§ 14EA — Deduction for expenditure incurred on qualifying innovation projects

14EA.—(1) Subject to this section, for the purpose of ascertaining the income of a person carrying on a 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, a deduction for qualifying expenditure incurred for a qualifying innovation project undertaken for the purpose of any of those trades and businesses, computed in accordance with the formula

where A is the lower of the following:

(a)

the qualifying expenditure incurred during the basis period for that year of assessment;

(b)

$50,000.

(2) Subsection (1) does not apply if —(a)

a trade or business of the person involves the carrying out of one or more relevant activities on behalf of another person; and

(b)

the qualifying innovation project is undertaken in the course of carrying on that trade or business.

(3) No deduction is allowed to a person under this section in respect of any expenditure for which a deduction or an allowance is given or made under section 14, 14A, 14C, 14D, 14U or 19B, as the case may be.

(4) Where the qualifying expenditure incurred by a person is also eligible for a deduction under section 14C or 14D and that person makes a claim for a deduction under this section, no deduction under section 14C or 14D is allowed to that person in respect of the whole or any part of the qualifying expenditure.

(5) For the purpose of subsection (1), a claim for deduction is allowed to a person only if —(a)

there is an undertaking by the person that the expenditure is not incurred in the circumstances mentioned in subsection (2)(a) and (b); and

(b)

the claim is made in such manner and subject to such conditions as the Comptroller may require.

(6) For the purpose of subsection (1), 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 in respect of those firms for the purposes of the individual’s trade or business, the deduction that may be allowed to the individual for that expenditure in respect of all of the individual’s trades and businesses must not exceed the amount computed in accordance with subsection (1) for that year of assessment.

(7) For the purposes of subsection (1), 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 for the purposes of the partnership’s trade or business, the aggregate of the deductions that may be allowed to all the partners of the partnership for that expenditure in respect of all of the trades and businesses of the partnership must not exceed the amount computed in accordance with subsection (1) for that year of assessment.

(8) For the purposes of this section, any qualifying expenditure incurred by a person prior to the commencement of that person’s trade or business is treated as having been incurred by that person on the first day that the person carries on that trade or business, but a deduction for such expenditure is subject to section 14X.

(9) In this section —“approved educational or research institution” means any institution approved by the Minister for the purpose of this section, that provides education or carries out research and development;

“qualifying expenditure” means any payment made by a person to an approved educational or research institution for the purpose of undertaking a qualifying innovation project with the person;

“qualifying innovation project” means a project that —(a)

is undertaken by a person with an approved educational or research institution;

(b)

predominantly involves the carrying out of one or more relevant activities; and

(c)

is certified by the approved educational or research institution as a project that predominantly involves the carrying out of one or more relevant activities;

“relevant activity” means an activity falling within any of the following categories of activities, being categories specified in the document “Oslo Manual 2018 — Guidelines for Collecting, Reporting and Using Data on Innovation” published by the Organisation for Economic Co-operation and Development on 22 October 2018:(a)

research and experimental development activities;

(b)

engineering, design and other creative work activities;

(c)

intellectual property-related activities;

(d)

software development and database activities.

(10) A reference in this section to qualifying expenditure excludes any expenditure to the extent that it is or is to be subsidised by any grant or subsidy from the Government or a statutory board.[Act 30 of 2023 wef 30/10/2023]

—(1) Subject to this section, for the purpose of ascertaining the income of a person carrying on a 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, a deduction for qualifying expenditure incurred for a qualifying innovation project undertaken for the purpose of any of those trades and businesses, computed in accordance with the formula

where A is the lower of the following:

(a)

the qualifying expenditure incurred during the basis period for that year of assessment;

(b)

$50,000.

(2) Subsection (1) does not apply if —(a)

a trade or business of the person involves the carrying out of one or more relevant activities on behalf of another person; and

(b)

the qualifying innovation project is undertaken in the course of carrying on that trade or business.

(3) No deduction is allowed to a person under this section in respect of any expenditure for which a deduction or an allowance is given or made under section 14, 14A, 14C, 14D, 14U or 19B, as the case may be.

(4) Where the qualifying expenditure incurred by a person is also eligible for a deduction under section 14C or 14D and that person makes a claim for a deduction under this section, no deduction under section 14C or 14D is allowed to that person in respect of the whole or any part of the qualifying expenditure.

(5) For the purpose of subsection (1), a claim for deduction is allowed to a person only if —(a)

there is an undertaking by the person that the expenditure is not incurred in the circumstances mentioned in subsection (2)(a) and (b); and

(b)

the claim is made in such manner and subject to such conditions as the Comptroller may require.

(6) For the purpose of subsection (1), 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 in respect of those firms for the purposes of the individual’s trade or business, the deduction that may be allowed to the individual for that expenditure in respect of all of the individual’s trades and businesses must not exceed the amount computed in accordance with subsection (1) for that year of assessment.

(7) For the purposes of subsection (1), 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 for the purposes of the partnership’s trade or business, the aggregate of the deductions that may be allowed to all the partners of the partnership for that expenditure in respect of all of the trades and businesses of the partnership must not exceed the amount computed in accordance with subsection (1) for that year of assessment.

(8) For the purposes of this section, any qualifying expenditure incurred by a person prior to the commencement of that person’s trade or business is treated as having been incurred by that person on the first day that the person carries on that trade or business, but a deduction for such expenditure is subject to section 14X.

(9) In this section —“approved educational or research institution” means any institution approved by the Minister for the purpose of this section, that provides education or carries out research and development;

“qualifying expenditure” means any payment made by a person to an approved educational or research institution for the purpose of undertaking a qualifying innovation project with the person;

“qualifying innovation project” means a project that —(a)

is undertaken by a person with an approved educational or research institution;

(b)

predominantly involves the carrying out of one or more relevant activities; and

(c)

is certified by the approved educational or research institution as a project that predominantly involves the carrying out of one or more relevant activities;

“relevant activity” means an activity falling within any of the following categories of activities, being categories specified in the document “Oslo Manual 2018 — Guidelines for Collecting, Reporting and Using Data on Innovation” published by the Organisation for Economic Co-operation and Development on 22 October 2018:(a)

research and experimental development activities;

(b)

engineering, design and other creative work activities;

(c)

intellectual property-related activities;

(d)

software development and database activities.

(10) A reference in this section to qualifying expenditure excludes any expenditure to the extent that it is or is to be subsidised by any grant or subsidy from the Government or a statutory board.[Act 30 of 2023 wef 30/10/2023]