§ 14D — Enhanced deduction for qualifying expenditure on research and development

14D.—(1) Subject to this section, for the purpose of ascertaining the income of a person carrying on any trade or business during the basis period for any year of assessment between the year of assessment 2009 and the year of assessment 2028 (both years inclusive), there is allowed in respect of all of the person’s trades and businesses, in addition to the deductions allowed under section 14C, a deduction for expenditure or payments for research and development undertaken by the person, of an amount computed in accordance with the formula

where U

is the amount of qualifying expenditure incurred during the basis period on any local research and development undertaken directly by the person, including on that part undertaken in Singapore of any mixed research and development undertaken directly by that person, but excluding any capital expenditure on plant, machinery, land or buildings or on alterations, additions or extensions to buildings or in the acquisition of rights in or arising out of research and development;

V

is the aggregate of the following:

(a)

the amount referred to in subsection (2A) of payments made during the basis period by the person to a research and development organisation for undertaking local research and development on the person’s behalf, including for that part undertaken in Singapore of any mixed research and development that is undertaken by a research and development organisation on the person’s behalf;

(b)

the amount in one of the following sub‑paragraphs, whichever is applicable:

(i)

in the case of a year of assessment between the years of assessment 2012 and 2017 (both years inclusive), the amount in subsection (2A) of payments made during the basis period by the person under a cost‑sharing agreement —

(A)

for any local research and development; or

(B)

for such part of any mixed research and development that is undertaken in Singapore,

regardless of who undertakes the research and development so long as it is undertaken wholly or partly for the person or on the person’s behalf;

(ii)

in the case of a year of assessment between the years of assessment 2018 and 2028 (both years inclusive), if the person makes any payment during the basis period under a cost‑sharing agreement, the sum of certain expenditure and payments (up to the amount in subsection (2AA)) that a party to the agreement (whether or not that person) has agreed to bear, and for which a deduction has not previously been allowed to the firstmentioned person under this sub‑paragraph, namely —

(A)

qualifying expenditure incurred by that person in undertaking a local research and development, or such part of a mixed research and development that is undertaken in Singapore; and

(B)

the amount mentioned in subsection (2AB) of payments made by that person to a research and development organisation for undertaking a local research and development, or a part of a mixed research and development in Singapore, on that person’s behalf; and

A

is —

(a)

for a year of assessment between the years of assessment 2009 and 2018 (both years inclusive) — 50%; or

(b)

for a year of assessment between the years of assessment 2019 and 2028 (both years inclusive) — 150%.

[37/2014; 39/2017; 45/2018]

[Act 30 of 2023 wef 30/10/2023]

(1A) Subject to this section and section 37R, for the purpose of ascertaining the income of a person carrying on any trade or business during the basis period for any year of assessment between the years of assessment 2024 and 2028 (both years inclusive), there is allowed in respect of all of the person’s trades and businesses, in addition to the deductions allowed under subsection (1) and section 14C, a deduction for expenditure or payments for research and development undertaken by the person, of an amount computed in accordance with the formula

where —

(a)

T is the lower of the following:(i)

the aggregate of U and V;

(ii)

$400,000; and

(b)

U and V have the meanings given by subsection (1).[Act 30 of 2023 wef 30/10/2023]

(2) Subject to this section and section 37J, for the purpose of ascertaining the income of a person carrying on any trade or business during the basis period for any year of assessment between the year of assessment 2011 and the year of assessment 2018 (both years inclusive), there is allowed in respect of all of the person’s trades and businesses, in addition to the deductions allowed under subsection (1) and section 14C, a deduction for expenditure or payments for research and development undertaken by the person, of —(a)

an amount computed in accordance with the formula

(b)

if the aggregate of U, V, W and X exceeds the specified amount for the year of assessment, an amount computed in accordance with the formula

where U and V

have the meanings given by subsection (1);

W

is the amount of qualifying expenditure incurred during the basis period on any foreign research and development undertaken directly by the person, including on that part undertaken outside Singapore of any mixed research and development undertaken directly by that person, but excluding any capital expenditure on plant, machinery, land or buildings or on alterations, additions or extensions to buildings or in the acquisition of rights in or arising out of research and development;

X

is the aggregate of the following:

(a)

the amount referred to in subsection (2A) of payments made during the basis period by the person to a research and development organisation for undertaking any foreign research and development on the person’s behalf, including for that part undertaken outside Singapore of any mixed research and development that is undertaken by a research and development organisation on the person’s behalf;

(b)

subject to subsection (2AD), the amount referred to in subsection (2A) of payments made during the basis period (being the basis period for any year of assessment between the year of assessment 2012 and the year of assessment 2018 (both years inclusive)) by the person under a cost‑sharing agreement —

(i)

for any foreign research and development; or

(ii)

for that part of any mixed research and development that is undertaken outside Singapore,

regardless of who undertakes the research and development so long as it is undertaken wholly or partly for the person or on the person’s behalf;

Y

is the whole or any part of the sum of U and V which the person has elected for inclusion in the computation of the deduction under this paragraph, which when aggregated with Z does not exceed the specified amount; and

Z

is the whole or any part of the sum of W and X which the person has elected for inclusion in the computation of the deduction under this paragraph, which when aggregated with Y does not exceed the specified amount.

[37/2014; 39/2017]

(2A) The amount of any of the payments in paragraphs (a) and (b)(i) of the definition of V in subsection (1), and paragraphs (a) and (b) of the definition of X in subsection (2) is —(a)

if more than 60% of all the payments made during the basis period to the research and development organisation or under the cost‑sharing agreement to which the definition applies are qualifying expenditure, the actual amount of the qualifying expenditure; or

(b)

in all other cases, 60% of all such payments,

and where there is more than one research and development organisation or cost‑sharing agreement, the aggregate of all the amounts computed in this manner of the payments to every organisation or under every agreement.

[39/2017]

(2AA) The amount mentioned in paragraph (b)(ii) of the definition of V in subsection (1) is the amount of the payments made during the basis period by the person under the cost‑sharing agreement.[39/2017]

(2AB) In paragraph (b)(ii)(B) of the definition of V in subsection (1), the amount is the higher of the following:(a)

the part of those payments made to the research and development organisation that are qualifying expenditure;

(b)

60% (or such other percentage as may be prescribed by rules made under section 7) of the sum of all of the payments made to the research and development organisation.[39/2017]

(2AC) For the purposes of paragraph (b)(ii) of the definition of V in subsection (1) (read with subsections (2AA) and (2AB)), where there is more than one cost‑sharing agreement or research and development organisation —(a)

first, calculate each amount in those provisions relating to a cost‑sharing agreement or research and development organisation for every agreement or organisation; and

(b)

then, add up all amounts calculated under paragraph (a).[39/2017]

(2AD) The amount mentioned in paragraph (b) of the definition of X in subsection (2)(b) is, in the case of the year of assessment 2018, subject to a maximum amount computed in accordance with the formula A – B, where —(a)

A is the amount of the payments made during the basis period by the person under the cost‑sharing agreement; and

(b)

B is the amount computed under paragraph (b)(ii) of the definition of V in subsection (1) in relation to the same cost‑sharing agreement that qualifies for the deduction under subsection (1).[39/2017]

(2B) In subsections (1) and (2) —“foreign research and development” means research and development that is undertaken outside Singapore, and that is related to the trade or business of the firstmentioned person in subsection (1);

“local research and development” means research and development that is undertaken in Singapore;

“mixed research and development” means research and development that is undertaken partly in Singapore and partly outside Singapore, and that is related to the trade or business of the firstmentioned person in subsection (1), (1A) or (2), as the case may be.[Act 30 of 2023 wef 30/10/2023]

(3) The election under subsection (2)(b) must be made at the time of lodgment of the return of income for the year of assessment or within such further time as the Comptroller may allow.

(4) The specified amount referred to in subsection (2)(b) is —(a)

for the year of assessment 2011, $800,000;

(b)

for the year of assessment 2012, the balance after deducting from $800,000 the subsection (2) amount for the year of assessment 2011;

(c)

for the year of assessment 2013, $1,200,000;

(d)

for the year of assessment 2014, the balance after deducting from $1,200,000 the subsection (2) amount for the year of assessment 2013;

(e)

for the year of assessment 2015, the balance after deducting from $1,200,000 the subsection (2) amount for the year of assessment 2013 and the subsection (2) amount for the year of assessment 2014;

(f)

for the year of assessment 2016, $1,200,000;

(g)

for the year of assessment 2017, the balance after deducting from $1,200,000 the subsection (2) amount for the year of assessment 2016; or

(h)

for the year of assessment 2018, the balance after deducting from $1,200,000 the subsection (2) amount for the year of assessment 2016 and the subsection (2) amount for the year of assessment 2017.[37/2014]

(5) In subsection (4) —(a)

the amount under paragraph (a) of that subsection is substituted with “$400,000” if the person does not carry on any trade or business during the basis period for the year of assessment 2012;

(b)

the balance under paragraph (b) of that subsection is substituted with “$400,000” if the person does not carry on any trade or business during the basis period for the year of assessment 2011;

(c)

if the person does not carry on any trade or business during the basis period for any one year of assessment between the year of assessment 2013 and the year of assessment 2015 (both years inclusive), the references to “$1,200,000” in the paragraphs of that subsection applicable to the other 2 years of assessment are each substituted with “$800,000”;

(d)

if the person does not carry on any trade or business during the basis periods for any 2 years of assessment between the year of assessment 2013 and the year of assessment 2015 (both years inclusive), the reference to “$1,200,000” in the paragraph of that subsection applicable to the remaining year of assessment is substituted with “$400,000”;

(da)

if the person does not carry on any trade or business during the basis period for any one year of assessment between the years of assessment 2016 and 2018 (both years inclusive), the references to “$1,200,000” in the paragraphs of that subsection applicable to the other 2 years of assessment are each substituted with “$800,000”;

(db)

if the person does not carry on any trade or business during the basis periods for any 2 years of assessment between the years of assessment 2016 and 2018 (both years inclusive), the reference to “$1,200,000” in the paragraph of that subsection applicable to the remaining year of assessment is substituted with “$400,000”;

(e)

to avoid doubt, no deduction may be made from the substituted amount in subsection (4)(d) or (e) of the subsection (2) amount for the year of assessment 2013 if the person does not carry on any trade or business during the basis period for that year of assessment, and no deduction may be made from the substituted amount in subsection (4)(e) of the subsection (2) amount for the year of assessment 2014 if the person does not carry on any trade or business during the basis period for that year of assessment; and

(f)

to avoid doubt, no deduction may be made from the substituted amount in subsection (4)(g) or (h) of the subsection (2) amount for the year of assessment 2016 if the person does not carry on any trade or business during the basis period for that year of assessment, and no deduction may be made from the substituted amount in subsection (4)(h) of the subsection (2) amount for the year of assessment 2017 if the person does not carry on any trade or business during the basis period for that year of assessment.[37/2014]

(6) For the purposes of subsections (4) and (5), “subsection (2) amount”, in relation to a year of assessment, means —(a)

if the deduction allowed under subsection (2) for that year of assessment is the amount referred to in subsection (2)(a), the aggregate of U, V, W and X referred to in that subsection; or

(b)

if the deduction allowed under subsection (2) for that year of assessment is the amount referred to in subsection (2)(b), the aggregate of Y and Z referred to in that subsection.

(6A) For the purpose of subsection (1A), where an individual carrying on a trade or business through 2 or more firms (excluding partnerships) has, during the basis period for any year of assessment between the years of assessment 2024 and 2028 (both years inclusive), incurred qualifying expenditure or made payments in respect of such firms entitling the individual to a deduction under subsection (1A), the deduction that may be allowed to the individual for those expenditure or payments in respect of all of the individual’s trades and businesses must not exceed the amount computed in accordance with subsection (1A) for that year of assessment.[Act 30 of 2023 wef 30/10/2023]

(6B) For the purpose of subsection (1A), where a partnership carrying on a trade or business has, during the basis period for any year of assessment between the years of assessment 2024 and 2028 (both years inclusive), incurred qualifying expenditure or made payments entitling the partners of the partnership to a deduction under subsection (1A), the aggregate of the deductions that may be allowed to all the partners of the partnership for those expenditure or payments in respect of all of the trades and businesses of the partnership must not exceed the amount computed in accordance with subsection (1A) for that year of assessment.[Act 30 of 2023 wef 30/10/2023]

(7) For the purpose of subsection (2)(b), where an individual carrying on a trade or business through 2 or more firms (excluding partnerships) has, during the basis period for any year of assessment between the year of assessment 2011 and the year of assessment 2018 (both years inclusive), incurred qualifying expenditure or made payments in respect of such firms entitling him or her to a deduction under subsection (2), the deduction that may be allowed to him or her for those expenditure or payments in respect of all of his or her trades and businesses must not exceed the amount computed in accordance with subsection (2)(b) for that year of assessment.[37/2014]

(8) For the purpose of subsection (2)(b), where a partnership carrying on a trade or business has, during the basis period for any year of assessment between the year of assessment 2011 and the year of assessment 2018 (both years inclusive), incurred qualifying expenditure or made payments entitling the partners of the partnership to a deduction under subsection (2), the aggregate of the deductions that may be allowed to all the partners of the partnership for the expenditure or payments in respect of all of the trades and businesses of the partnership must not exceed the amount computed in accordance with subsection (2)(b) for that year of assessment.[37/2014]

(9) Section 14C(4) and (5) applies in relation to the deduction for expenditure and payments for which a deduction is allowed under subsection (1), (1A) or (2) for research and development that is not related to the trade or business carried on by the person, as it applies in relation to the deduction for the expenditure and payments referred to in section 14C(1)(aa), (c) and (f), subject to the following modifications:(a)

a reference to the amount of the expenditure or payments (after deducting any amount in respect of which an election for a cash payout has been made under section 37G or 37R) in section 14C(4) is a reference to the remaining amount of the deduction under subsection (1), (1A) or (2) (as the case may be) after deducting the amount of the deduction under that subsection that corresponds to the qualifying expenditure or payments in respect of which an election for a cash payout has been made under section 37G or 37R;[Act 30 of 2023 wef 30/10/2023]

(b)

a reference to the specified amount of the expenditure or payments is a reference to an amount computed in accordance with the formula

where A

is the remaining amount of the deduction under subsection (1), (1A) or (2) (as the case may be) after deducting the amount of the deduction under that subsection that corresponds to the qualifying expenditure or payments in respect of which an election for a cash payout has been made under section 37G or 37R;

B

is the rate of tax specified in section 43(1)(a); and

C

is —

(i)

in a case where the concessionary income derived by the person from the trade or business carried on by the person is subject to tax at a single concessionary rate of tax, that rate; or

(ii)

in a case where the concessionary income derived by the person from the trade or business carried on by the person is subject to tax at 2 or more concessionary rates of tax, the higher or highest of those rates.

[Act 30 of 2023 wef 30/10/2023]

(10) No deduction is allowed to a company under subsection (2) for any year of assessment if a deduction for any expenditure has been allowed under section 37F for that year of assessment.

(11) In this section —“consumables” means any materials or items used in the research and development which, upon such use, are consumed or transformed in such a manner that they are no longer useable in their original form, but does not include utilities;

“cost‑sharing agreement” means any agreement or arrangement made by 2 or more persons to share the expenditure of research and development activities to be carried out under the agreement or arrangement;

“qualifying expenditure” means any expenditure attributable to the research and development that is incurred on —(a)

staff costs;

(b)

consumables; or

(c)

such other matter as the Minister may prescribe by regulations;

“staff costs” means any salary, wages and other benefits paid or granted in respect of employment (excluding director’s fees), whether in money or otherwise, to any employee for carrying out the research and development, and includes —(a)

expenses incurred for training or certifying the employee for the purpose of carrying out the research and development; and

(b)

such other expenses as may be prescribed.

(12) In this section —(a)

a reference to a person undertaking research and development includes —(i)

a reference to a research and development organisation undertaking research and development on the person’s behalf; and

(ii)

for any year of assessment between the year of assessment 2012 and the year of assessment 2028 (both years inclusive), a reference to any person undertaking research and development under a cost‑sharing agreement of which the firstmentioned person is a party, so long as the research and development is undertaken wholly or partly for the firstmentioned person or on the firstmentioned person’s behalf; and[Act 30 of 2023 wef 30/10/2023]

(b)

a reference to any expenditure or payment excludes any such expenditure or payment to the extent that it is or is to be subsidised by grants or subsidies from the Government or a statutory board.[37/2014]

(13) In this section —(a)

a reference to a payment made by a person under a cost‑sharing agreement is a reference to the expenditure that is allocated to the person for the person to bear under the cost‑sharing agreement, and the time the payment for any part of the expenditure becomes payable or (if no such payment is needed) the time of the allocation, is treated as the time the payment is made; and

(b)

a reference to a payment made by a person under a cost‑sharing agreement excludes any payment for the right to be a party to the cost‑sharing agreement.[39/2017]

(14) Subsection (13) is deemed to have effect for every year of assessment to which each provision of this section containing the reference mentioned in subsection (13) applies.[14DA

[39/2017]

—(1) Subject to this section, for the purpose of ascertaining the income of a person carrying on any trade or business during the basis period for any year of assessment between the year of assessment 2009 and the year of assessment 2028 (both years inclusive), there is allowed in respect of all of the person’s trades and businesses, in addition to the deductions allowed under section 14C, a deduction for expenditure or payments for research and development undertaken by the person, of an amount computed in accordance with the formula

where U

is the amount of qualifying expenditure incurred during the basis period on any local research and development undertaken directly by the person, including on that part undertaken in Singapore of any mixed research and development undertaken directly by that person, but excluding any capital expenditure on plant, machinery, land or buildings or on alterations, additions or extensions to buildings or in the acquisition of rights in or arising out of research and development;

V

is the aggregate of the following:

(a)

the amount referred to in subsection (2A) of payments made during the basis period by the person to a research and development organisation for undertaking local research and development on the person’s behalf, including for that part undertaken in Singapore of any mixed research and development that is undertaken by a research and development organisation on the person’s behalf;

(b)

the amount in one of the following sub‑paragraphs, whichever is applicable:

(i)

in the case of a year of assessment between the years of assessment 2012 and 2017 (both years inclusive), the amount in subsection (2A) of payments made during the basis period by the person under a cost‑sharing agreement —

(A)

for any local research and development; or

(B)

for such part of any mixed research and development that is undertaken in Singapore,

regardless of who undertakes the research and development so long as it is undertaken wholly or partly for the person or on the person’s behalf;

(ii)

in the case of a year of assessment between the years of assessment 2018 and 2028 (both years inclusive), if the person makes any payment during the basis period under a cost‑sharing agreement, the sum of certain expenditure and payments (up to the amount in subsection (2AA)) that a party to the agreement (whether or not that person) has agreed to bear, and for which a deduction has not previously been allowed to the firstmentioned person under this sub‑paragraph, namely —

(A)

qualifying expenditure incurred by that person in undertaking a local research and development, or such part of a mixed research and development that is undertaken in Singapore; and

(B)

the amount mentioned in subsection (2AB) of payments made by that person to a research and development organisation for undertaking a local research and development, or a part of a mixed research and development in Singapore, on that person’s behalf; and

A

is —

(a)

for a year of assessment between the years of assessment 2009 and 2018 (both years inclusive) — 50%; or

(b)

for a year of assessment between the years of assessment 2019 and 2028 (both years inclusive) — 150%.

[37/2014; 39/2017; 45/2018]

[Act 30 of 2023 wef 30/10/2023]

(1A) Subject to this section and section 37R, for the purpose of ascertaining the income of a person carrying on any trade or business during the basis period for any year of assessment between the years of assessment 2024 and 2028 (both years inclusive), there is allowed in respect of all of the person’s trades and businesses, in addition to the deductions allowed under subsection (1) and section 14C, a deduction for expenditure or payments for research and development undertaken by the person, of an amount computed in accordance with the formula

where —

(a)

T is the lower of the following:(i)

the aggregate of U and V;

(ii)

$400,000; and

(b)

U and V have the meanings given by subsection (1).[Act 30 of 2023 wef 30/10/2023]

(2) Subject to this section and section 37J, for the purpose of ascertaining the income of a person carrying on any trade or business during the basis period for any year of assessment between the year of assessment 2011 and the year of assessment 2018 (both years inclusive), there is allowed in respect of all of the person’s trades and businesses, in addition to the deductions allowed under subsection (1) and section 14C, a deduction for expenditure or payments for research and development undertaken by the person, of —(a)

an amount computed in accordance with the formula

(b)

if the aggregate of U, V, W and X exceeds the specified amount for the year of assessment, an amount computed in accordance with the formula

where U and V

have the meanings given by subsection (1);

W

is the amount of qualifying expenditure incurred during the basis period on any foreign research and development undertaken directly by the person, including on that part undertaken outside Singapore of any mixed research and development undertaken directly by that person, but excluding any capital expenditure on plant, machinery, land or buildings or on alterations, additions or extensions to buildings or in the acquisition of rights in or arising out of research and development;

X

is the aggregate of the following:

(a)

the amount referred to in subsection (2A) of payments made during the basis period by the person to a research and development organisation for undertaking any foreign research and development on the person’s behalf, including for that part undertaken outside Singapore of any mixed research and development that is undertaken by a research and development organisation on the person’s behalf;

(b)

subject to subsection (2AD), the amount referred to in subsection (2A) of payments made during the basis period (being the basis period for any year of assessment between the year of assessment 2012 and the year of assessment 2018 (both years inclusive)) by the person under a cost‑sharing agreement —

(i)

for any foreign research and development; or

(ii)

for that part of any mixed research and development that is undertaken outside Singapore,

regardless of who undertakes the research and development so long as it is undertaken wholly or partly for the person or on the person’s behalf;

Y

is the whole or any part of the sum of U and V which the person has elected for inclusion in the computation of the deduction under this paragraph, which when aggregated with Z does not exceed the specified amount; and

Z

is the whole or any part of the sum of W and X which the person has elected for inclusion in the computation of the deduction under this paragraph, which when aggregated with Y does not exceed the specified amount.

[37/2014; 39/2017]

(2A) The amount of any of the payments in paragraphs (a) and (b)(i) of the definition of V in subsection (1), and paragraphs (a) and (b) of the definition of X in subsection (2) is —(a)

if more than 60% of all the payments made during the basis period to the research and development organisation or under the cost‑sharing agreement to which the definition applies are qualifying expenditure, the actual amount of the qualifying expenditure; or

(b)

in all other cases, 60% of all such payments,

and where there is more than one research and development organisation or cost‑sharing agreement, the aggregate of all the amounts computed in this manner of the payments to every organisation or under every agreement.

[39/2017]

(2AA) The amount mentioned in paragraph (b)(ii) of the definition of V in subsection (1) is the amount of the payments made during the basis period by the person under the cost‑sharing agreement.[39/2017]

(2AB) In paragraph (b)(ii)(B) of the definition of V in subsection (1), the amount is the higher of the following:(a)

the part of those payments made to the research and development organisation that are qualifying expenditure;

(b)

60% (or such other percentage as may be prescribed by rules made under section 7) of the sum of all of the payments made to the research and development organisation.[39/2017]

(2AC) For the purposes of paragraph (b)(ii) of the definition of V in subsection (1) (read with subsections (2AA) and (2AB)), where there is more than one cost‑sharing agreement or research and development organisation —(a)

first, calculate each amount in those provisions relating to a cost‑sharing agreement or research and development organisation for every agreement or organisation; and

(b)

then, add up all amounts calculated under paragraph (a).[39/2017]

(2AD) The amount mentioned in paragraph (b) of the definition of X in subsection (2)(b) is, in the case of the year of assessment 2018, subject to a maximum amount computed in accordance with the formula A – B, where —(a)

A is the amount of the payments made during the basis period by the person under the cost‑sharing agreement; and

(b)

B is the amount computed under paragraph (b)(ii) of the definition of V in subsection (1) in relation to the same cost‑sharing agreement that qualifies for the deduction under subsection (1).[39/2017]

(2B) In subsections (1) and (2) —“foreign research and development” means research and development that is undertaken outside Singapore, and that is related to the trade or business of the firstmentioned person in subsection (1);

“local research and development” means research and development that is undertaken in Singapore;

“mixed research and development” means research and development that is undertaken partly in Singapore and partly outside Singapore, and that is related to the trade or business of the firstmentioned person in subsection (1), (1A) or (2), as the case may be.[Act 30 of 2023 wef 30/10/2023]

(3) The election under subsection (2)(b) must be made at the time of lodgment of the return of income for the year of assessment or within such further time as the Comptroller may allow.

(4) The specified amount referred to in subsection (2)(b) is —(a)

for the year of assessment 2011, $800,000;

(b)

for the year of assessment 2012, the balance after deducting from $800,000 the subsection (2) amount for the year of assessment 2011;

(c)

for the year of assessment 2013, $1,200,000;

(d)

for the year of assessment 2014, the balance after deducting from $1,200,000 the subsection (2) amount for the year of assessment 2013;

(e)

for the year of assessment 2015, the balance after deducting from $1,200,000 the subsection (2) amount for the year of assessment 2013 and the subsection (2) amount for the year of assessment 2014;

(f)

for the year of assessment 2016, $1,200,000;

(g)

for the year of assessment 2017, the balance after deducting from $1,200,000 the subsection (2) amount for the year of assessment 2016; or

(h)

for the year of assessment 2018, the balance after deducting from $1,200,000 the subsection (2) amount for the year of assessment 2016 and the subsection (2) amount for the year of assessment 2017.[37/2014]

(5) In subsection (4) —(a)

the amount under paragraph (a) of that subsection is substituted with “$400,000” if the person does not carry on any trade or business during the basis period for the year of assessment 2012;

(b)

the balance under paragraph (b) of that subsection is substituted with “$400,000” if the person does not carry on any trade or business during the basis period for the year of assessment 2011;

(c)

if the person does not carry on any trade or business during the basis period for any one year of assessment between the year of assessment 2013 and the year of assessment 2015 (both years inclusive), the references to “$1,200,000” in the paragraphs of that subsection applicable to the other 2 years of assessment are each substituted with “$800,000”;

(d)

if the person does not carry on any trade or business during the basis periods for any 2 years of assessment between the year of assessment 2013 and the year of assessment 2015 (both years inclusive), the reference to “$1,200,000” in the paragraph of that subsection applicable to the remaining year of assessment is substituted with “$400,000”;

(da)

if the person does not carry on any trade or business during the basis period for any one year of assessment between the years of assessment 2016 and 2018 (both years inclusive), the references to “$1,200,000” in the paragraphs of that subsection applicable to the other 2 years of assessment are each substituted with “$800,000”;

(db)

if the person does not carry on any trade or business during the basis periods for any 2 years of assessment between the years of assessment 2016 and 2018 (both years inclusive), the reference to “$1,200,000” in the paragraph of that subsection applicable to the remaining year of assessment is substituted with “$400,000”;

(e)

to avoid doubt, no deduction may be made from the substituted amount in subsection (4)(d) or (e) of the subsection (2) amount for the year of assessment 2013 if the person does not carry on any trade or business during the basis period for that year of assessment, and no deduction may be made from the substituted amount in subsection (4)(e) of the subsection (2) amount for the year of assessment 2014 if the person does not carry on any trade or business during the basis period for that year of assessment; and

(f)

to avoid doubt, no deduction may be made from the substituted amount in subsection (4)(g) or (h) of the subsection (2) amount for the year of assessment 2016 if the person does not carry on any trade or business during the basis period for that year of assessment, and no deduction may be made from the substituted amount in subsection (4)(h) of the subsection (2) amount for the year of assessment 2017 if the person does not carry on any trade or business during the basis period for that year of assessment.[37/2014]

(6) For the purposes of subsections (4) and (5), “subsection (2) amount”, in relation to a year of assessment, means —(a)

if the deduction allowed under subsection (2) for that year of assessment is the amount referred to in subsection (2)(a), the aggregate of U, V, W and X referred to in that subsection; or

(b)

if the deduction allowed under subsection (2) for that year of assessment is the amount referred to in subsection (2)(b), the aggregate of Y and Z referred to in that subsection.

(6A) For the purpose of subsection (1A), where an individual carrying on a trade or business through 2 or more firms (excluding partnerships) has, during the basis period for any year of assessment between the years of assessment 2024 and 2028 (both years inclusive), incurred qualifying expenditure or made payments in respect of such firms entitling the individual to a deduction under subsection (1A), the deduction that may be allowed to the individual for those expenditure or payments in respect of all of the individual’s trades and businesses must not exceed the amount computed in accordance with subsection (1A) for that year of assessment.[Act 30 of 2023 wef 30/10/2023]

(6B) For the purpose of subsection (1A), where a partnership carrying on a trade or business has, during the basis period for any year of assessment between the years of assessment 2024 and 2028 (both years inclusive), incurred qualifying expenditure or made payments entitling the partners of the partnership to a deduction under subsection (1A), the aggregate of the deductions that may be allowed to all the partners of the partnership for those expenditure or payments in respect of all of the trades and businesses of the partnership must not exceed the amount computed in accordance with subsection (1A) for that year of assessment.[Act 30 of 2023 wef 30/10/2023]

(7) For the purpose of subsection (2)(b), where an individual carrying on a trade or business through 2 or more firms (excluding partnerships) has, during the basis period for any year of assessment between the year of assessment 2011 and the year of assessment 2018 (both years inclusive), incurred qualifying expenditure or made payments in respect of such firms entitling him or her to a deduction under subsection (2), the deduction that may be allowed to him or her for those expenditure or payments in respect of all of his or her trades and businesses must not exceed the amount computed in accordance with subsection (2)(b) for that year of assessment.[37/2014]

(8) For the purpose of subsection (2)(b), where a partnership carrying on a trade or business has, during the basis period for any year of assessment between the year of assessment 2011 and the year of assessment 2018 (both years inclusive), incurred qualifying expenditure or made payments entitling the partners of the partnership to a deduction under subsection (2), the aggregate of the deductions that may be allowed to all the partners of the partnership for the expenditure or payments in respect of all of the trades and businesses of the partnership must not exceed the amount computed in accordance with subsection (2)(b) for that year of assessment.[37/2014]

(9) Section 14C(4) and (5) applies in relation to the deduction for expenditure and payments for which a deduction is allowed under subsection (1), (1A) or (2) for research and development that is not related to the trade or business carried on by the person, as it applies in relation to the deduction for the expenditure and payments referred to in section 14C(1)(aa), (c) and (f), subject to the following modifications:(a)

a reference to the amount of the expenditure or payments (after deducting any amount in respect of which an election for a cash payout has been made under section 37G or 37R) in section 14C(4) is a reference to the remaining amount of the deduction under subsection (1), (1A) or (2) (as the case may be) after deducting the amount of the deduction under that subsection that corresponds to the qualifying expenditure or payments in respect of which an election for a cash payout has been made under section 37G or 37R;[Act 30 of 2023 wef 30/10/2023]

(b)

a reference to the specified amount of the expenditure or payments is a reference to an amount computed in accordance with the formula

where A

is the remaining amount of the deduction under subsection (1), (1A) or (2) (as the case may be) after deducting the amount of the deduction under that subsection that corresponds to the qualifying expenditure or payments in respect of which an election for a cash payout has been made under section 37G or 37R;

B

is the rate of tax specified in section 43(1)(a); and

C

is —

(i)

in a case where the concessionary income derived by the person from the trade or business carried on by the person is subject to tax at a single concessionary rate of tax, that rate; or

(ii)

in a case where the concessionary income derived by the person from the trade or business carried on by the person is subject to tax at 2 or more concessionary rates of tax, the higher or highest of those rates.

[Act 30 of 2023 wef 30/10/2023]

(10) No deduction is allowed to a company under subsection (2) for any year of assessment if a deduction for any expenditure has been allowed under section 37F for that year of assessment.

(11) In this section —“consumables” means any materials or items used in the research and development which, upon such use, are consumed or transformed in such a manner that they are no longer useable in their original form, but does not include utilities;

“cost‑sharing agreement” means any agreement or arrangement made by 2 or more persons to share the expenditure of research and development activities to be carried out under the agreement or arrangement;

“qualifying expenditure” means any expenditure attributable to the research and development that is incurred on —(a)

staff costs;

(b)

consumables; or

(c)

such other matter as the Minister may prescribe by regulations;

“staff costs” means any salary, wages and other benefits paid or granted in respect of employment (excluding director’s fees), whether in money or otherwise, to any employee for carrying out the research and development, and includes —(a)

expenses incurred for training or certifying the employee for the purpose of carrying out the research and development; and

(b)

such other expenses as may be prescribed.

(12) In this section —(a)

a reference to a person undertaking research and development includes —(i)

a reference to a research and development organisation undertaking research and development on the person’s behalf; and

(ii)

for any year of assessment between the year of assessment 2012 and the year of assessment 2028 (both years inclusive), a reference to any person undertaking research and development under a cost‑sharing agreement of which the firstmentioned person is a party, so long as the research and development is undertaken wholly or partly for the firstmentioned person or on the firstmentioned person’s behalf; and[Act 30 of 2023 wef 30/10/2023]

(b)

a reference to any expenditure or payment excludes any such expenditure or payment to the extent that it is or is to be subsidised by grants or subsidies from the Government or a statutory board.[37/2014]

(13) In this section —(a)

a reference to a payment made by a person under a cost‑sharing agreement is a reference to the expenditure that is allocated to the person for the person to bear under the cost‑sharing agreement, and the time the payment for any part of the expenditure becomes payable or (if no such payment is needed) the time of the allocation, is treated as the time the payment is made; and

(b)

a reference to a payment made by a person under a cost‑sharing agreement excludes any payment for the right to be a party to the cost‑sharing agreement.[39/2017]

(14) Subsection (13) is deemed to have effect for every year of assessment to which each provision of this section containing the reference mentioned in subsection (13) applies.[14DA

[39/2017]