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Further deduction for expenditure on research and development project

Income Tax Act 1947

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—(1) Subject to this section, where the Comptroller is satisfied that —(a)a person carrying on any trade or business has incurred expenditure in undertaking directly by the person, or in paying a research and development organisation to undertake on the person’s behalf, an approved research and development project in Singapore which is related to that trade or business;(aa)a person carrying on any trade or business has incurred during the basis period for any year of assessment between the year of assessment 2009 and the year of assessment 2020 (both years inclusive) expenditure in undertaking directly by the person, or in paying a research and development organisation to undertake on the person’s behalf, an approved research and development project in Singapore which is not related to that trade or business; or(b)a research and development organisation has incurred expenditure in undertaking an approved research and development project in Singapore and no deduction under this section has been allowed to another person in respect of any expenditure for that project or for another project of which that project forms a part,there is allowed to that person or research and development organisation a further deduction of the amount of such expenditure in addition to the deduction allowed under section 14, 14C or 14D, as the case may be.(2) The Minister or such person as the Minister may appoint may —(a)specify the maximum amount of the expenditure (or any item thereof) incurred to be allowed under subsection (1);(b)impose such conditions as the Minister or appointed person thinks fit when approving the research and development project; and(c)specify the period or periods for which deduction is to be allowed under this section.(3) No deduction is allowed under this section in respect of any expenditure which is not allowed under section 14 or 14C.(3A) The total amount of deduction allowed under this section for any expenditure incurred by a person for an approved research and development project in Singapore must not, after adding the total amount of deductions allowed under sections 14, 14C and 14D for the same expenditure, result in the total amount of deductions for that expenditure exceeding 200% of that expenditure; and if it so exceeds then no deduction is allowed under this section for that expenditure.(3AA) No deduction is allowed to any person under this section in respect of any expenditure for which a deduction has been allowed under section 14D(2).(3B) Section 14C(4) and (5) applies in relation to the deduction of the expenditure and payments referred to in subsection (1)(aa), as it applies in relation to the deduction of the expenditure and payments referred to in section 14C(1)(aa), (c) and (f), subject to the following modifications:(a)a reference to the amount of the expenditure or payments is a reference to the amount of deduction that would have been allowed under this section for the expenditure or payments referred to in subsection (1)(aa) but for this subsection;(b)a reference to a specified amount of the expenditure or payments is a reference to an amount computed in accordance with the formulawhere Ais the amount of the deduction referred to in paragraph (a);Bis the rate of tax specified in section 43(1)(a); andCis — (i)in a case where the concessionary income (as defined in section 14C(5)) derived by the person from the trade or business carried on by the person is subject to tax at a single concessionary rate of tax, that rate; or (ii)in a case where the concessionary income derived by the person from the trade or business carried on by the person is subject to tax at 2 or more concessionary rates of tax, the higher or highest of those rates.(3C) No research and development project may be approved under this section after 31 March 2020.(4) In this section, “approved” means approved by the Minister or such person as the Minister may appoint.

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