feedback channels can be found at the MOF website or REACH portal.

The consultation period runs from 24 July 2012 till 13 August 2012.

Source: Ministry of Finance (MOF)

Income Tax (Amendment) Bill 2011 goes through second reading in Parliament

On By taxsgIn Corporate Tax, Income Tax Act, Individual Tax, Latest Tax News, Legislative Updates

23 November 2011

On 22 November, the Income Tax (Amendment) Bill 2011 was read for the second time in Parliament by Mrs Josephine Teo, Minister of State for Finance and Transport.

Key changes are summarised as follows:

A. Changes resulting from 2011 Budget Statement

  • The Productivity and Innovation Credit (“PIC”) Scheme enhanced to encourage innovation and productivity efforts. Changes include increasing the PIC deduction from 250% to 400%, increasing the cap on qualifying expenditure from $300,000 to $400,000 per activity, and raising the cash payout in lieu of deduction to $30,000.  (Clauses 17, 19, 23, 24, 25, 29, 30, 31 and 33.)
  • A one-off corporate income tax rebate of 20% up to $10,000, or an SME cash grant of up to $5,000 granted to help companies cope with rising cost (Clause 61).
  • Businesses can pool their tax credits for foreign tax suffered on their foreign incomes with the new Foreign Tax Credit (“FTC”) Pooling system (Clause 54).
  • All existing maritime tax incentives will be streamlined under a new umbrella incentive – the Maritime Sector Incentive. Existing shipping-related incentives are improved by covering more shipping-related support services and new entrants into the industry (Clauses 7, 10, 12, 43, 45, 46, 48, 49, 69(a) and 71).
  • A new tax deduction introduced to allow a company to claim for the cost incurred on acquisition of its parent company’s shares, through a Special Purpose Vehicle, for its Employee Equity-Based Remuneration Scheme (Clauses 22 and 27(b) and (c)).
  • Start-ups can claim tax deduction for expenses incurred prior to its earning any revenues. The expenses should be incurred in the accounting year before that in which it earns the first dollar of revenues. (Clause 26)
  • The tax deduction of 250% for donations made to Institutions of a Public Character, Government, approved persons and prescribed educational or research institutions to be extended for another five years to 31 December 2015 (Clause 32(a)).
  • Personal income tax rate structure amended effective from the next year of assessment in 2012. The new personal income tax schedule is more progressive. A one-off personal income tax rebate of 20% up to $2,000 has also been granted for Year of Assessment 2011 (Clauses 68 and 70 respectively).
  • Following an increase in the employer’s CPF contribution rate from 1 September 2011, the corresponding tax deduction allowable to the employer is increased to the new CPF contribution rate of 16%. The contribution that is exempt from tax or the contribution in excess of which is deemed taxable, as the case may be, is accordingly raised to $5,000 per month (Clauses 4(b) and (c) and 16(a)).

B. Changes resulting from the on-going review of the Income Tax Act.

  • Clarification that Government-Paid Childcare Leave payments received by self-employed individuals are taxable income since their introduction on 31 October 2008 (Clause 3) and which ensures consistency with the tax treatment of Government-Paid Maternity Leave payments received by self-employed women.
  • Greater clarity to the income tax appeal procedures in the timely resolution of tax disputes, and savings in tax compliance and administration costs. Changes include enabling taxpayers to take their case to the Income Tax Board of Review even if their case is non-taxable for that year, and extending the time to file appeals from 14 days to 30 days (Clauses 56 to 60).
  • The provision of Unique Identity Number (“UIN”) or Unique Entity Number (“UEN”) to be made compulsory and extended to donors who make cash donations to IPCs through grant maker, cash donations to Government, donations of computers to prescribed institutions, and donations of art works to approved persons. This requirement was already introduced for qualifying donations made to IPCs directly. With the amendment, donors will not need to declare their donations in their tax returns in order to enjoy tax deductions on their donations (Clause 32(b)).
  • The Income Tax Act is amended to allow Singapore to exchange information via separate Exchange of  Information (“EOI”) arrangements, where necessary. Presently EOI can only be done through Avoidance of Double Taxation Arrangements (Clauses 62 to 67).

The remaining legislative changes arising from periodic review of the income tax system are either technical in nature or relate to improvements in tax administration.

A copy of the Bill is available here.

Source: Ministry of Finance

Income Tax (Amendment) Bill 2011 – First reading in Parliament

On By taxsgIn e-Gazette, Income Tax Act, Legislative Updates

20 October 2011

The Income Tax (Amendment) Bill No 14/2011 was published in the Government Gazette on 17 October, 2011.

This Bill seeks to implement the tax changes announced in the 2011 Budget Statement, make certain other amendments to the Income Tax Act (Cap. 134) and make a consequential amendment to the Economic Expansion Incentives (Relief from Income Tax) Act (Cap. 86).

The proposed amendments to the Income Tax Act (“ITA”) which principally relate to the changes announced in the 2011 Budget Statement are as follows:

  • Enhancement of the Productivity and Innovation Credit (“PIC”) Scheme to further encourage pervasive innovation and raise productivity efforts by increasing the amount of tax deductions and improving the PIC qualifying conditions;
  • One-off corporate tax rebate of 20% up to $10,000; or SME Cash Grant of up to $5,000 to help companies with rising cost;
  • Introduction of the Foreign Tax Credit (“FTC”) Pooling System to allow businesses to pool their tax credits for foreign tax suffered so as to simplify tax compliance and reduce their tax payable on the remitted foreign income;
  • Introduction of the Maritime Sector Incentive (“MSI”) to enhance and streamline all existing maritime tax incentives under an umbrella incentive; and
  • Changes to personal income tax rate structure for resident individuals.

The Income Tax (Amendment) Bill 2011 also provides for refinements to existing tax policies and tax administration.

For a copy of the Bill, please click here.

A summary of the changes proposed in this Bill can be found here.

Those who wish to read more about the outcome of the recent public consultation on the draft Bill, please click here.

Source: e-Gazette

Results of public consultation on draft Income Tax (Amendment) Bill 2011 – MOF accepts 23 out of 55 suggestions

On By taxsgIn Corporate Tax, Latest Tax News

13 October 2011

The Ministry of Finance (MOF) has accepted for implementation 23 out of the 55 suggestions on the draft Income Tax (Amendment) Bill 2011 received during the public consultation exercise held from 11 July 2011 to 1 August 2011.

According to the MOF, the remaining 32 suggestions were not accepted for implementation as they were “inconsistent with the legislative drafting conventions or the policy objectives for the proposed legislative changes”.

Most feedback was received on the following tax changes:

  • Productivity and innovation credit (PIC) scheme
  • Foreign tax credit pooling
  • Tax deduction for Equity-Based Remuneration (EEBR) scheme
  • Tax benefit for voluntary Medisave CPF contributions made by eligible companies to self-employed persons
  • CPF contribution rate and salary ceiling changes
  • Tax exemption for alimony and maintenance payments.

A summary of the key suggestions accepted relate to:

  • Productivity and Innovation Credit (PIC) scheme

MOF has agreed to some of the suggestions to expand the list of qualifying PIC equipment. The list of qualifying PIC equipment, including additions, has been published on IRAS’ website.  Suggestion for extension of the cash conversion till the end of the scheme however will be reviewed by MOF in 2012, nearer the date of the expiry of the conversion.

  • Foreign Tax Credit Pooling

The wording for the above provision will be redrafted. As a taxpayer will elect for pooling of credits only where it has two or more sources of foreign income, it  was proposed that the draft sub-subsections (a) to (d) of section 50C(1) be deleted and reworded, as it is not necessary to outline the various situations under which foreign tax credit pooling will apply.

  • Tax deduction for EEBR Scheme

There may be situations where the employees of the company pay a portion of the cost of shares to the holding company, and the holding company recharges the company for the net amount (i.e. cost of treasury shares less amount payable by employees). 

The provisions have been amended to ensure the tax deduction will be computed on the correct amount of recharges by the holding company and the amount payable by the employees as the proposed drafting seems to require the amount payable by the employee to be excluded from the net amount payable by the company. This may result in a shortfall in the amount of tax deduction available to the company.

  • Tax benefit for voluntary Medisave CPF contributions made by eligible companies to self-employed persons

The definition of “A person of a description prescribed by the Minister” will be provided in the Income Tax Regulations to be made after the Bill becomes law. Currently in the proposed new section 13(1)(jc), it is unclear who the “person of a description” is intended to cover.

  • CPF contribution rate and salary ceiling changes

The definition of “prescribed payment” will be provided in the Income Tax Regulations to be made after the Bill becomes law as there is currently no definition of “prescribed payment” in section 39(3), (3A) and (4) of the ITA.

Those suggestions rejected by the MOF include the following:

  • Foreign Tax Credit Pooling

In attributing expenses and capital allowances to the foreign-sourced income, the foreign tax credit may be restricted and reduced which is inequitable as those expenses may not be incurred in earning the foreign-sourced income.

  • Tax exemption for alimony and maintenance payments

The suggestion to amend the draft on the exemption for alimony and maintenance payments in section 13(1)(zo) by replacing the word “woman” with “spouse” so as to be gender neutral.

The suggestions accepted will be incorporated into the revised Income Tax (Amendment) Bill 2011.

To view the MOF’s response, please click here.

To view the proposed changes to the draft Income Tax (Amendment) Bill 2011, please click here.

Source: Ministry of Finance