Income Tax Act amended with effect from various dates to implement Budget 2021 and other changes

29 November 2021

On 16 November 2021, the Income Tax (Amendment) Act 2021 was gazetted, with its provisions coming into operation on various dates. Set out below is a brief outline of the key changes to the Income Tax Act.

Tax changes announced in Budget 2021 Statement and support measures

The following are key amendments that give effect to the Budget 2021 Statement, and the support measures announced earlier this year:

  • Loss carry-back relief scheme: To help businesses with cash flow, the enhancement to the loss carry-back relief scheme has been extended for another year. Qualifying deductions for the Year of Assessment (“YA”) 2021 may be carried back up to three preceding YAs instead of one. The amount of qualifying deductions that may be carried back is capped at S$100,000. This allows businesses to get a refund of up to S$17,000 of income tax paid for YA 2018 to YA 2020.
  • Double Tax Deduction for Internationalisation scheme: To encourage firms to internationalise, the scope of the Double Tax Deduction for Internationalisation (DTDi) scheme has been enhanced to cover additional qualifying expenses, e.g. specific expenses incurred to participate in approved virtual trade fairs.
  • Donations to IPCs: The 250% tax deduction for qualifying donations to Institutions of Public Character (“IPCs”) has been extended for another two years to Calendar Year (“CY”) 2023. To continue supporting corporate volunteering, the Business and IPC Partnership Scheme (BIPS) has been extended for another two years to CY 2023.
  • Monetary support payments received from landlords: Mandatory or voluntary monetary support payments that tenants receive from their landlords in 2021 will not be taxed. This will allow tenants to benefit from the full amount of the monetary support payments. Landlords will be allowed to claim income tax deductions for the monetary support payments they made to tenants in 2021. This is to facilitate the passing on of rental waivers granted to master tenants of qualifying Government-owned commercial properties to their sub-tenants, as well as the making of monetary support payments by landlords to their tenants in 2021.

For more on Budget 2021, please read our articles “Budget 2021: Key highlights” and “Budget 2021: Summary of key changes”.

Non-Budget 2021 amendments

The following are three key amendments to the Income Tax Act following a regular review of the income tax regime by the Ministry of Finance:

  • Tax treatment of trading stock: Amendments to set out the tax treatment for two situations: where trading stock is appropriated, or used, for non-trade or capital purposes, and vice-versa, that is to say, where capital assets become trading stock.
  • Administration of public schemes by IRAS: To facilitate the Inland Revenue Authority of Singapore’s (“IRAS”) administration of public schemes, persons authorised by the CEO of IRAS will be allowed to have access to selected income tax data and documents, subject to safeguards, for the sole purpose of auditing the administration of public schemes such as the Jobs Support Scheme.
  • Protection of informers: A provision to protect informers is introduced to protect informers by prohibiting witnesses in court (who might be the informers themselves) from disclosing information that may lead to the discovery of an informer’s identity.

Reference materials

The Income Tax (Amendment) Act 2021 is available from Singapore Statutes Online sso.agc.gov.sg.