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Deduction for costs for protecting intellectual property

Income Tax Act 1947

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—(1) Subject to this section, where a person carrying on a trade or business has incurred —(a)patenting costs during the period from 1 June 2003 to the last day of the basis period for the year of assessment 2010 (both dates inclusive); or(b)qualifying intellectual property registration costs during the basis period for any year of assessment between the year of assessment 2011 and the year of assessment 2025 (both years inclusive),for the purposes of that trade or business, there is allowed to the person a deduction of the amount of such costs.(1A) Subject to this section, for the purpose of ascertaining the income of a person carrying on a trade or business during the basis period for the year of assessment 2011 or the year of assessment 2012, there is allowed in respect of all of the person’s trades and businesses, in addition to the deduction allowed under subsection (1), a deduction for qualifying intellectual property registration costs incurred for the purposes of those trades and businesses, computed in accordance with the formulawhere A is —(a)for the year of assessment 2011, the lower of the following:(i)such costs incurred during the basis period for that year of assessment;(ii)$800,000; and(b)for the year of assessment 2012, the lower of the following:(i)such costs incurred during the basis period for that year of assessment;(ii)the balance after deducting from $800,000 the lower of the amounts specified in paragraph (a)(i) and (ii).(1B) Subject to this section and section 37J, for the purpose of ascertaining the income of a person carrying on a trade or business during the basis period for the year of assessment 2013, the year of assessment 2014 or the year of assessment 2015, there is allowed in respect of all of the person’s trades and businesses, in addition to the deduction allowed under subsection (1), a deduction for qualifying intellectual property registration costs incurred for the purposes of those trades and businesses, computed in accordance with the formulawhere A is —(a)for the year of assessment 2013, the lower of the following:(i)such costs incurred during the basis period for that year of assessment;(ii)$1,200,000;(b)for the year of assessment 2014, the lower of the following:(i)such costs incurred during the basis period for that year of assessment;(ii)the balance after deducting from $1,200,000 the lower of the amounts specified in paragraph (a)(i) and (ii); and(c)for the year of assessment 2015, the lower of the following:(i)such costs incurred during the basis period for that year of assessment;(ii)the balance after deducting from $1,200,000 the lower of the amounts specified in paragraph (a)(i) and (ii), and the lower of the amounts specified in paragraph (b)(i) and (ii).(1BA) Subject to this section and section 37J, for the purpose of ascertaining the income of a person carrying on a trade or business during the basis period for the year of assessment 2016, 2017 or 2018, there is allowed in respect of all of the person’s trades and businesses, in addition to the deduction allowed under subsection (1), a deduction for qualifying intellectual property registration costs incurred for the purposes of those trades and businesses, computed in accordance with the formulawhere A is —(a)for the year of assessment 2016, the lower of the following:(i)such costs incurred during the basis period for that year of assessment;(ii)$1,200,000;(b)for the year of assessment 2017, the lower of the following:(i)such costs incurred during the basis period for that year of assessment;(ii)the balance after deducting from $1,200,000 the lower of the amounts specified in paragraph (a)(i) and (ii); and(c)for the year of assessment 2018, the lower of the following:(i)such costs incurred during the basis period for that year of assessment;(ii)the balance after deducting from $1,200,000 the lower of the amounts specified in paragraph (a)(i) and (ii), and the lower of the amounts specified in paragraph (b)(i) and (ii).(1BB) Subject to this section, for the purpose of ascertaining the income of a person carrying on a trade or business during the basis period for any year of assessment between the years of assessment 2019 and 2025 (both years inclusive), there is to be allowed in respect of all of the person’s trades and businesses, in addition to the deduction allowed under subsection (1), a deduction of the amount of qualifying intellectual property registration costs incurred during the basis period for the purposes of those trades and businesses, up to $100,000.(1C) In subsection (1A), the amount under paragraph (a)(ii) is substituted with “$400,000” if the person does not carry on any trade or business during the basis period for the year of assessment 2012, and the balance under paragraph (b)(ii) is substituted with “$400,000” if the person does not carry on any trade or business during the basis period for the year of assessment 2011.(1D) In subsection (1B) —(a)if the person does not carry on any trade or business during the basis period for any one year of assessment between the year of assessment 2013 and the year of assessment 2015 (both years inclusive), the references to “$1,200,000” in the paragraphs of that subsection applicable to the other 2 years of assessment are each substituted with “$800,000”;(b)if the person does not carry on any trade or business during the basis periods for any 2 years of assessment between the year of assessment 2013 and the year of assessment 2015 (both years inclusive), the reference to “$1,200,000” in the paragraph of that subsection applicable to the remaining year of assessment is substituted with “$400,000”; and(c)to avoid doubt, no deduction may be made from the substituted amount in subsection (1B)(b)(ii) or (c)(ii) of the lower of the amounts specified in subsection (1B)(a)(i) and (ii) if the person does not carry on any trade or business during the basis period for the year of assessment 2013, and no deduction may be made from the substituted amount in subsection (1B)(c)(ii) of the lower of the amounts specified in subsection (1B)(b)(i) and (ii) if the person does not carry on any trade or business during the basis period for the year of assessment 2014.(1DA) In subsection (1BA) —(a)if the person does not carry on any trade or business during the basis period for any one year of assessment between the years of assessment 2016 and 2018 (both years inclusive), the references to “$1,200,000” in the paragraphs of that subsection applicable to the other 2 years of assessment are each substituted with “$800,000”;(b)if the person does not carry on any trade or business during the basis periods for any 2 years of assessment between the years of assessment 2016 and 2018 (both years inclusive), the reference to “$1,200,000” in the paragraph of that subsection applicable to the remaining year of assessment is substituted with “$400,000”; and(c)to avoid doubt, no deduction may be made from the substituted amount in subsection (1BA)(b)(ii) or (c)(ii) of the lower of the amounts specified in subsection (1BA)(a)(i) and (ii) if the person does not carry on any trade or business during the basis period for the year of assessment 2016, and no deduction may be made from the substituted amount in subsection (1BA)(c)(ii) of the lower of the amounts specified in subsection (1BA)(b)(i) and (ii) if the person does not carry on any trade or business during the basis period for the year of assessment 2017.(1E) For the purposes of subsections (1A), (1B), (1BA) and (1BB), where an individual carrying on a trade or business through 2 or more firms (excluding partnerships) has, during the basis period for any year of assessment between the years of assessment 2011 and 2025 (both years inclusive), incurred qualifying intellectual property registration costs in respect of such firms for the purposes of the individual’s trade or business, the deduction that may be allowed to the individual for those costs in respect of all of the individual’s trades and businesses must not exceed the amount computed in accordance with subsection (1A), (1B), (1BA) or (1BB) (as the case may be) for that year of assessment.(1F) For the purposes of subsections (1A), (1B), (1BA) and (1BB), where a partnership carrying on a trade or business has, during the basis period for any year of assessment between the years of assessment 2011 and 2025 (both years inclusive), incurred qualifying intellectual property registration costs for the purposes of the partnership’s trade or business, the aggregate of the deductions that may be allowed to all the partners of the partnership for those costs in respect of all of the trades and businesses of the partnership must not exceed the amount computed in accordance with subsection (1A), (1B), (1BA) or (1BB) (as the case may be) for that year of assessment.(2) The claim for deduction under subsection (1), (1A), (1B), (1BA) or (1BB) is allowed to a person only if —(a)there is an undertaking by the person that the person would be the proprietor of the patent or registered trade mark, the registered owner of the registered design or the grantee of the plant variety (as the case may be) when the patent is granted, the trade mark or design is registered or the plant variety is granted protection; and(b)the claim is made by the person in such manner and subject to such conditions as the Comptroller may require.(3) For the purposes of this section, any patenting costs or qualifying intellectual property registration costs (as the case may be) incurred by a person prior to the commencement of that person’s trade or business are deemed to have been incurred by that person on the first day that person carries on that trade or business but a deduction for these is subject to section 14X.(4) Where a person to whom a deduction for patenting costs or qualifying intellectual property registration costs (as the case may be) has been allowed under subsection (1) sells, transfers or assigns in the basis period for any year of assessment all or any part of the rights for which such patenting costs or qualifying intellectual property registration costs (as the case may be) were incurred, the person is deemed to have derived an amount of income for that year of assessment equal to the price at which the rights were sold, transferred or assigned or the deduction which has been allowed under subsection (1), whichever is less.(5) For the purposes of subsection (4), where there is more than one sale, transfer or assignment of any part of the rights for which such patenting costs or qualifying intellectual property registration costs (as the case may be) were incurred, the total amount deemed as income must not exceed the total amount of deduction previously allowed under subsection (1).(5A) Where —(a)a deduction has been made to any person under subsection (1A), (1B), (1BA) or (1BB) in respect of any qualifying intellectual property registration costs; and(b)the person sells, transfers or assigns all or any part of the qualifying intellectual property rights or the application for the registration or grant of the qualifying intellectual property rights for which such costs were incurred, within a period of one year from the date of filing of the application,the deduction allowed under subsection (1A), (1B), (1BA) or (1BB) (as the case may be) is deemed as income of the person for the year of assessment relating to the basis period in which the sale, transfer or assignment occurs.(6) In this section —“patenting costs” means the fees paid to —(a)the Registry of Patents in Singapore or an equivalent registry outside Singapore for the —(i)filing of a patent;(ii)search and examination report on the application for a patent; or(iii)grant of a patent; and(b)any registered patent agent for —(i)applying for any patent in Singapore or elsewhere;(ii)preparing specifications or other documents for the purposes of the Patents Act 1994 or the patents law of any other country; or(iii)giving advice on the validity or infringement of the patent;“qualifying intellectual property registration costs” means the fees paid to —(a)the Registry of Patents, Registry of Trade Marks, Registry of Designs or Registry of Plant Varieties in Singapore or an equivalent registry outside Singapore for the —(i)filing of an application for a patent, for the registration of a trade mark or design, or for the grant of protection of a plant variety;(ii)search and examination report on the application for a patent;(iii)examination report on the application for grant of protection of a plant variety; or(iv)grant of a patent; and(b)any person acting as an agent for —(i)applying for any patent, for the registration of a trade mark or design, or for the grant of protection of a plant variety, in Singapore or elsewhere;(ii)preparing specifications or other documents for the purposes of the Patents Act 1994, the Trade Marks Act 1998, the Registered Designs Act 2000, the Plant Varieties Protection Act 2004 or the intellectual property law of any other country relating to patents, trade marks, designs or plant varieties; or(iii)giving advice on the validity or infringement of any patent, registered trade mark, registered design or grant of protection of a plant variety;“qualifying intellectual property right” means the right to do or authorise the doing of anything which would, but for that right, be an infringement of any patent, registered trade mark or design, or grant of protection of a plant variety;“registered patent agent” has the meaning given by the Patents Act 1994.(7) In this section, “patenting costs” and “qualifying intellectual property registration costs” exclude any expenditure to the extent that it is or is to be subsidised by grants or subsidies from the Government or a statutory board.

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