Income Tax (Amendment) Bill introduced to effect tax measures announced in Budget Statement and other changes

29 September 2021

On 13 September 2021, the Income Tax (Amendment) Bill (“Bill”) was tabled for first reading in Parliament.

Among other things, the Bill introduces tax changes covering tax measures announced in the Budget Statement for 2021 and economy-wide and sector-specific measures announced by the Government in May and July 2021 in response to the Covid-19 pandemic.

By way of background, from 11 June 2021 to 2 July 2021, the Ministry of Finance (“MOF”) conducted a public consultation and sought comments on a draft version of the Bill. On 3 September 2021, MOF issued a summary of its response to the comments received. The Bill takes into account the comments received from the public consultation.

The following are brief highlights of some of the changes from the Bill.

Tax changes announced in Budget Statement 2021

  • Extending to Year of Assessment (“YA”) 2021 the enhancement to the loss carry-back relief scheme to allow for qualifying deductions to be carried back for up to three years (instead of one);
  • Extending the option to accelerate the write-off of the cost of acquiring plant and machinery over two years (instead of three) to capital expenditure incurred on the acquisition of plant and machinery in the basis period for YA 2022 (i.e. Financial Year (“FY”) 2021); 
  • Extending the option to claim renovation and refurbishment (“R&R”) deduction in one YA (i.e. accelerated R&R deduction) (instead of three) to qualifying expenditure incurred on R&R in the basis period for YA 2022 (i.e. FY 2021); 
  • Enhancing the Double Tax Deduction for Internationalisation (DTDi) scheme to cover additional qualifying expenses (e.g. specific expenses incurred to participate in approved virtual trade fairs), in a move to support internationalisation efforts of businesses; and 
  • Extending the 250% tax deduction for qualifying donations made to Institutions of Public Character and other qualifying recipients for another two years, i.e. for donations made during the period 1 January 2022 to 31 December 2023 (both dates inclusive).

Measures announced by Government in response to Covid-19 pandemic in May and July 2021

  • Exempt landlords/master tenants’ mandatory/voluntary support payments made in 2021 from income tax in the hands of the tenant-occupiers and qualifying sub-tenants; 
  • Allow income tax deductions (subject to a cap) for monetary payments made in 2021 by landlords/master tenants (a) to pass on the rental waiver granted for Government-owned commercial properties, and (b) on mandatory/voluntary support payments to their tenant-occupiers and qualifying sub-tenants; and 
  • Provide that the tax-deductible rental expenses which tenant-occupiers/sub-tenants may claim are to be net of monetary benefits received from the landlords/master tenants in 2021.

Tax changes arising from periodic review of the income tax system, and technical amendments

The Bill also seeks to make changes arising from a periodic review of Singapore’s income tax system. These include:

  • Providing for the tax treatment for cases where trading stock is appropriated for non-trade or capital purposes, and where a non-trade or capital asset becomes trading stock;
  • Requiring taxpayers to give written notice to the Comptroller when a foreign tax authority makes a downward adjustment of foreign tax which results in the foreign tax credit previously allowed in Singapore on foreign-sourced income becoming excessive; 
  • Aligning the maximum penalty for non-filing and other related offences under the Income Tax Act with those for similar offences under the Goods and Services Tax Act and Property Tax Act; and 
  • Including a provision to protect informers by prohibiting witnesses from disclosing information that may lead to the discovery of an informer’s identity. A similar provision will be included in the Goods and Services Tax Act, Property Tax Act and Stamp Duties Act. 

Reference materials

The following materials are available on the MOF website www.mof.gov.sg and Singapore Statutes Online sso.agc.gov.sg: