INCOME TAX (AMENDMENT) BILL

Order for Second Reading read. 3.52 pm

The Minister for Finance and Minister for Health (Dr Hu Tsu Tau): Sir, I beg to move, "That the Bill be now read a Second time."

The Income Tax (Amendment) Bill seeks to give legislative authority to the income tax concessions announced in the 1985 budget statement. Opportunity is also taken to include four other amendments to the Act.

It was announced in the 1985 budget statement that with effect from the year of assessment 1986, all individual taxpayers will be allowed to deduct their course fees incurred towards obtaining professional or academic qualifications. Fees for approved courses related to the individual's trade, business, profession, vocation or employment can also be offset against his income. Tax deductibility is subject to a maximum of $2,000 per taxpayer for each year of assessment. Clause 5 of the Bill provides for this.

Under our present laws, a tax credit is available only if income is remitted from a country with which Singapore has an agreement for the avoidance of double taxation or a Commonwealth country. In the 1985 budget statement, a unilateral tax credit was made available for offset against overseas taxes suffered on income derived from services rendered by resident taxpayers in selected non-treaty countries. Clause 6 of the Bill empowers the Minister to prescribe regulations to determine the type of income which will enjoy the concession and the countries from which such income is derived.

I now move to the other amendments to the Act. Clause 2 amends section 14(l)(e) of the Act to bring it in line with the increases in CPF contributions by employers, reflecting the increases to 23% in July 1983 and 25% in July 1984.

Last year, section 19(A) of the Act was amended to allow all plant and machinery to be depreciated over three years but the effective date of this concession was unintentionally restrictive.

Clause 3 includes an amendment to clarify that such capital expenditure incurred during or after the basis period to the year of assessment 1985 can be written off over three years.

At present, computers, robots and office automation equipment can be fully depreciated in one year. Clause 3 also extends this one year write-off to automated production equipment which would take effect from the year of assessment 1985. Unclaimed residual allowances in respect of existing automated production equipment will also be allowed the full set off in one year.

Section 25 of the Act provides that capital allowances claimed and granted before separation from Malaysia in 1965 will continue to be recognized under Singapore laws after Separation. Clause 4 of the Bill is a technical amendment to make clear that Part XV of the Act mentioned in section 25 refers to a provision which was in force before the year of assessment 1966 but has since been repealed.

Sir, I beg to move.

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. - [Dr Hu Tsu Tau].

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