Budget Seminar : Questions on Budget 2009 Changes and IRAS’ Response  (119KB)

(The Budget Seminar was held on 20 February 2009. A number of questions, including tax and non-tax, budget and non-budget related, were raised at the Seminar.  We have compiled a list of key questions received and IRAS’ response to the questions for information. As some of the questions received do not specifically relate to tax changes announced in the Budget 2009 statement, they have not been included in this list.)

The following tax changes were announced by Minister for Finance, Mr. Tharman Shanmugaratnam in his Budget Speech for the Financial Year 2009 which was delivered in Parliament on Thursday, 22 January 2009.

Individuals

Tax Changes	Summary
Personal Income Tax Rebate for Resident Individuals	All resident individual taxpayers will be given a one-off income tax rebate of 20%, up to a cap of $2,000, for the tax  payable for  Year of Assessment (YA) 2009.
Flexible GIRO arrangements	Taxpayers* who have lost their jobs in 2008 or 2009, for example due to retrenchment, can approach IRAS to re-work their GIRO instalment plans (up to a maximum of 24- month instalments) for tax assessed in YA 2009. Please call 1800 356 8300 for assistance.* Except for foreigners where tax clearance is applicable. The requirement to settle all outstanding taxes before leaving Singapore remains unchanged.
Removal of Income Tax on Net Annual Value	Income tax on net annual value of all residential properties will be removed from YA 2010.
Tax Exemption of Foreign – Sourced Income Received in Singapore	Tax exemption will be granted to all foreign-sourced income earned/ accrued outside Singapore on or before  21 Jan 2009 to resident non-individuals and resident partners of partnerships in Singapore and received in Singapore during the period from  22 Jan 2009 to  21 Jan 2010.
Enhancement of tax deduction on donation	Tax deduction will be increased for donations made in 2009 to Institutions of a Public Character and other approved recipients (such as approved museums, prescribed schools etc.) from double to 2.5 times.

Property

Tax Changes	Summary
40% Property Tax Rebate for Owner-Occupied Residential Properties	Owner-occupied residential properties will be granted a rebate of 40% on the property tax payable (after existing rebates) for calendar year 2009.
40% Property Tax Rebate for Commercial and Industrial Properties	Owners of commercial and industrial properties will be granted a rebate of 40% on the property tax payable for calendar year 2009.
Property Tax Deferral for Land Approved For Development for Businesses	Business owners may apply for property tax deferral for land approved for development if they satisfy the eligibility criteria. The period of the property tax deferral shall be from 22 Jan 2009 to 21 Jan 2011.
Deferment of Increase in Assessment Rate for Hotel Rooms	The increase in rate from 20% to 25% of gross room receipts with effect from 1 January 2009 will be deferred for 1 year. The rate for 2009 will remain at 20% of gross room receipts.

Businesses

Tax Changes	Summary
Jobs Credit	The Jobs Credit Scheme is introduced to encourage businesses to preserve jobs in the downturn. The first quarterly payment will be paid on 31 Mar 2009, and subsequent ones in Jun, Sep, and Dec 2009. Employers do not need to apply for the Jobs Credit.  The Jobs Credit is automatically granted to eligible employers and computed based on CPF contribution data.
Corporate income tax rate cut	Corporate income tax rate will be reduced from 18% to 17% to help maintain Singapore’s competitiveness. The rate cut will take effect from YA 2010.
Enhancement of Carry-Back Relief for YA 2009 and YA 2010	Unutilised trade losses and capital allowance for YA 2009 and YA2010 can be carried back to set off against Assessable Income of 3 immediately preceding YAs up to a limit of $200,000.
Enhancement of Tax Deduction for Capital Expenditure Incurred on Renovation or Refurbishment Works	Businesses that incur qualifying Renovation & Refurbishment expenses in the basis periods for YA 2010 and YA 2011 can deduct such expenses in one year instead of over three years, subject to the cap of $150,000 for each relevant three-year period.
Extension of the Tax Exemption Scheme for New Start-up Companies to Companies limited by Guarantee	Companies Limited by Guarantee (CLGs) will be allowed to qualify for the tax exemption scheme for new start-up companies effective from YA2010.
Tax Framework for facilitating Corporate Amalgamations	A new tax framework for qualifying amalgamations will be introduced.
Enhancement of Capital Allowance Granted In Respect of Plant or Machinery Acquired for YA2010 and 2011	Accelerated write-down of capital  allowance (CA) will be  allowed on  plant and machinery  acquired in the basis periods for YA 2010 and  YA 2011.  CA is computed based on 75% of the capital expenditure for the first YA and 25% of the capital expenditure for the second YA.
Accelerated Writing – Down Allowance for Acquisition of Intellectual Property for Media & Digital Entertainment Content	The writing-down period for writing-down allowance under section 19B will be reduced from 5 years to 2 years in respect of acquisition cost of intellectual property rights for Media & Digital Entertainment (MDE) content incurred by an approved MDE company or partnership, subject to conditions.
Extension and Enhancement of Withholding Tax Exemption for Maritime Industry	Under the Block Transfer Scheme (BTS), WHT exemption can be granted in respect of interest payable on a loan taken by a shipping enterprise from a lender outside Singapore to acquire a Singapore-flagged ship.  This WHT exemption is for ships registered with the Singapore Registry of Ships (SRS) on any date from 1 Jan 2009 to 31 Dec 2013.
Enhancement of Fund Management Incentive Scheme	Existing fund management incentive schemes under sections 13C, 13CA and 13R will be enhanced by introducing an enhanced tier.The enhanced tier is open to fund vehicles in the form of companies, trusts and limited partnerships.
Enhancement of the List of Specified Income and Designated Investment for Certain Tax Incentive Schemes	The tax exemption schemes for foreign investors and qualifying resident funds, tax incentive schemes for  approved trustee companies and financial sector incentive companies are enhanced by expanding the list of specified income and designated investment.
Review and Enhancement to Current FSI-HQ Scheme	A series of enhancements will be made to the FSI-HQ scheme.
Extension and Enhancement for the Commodity Derivatives Trading(CDT) Scheme	A series of enhancements will be made to the CDT scheme.
Extension of Tax Deduction for Provisions Made under MAS Notices	The tax deduction for collective impairment provisions made by banks, merchant banks or finance companies under MAS Notices 612, 811 and 1005 will be extended for a further 3 years, subject to conditions.
Tax Exemption of Foreign – Sourced Income Received in Singapore	Resident  non-individuals and resident partners of partnerships in Singapore will enjoy tax exemption on all foreign-sourced income that was earned/ accrued on or before 21 Jan 2009 and remitted to Singapore during the period from 22 Jan 2009 to 21 Jan 2010 (both dates inclusive).
Enhancement of tax deduction on donation	Tax deduction will be increased for donations made in 2009 to Institutions of a Public Character and other approved recipients (such as approved museums, prescribed schools etc.) from double to 2.5 times.

Goods and Services Tax (GST)

Tax Changes	Summary
Changes to the GST treatment of aircraft and aircraft related supplies	The following GST changes will take effect from 1 Apr 2009:(i) Revision to the definition of ‘qualifying aircraft’; (ii) Extension of  zero-rating relief to cover the sale, maintenance and repair services of aircraft components or systems as long as they form part of a qualifying aircraft; (iii) Import GST suspension for approved aerospace players under a new scheme.
Suspension of GST on goods temporarily removed from Zero GST or Licensed Warehouse for Auctions and Exhibitions	With effect from 1 Apr 2009, GST will be suspended on the following:(i) Temporary removal of goods stored in a Zero GST or Licensed Warehouse for auctions or exhibitions, provided the goods are returned to the warehouse after the auction or exhibition; and (ii) Sale of these goods at the auction or exhibition, provided the goods are returned to the warehouse subsequently. Details of the above tax changes will be released by Singapore Customs by Mar 2009.
Recovery of GST for qualifying funds	Qualifying funds managed by prescribed fund managers will be allowed to recover a substantial portion of the GST incurred on prescribed expenses incurred from 22 Jan 2009 to 31 Mar 2014 (both dates inclusive).Details of the GST remission will be released by MAS by Apr 2009.

Income Tax changes for bodies of persons

Tax Changes	Summary
Tax Exemption of Foreign – Sourced Income Received in Singapore	Tax exemption will be granted to all foreign-sourced income earned/ accrued outside Singapore on or before  21 Jan 2009 to resident non-individuals and resident partners of partnerships in Singapore and received in Singapore during the period from  22 Jan 2009 to  21 Jan 2010.
Enhancement of tax deduction on donation	Tax deduction will be increased for donations made in 2009 to Institutions of a Public Character and other approved recipients (such as approved museums, prescribed schools etc.) from double to 2.5 times.