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Ascertainment of income in respect of old trade or business

Economic Expansion Incentives (Relief from Income Tax) Act 1967

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—(1) The income of a pioneer enterprise from each of its old trades or businesses is to be ascertained in accordance with the provisions of the Income Tax Act 1947 after making such adjustments as may be necessary in consequence of any direction given under section 9.(2) In determining the income of a pioneer enterprise referred to in subsection (1), the allowances provided for in sections 16, 17, 18, 18B, 18C, 19, 19A, 19B, 20, 21 and 22 of the Income Tax Act 1947 for capital expenditure incurred for the purposes of each old trade or business must be taken into account even though no claim for such allowances has been made.(3) Where the tax relief expiry date of an old trade or business of a pioneer enterprise is before the last day of the basis period for any year of assessment, then, for the purpose of determining the income in respect of —(a)that old trade or business for that year of assessment; and (b)the corresponding new trade or business for the same year of assessment, allowances provided for in sections 16, 17, 18, 18B, 18C, 19, 19A, 19B, 20, 21 and 22 of the Income Tax Act 1947 for capital expenditure incurred for the purposes of that old trade or business must be deducted even though no claim for such allowances has been made.(4) For the purpose of computing the allowances under subsection (3) —(a)the allowances for that year of assessment must be computed as if the old trade or business of the pioneer enterprise had not been considered to have permanently ceased on the tax relief expiry date in accordance with section 7(a); and(b)the allowances computed in accordance with paragraph (a) must be apportioned between that old trade or business and that new trade or business in such manner as appears to the Comptroller to be reasonable in the circumstances.(5) Where in any year of assessment full effect cannot, by reason of an insufficiency of profits for that year of assessment, be given to the allowances mentioned in subsection (2), then the balance of the allowances must be added to, and is deemed to form part of, the corresponding allowances (if any) for the next succeeding year of assessment and, if no such corresponding allowances fall to be made for that year, is deemed to constitute the corresponding allowances for that year, and so on for subsequent years of assessment.(6) Despite subsections (1) and (2), where a pioneer enterprise has incurred or has given a written undertaking to the Minister to incur a capital expenditure of not less than $150 million and —(a)more than 50%, or such other percentage as the Minister may determine, of the paid‑up capital of the pioneer enterprise is held by persons permanently resident in Singapore; and(b)such capital expenditure has been approved by the Minister as promoting or enhancing the economic or technological development of Singapore,the capital expenditure so incurred by the pioneer enterprise whilst it is carrying on an old trade or business in respect of any asset used for the purposes of its corresponding new trade or business are (subject to such conditions as the Minister may impose) considered for the purposes of sections 16, 17, 18, 18B, 18C, 19, 19A, 19B, 20, 21 and 22 of the Income Tax Act 1947, to have been incurred on the day immediately following the tax relief expiry date of the old trade or business.(7) Where a pioneer enterprise referred to in subsection (6) carries on a separate trade or business, and any building, plant or machinery is used both for the purposes of that trade or business and the trade or business relating to the relevant pioneer product, subsection (6) applies to that building, plant or machinery.(8) Where a pioneer enterprise has, before 16 August 1991, incurred a capital expenditure of not less than $1,000 million, subsection (6) applies to that enterprise in respect of that expenditure even though the enterprise has not complied with paragraphs (a) and (b) of that subsection.(9) Where —(a)a pioneer enterprise mentioned in subsection (6) or (8) is the holder of 2 or more pioneer certificates; (b)the tax relief expiry dates of the old trades or businesses relating to those pioneer certificates are different; and(c)capital expenditure has been incurred in respect of any building, plant or machinery which is jointly used in carrying on those old trades or businesses,then a deduction must not be made in respect of such expenditure under any of the provisions contained in sections 16, 17, 18, 18B, 18C, 19, 19A, 19B, 20, 21 and 22 of the Income Tax Act 1947 until after the tax relief expiry date that is later or latest in time.(10) In subsections (6) and (8), “capital expenditure” means capital expenditure in connection with a pioneer product, on factory building (excluding land) in Singapore, on any new plant or new machinery used in Singapore and on intellectual property rights for use in Singapore and, subject to the Minister’s approval, on any secondhand plant or secondhand machinery used in Singapore.

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