INCOME TAX (AMENDMENT) BILL

Order for Second Reading read. 5.40 p.m.

The Minister for Finance (Mr Hon Sui Sen): Mr Deputy Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

The purpose of this Income Tax (Amendment) Bill is to give legislative authority to the income tax concessions announced in the 1982 Budget Statement. Opportunity has also been taken to include two other amendments to the existing legislation.

It was announced in the 1982 Budget Statement that the ceiling of the capital allowances for company registered motorcars would be increased from $25,000 to $35,000 with effect from 1st April, 1982. Clauses 2, 3, and 5 of the Bill amend Sections 14, 19 and 20 of the Income Tax Act to provide for this.

Another concession is the extension of the accelerated depreciation allowance of 33 1/3% over three years to lessors for equipment leased to lessees who would be eligible for the accelerated depreciation had they purchased the equipment themselves. This applies to equipment purchased on or after 1st April, 1982. The accelerated depreciation allowance is also granted to non-industrial enterprises which install approved energy-saving equipment on or after 1st January, 1982. Clause 4 amends section 19A of the Income Tax Act to make provision for these concessions.

Clause 7 amends section 39 of the Act to allow the whole amount of statutory contributions to the Central Provident Fund and other designated approved pension or provident fund schemes to be exempt from tax with effect from Year of Assessment 1983. Where such contributions exceed $5,000, no further tax deduction will be allowed for life insurance premiums and other voluntary contributions to superannuation schemes. Where they do not exceed $5,000, the maximum amount deductible for contributions to the Central Provident Fund and approved pension or provident funds and life insurance premiums is $5,000.

Clause 7 also provides for the increase in the aged dependant relief from $750 to $1,000 with effect from Year of Assessment 1983, if the parent, grandparent or great grandparent does not have an income of more than $1,500 a year.

I now move on to the two minor amendments to the existing legislation.

Clause 2 of the Bill also makes consequential amendment to section 14 (1) (e) of the Income Tax Act as a result of the increase in the rate of employers' Central Provident Fund contributions from 201/2% to 22% effective from 1st July 1982.

Presently, Singapore accepts and computes taxable profits of a non-resident shipping or air transport enterprise based on the ratio certificate issued by the tax authority of the country of residence if that country adopts a similar basis of assessment. If the certificate is not issued or is unacceptable, the non-resident enterprise is assessed on 5% of the gross freight. Clause 6 amends Section 27 of the Act to provide that the ratio certificates issued by the foreign country will be acceptable to the Comptroller of Income Tax only if that country also accepts similar certificates by him.

Mr Deputy Speaker, Sir, I beg to move.

Question proposed.

Dr Augustine H.H. Tan (Whampoa): Sir, I just want to make a comment on clause 7, in particular the provision to increase the relief to $1,500 a year allowed to a tax-payer for maintaining a parent, a grandparent or a great grandparent who is living with him. There are two conditions which underlie this allowance. First, the parent or grandparent concerned has to live with the taxpayer; and secondly, the parent or grandparent concerned has to have an income of not more than $1,500 per year. I believe that many retired people would have $15,000 to $20,000 in the bank and interest on this sum would give an income of $1,500 or more. Therefore, I would think that if people are honest not many people would benefit from this particular provision. Furthermore, many tax-payers are supporting their parents or grandparents but are unable to live together with them and therefore do not benefit from this provision. Would the Hon. Minister consider relaxing these two conditions?

Mr Hon Sui Sen: Sir, the simple answer to that is no, for the purpose of this Bill. This Bill merely enacts legislation to implement the 1982 Budget concessions. If he wants this to be considered separately at a different time it would be possible, but I am not sure whether the Minister responsible for the Budget at that time will be prepared to give a satisfactory answer to him.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. - [Mr Hon Sui Sen]

Bill considered in Committee; reported without amendment; read a Third time and passed.