§ 14J — Deduction for upfront land premium

14J.—(1) Where the Comptroller is satisfied that an upfront land premium has been paid by a lessee to a relevant body in respect of a designated lease for the construction or use of a building or structure for the purposes of carrying on any qualifying activity in that building or structure, there is, subject to this section, allowed to the lessee, for each year of assessment in the basis period for which the qualifying activity is carried on, a deduction of an amount of such expenditure ascertained by the formula

where A

is the amount of upfront land premium paid; and

B

is the number of years of the term of the designated lease for which the upfront land premium was paid.

(2) Where an assignee has incurred any expenditure in acquiring the remaining term of a designated lease for the construction or use of a building or structure for the purposes of carrying on any qualifying activity, there is, subject to this section, allowed to the assignee, for each year of assessment in the basis period for which the qualifying activity is carried on, a deduction of an amount of such expenditure ascertained by the formula

where C

is —

(a)

the residual expenditure immediately after the assignment; or

(b)

the upfront land premium at the time of the assignment as determined by the relevant body for the remaining term of the designated lease,

whichever is the lower; and

D

is the remaining number of years (excluding any part of a year) of the term of the designated lease for which the upfront land premium was paid.

(3) Subsection (2) applies, with the necessary modifications, to any subsequent assignment of the remaining term of the designated lease.

(4) The total amount of deductions to be allowed —(a)

to a lessee under subsection (1), must not exceed the amount of the upfront land premium paid by the lessee to the relevant body in respect of the designated lease; and

(b)

to an assignee under subsection (2) or (3) (as the case may be) must not exceed the amount of C as ascertained in the formula in subsection (2).

(5) Where more than one‑tenth of the total built‑up area of a building or structure constructed on any industrial land under a designated lease is not in use for any qualifying activity, no deduction under subsection (1), (2) or (3) is allowed in respect of such part of the building or structure which is not in use for any qualifying activity.

(6) No deduction is allowed under this section to any person for any year of assessment if the building or structure constructed on any industrial land under a designated lease is not in use for any qualifying activity at the end of the basis period for that year of assessment.

(7) The following provisions apply where a designated lease is assigned:(a)

where the consideration received by the assignor for the remaining term of the designated lease is less than the residual expenditure immediately before the assignment, the difference is allowed as a deduction to the assignor for the year of assessment in the basis period in which the assignor assigns the remaining term of the designated lease;

(b)

where the consideration received by the assignor for the remaining term of the designated lease is more than the residual expenditure immediately before the assignment, the difference is deemed to be income subject to tax under section 10(1)(g) and is included as income of the assignor for the year of assessment in the basis period in which the assignor assigns the remaining term of the designated lease.

(8) The amount deemed to be income of an assignor for the purposes of subsection (7)(b) must not exceed the total amount of deduction allowed to the assignor under subsection (1), (2) or (3), as the case may be.

(9) In this section —“designated lease” means any lease in respect of any industrial land granted to a lessee by a relevant body —(a)

for a period of 30 years or less during the period from 1 January 1998 to the last day of the basis period for the year of assessment 2003 of the lessee (both dates inclusive); or

(b)

for a period of 60 years or less on or after the first day of the basis period for the year of assessment 2004 of the lessee and before 28 February 2013,

and includes an assignment of such a lease;

“industrial land” means any land permitted to be used for industrial purposes under the Planning Act 1998;

“qualifying activity” means —(a)

any activity in respect of any of the purposes referred to in section 18(1) other than the activities for purposes referred to in section 18(1)(h) and (i);

(b)

any activity in respect of any prescribed purposes under section 18(1)(j) other than any activity relating to postal services or to the organisation or management of exhibitions and conferences; and

(c)

any activity relating to the examination of motor vehicles for the purposes of section 90 of the Road Traffic Act 1961 and the rules made under that Act;

“relevant body” means —(a)

the Housing and Development Board constituted under the Housing and Development Act 1959; or

(b)

the Jurong Town Corporation constituted under the Jurong Town Corporation Act 1968;

“residual expenditure”, in relation to an assignment of a designated lease, is the amount of expenditure available for deduction to the assignor reduced by —(a)

the amount of any deduction allowed to the assignor under this section; and

(b)

the amount of any deduction not allowed to the assignor under subsection (5) or (6),

and increased by any amount deemed to be income of the assignor under subsection (7)(b);

“upfront land premium”, in relation to a designated lease, means the lump sum payment paid by a lessee to a relevant body at the commencement of the term of the designated lease.[14N

[37/2014]

—(1) Where the Comptroller is satisfied that an upfront land premium has been paid by a lessee to a relevant body in respect of a designated lease for the construction or use of a building or structure for the purposes of carrying on any qualifying activity in that building or structure, there is, subject to this section, allowed to the lessee, for each year of assessment in the basis period for which the qualifying activity is carried on, a deduction of an amount of such expenditure ascertained by the formula

where A

is the amount of upfront land premium paid; and

B

is the number of years of the term of the designated lease for which the upfront land premium was paid.

(2) Where an assignee has incurred any expenditure in acquiring the remaining term of a designated lease for the construction or use of a building or structure for the purposes of carrying on any qualifying activity, there is, subject to this section, allowed to the assignee, for each year of assessment in the basis period for which the qualifying activity is carried on, a deduction of an amount of such expenditure ascertained by the formula

where C

is —

(a)

the residual expenditure immediately after the assignment; or

(b)

the upfront land premium at the time of the assignment as determined by the relevant body for the remaining term of the designated lease,

whichever is the lower; and

D

is the remaining number of years (excluding any part of a year) of the term of the designated lease for which the upfront land premium was paid.

(3) Subsection (2) applies, with the necessary modifications, to any subsequent assignment of the remaining term of the designated lease.

(4) The total amount of deductions to be allowed —(a)

to a lessee under subsection (1), must not exceed the amount of the upfront land premium paid by the lessee to the relevant body in respect of the designated lease; and

(b)

to an assignee under subsection (2) or (3) (as the case may be) must not exceed the amount of C as ascertained in the formula in subsection (2).

(5) Where more than one‑tenth of the total built‑up area of a building or structure constructed on any industrial land under a designated lease is not in use for any qualifying activity, no deduction under subsection (1), (2) or (3) is allowed in respect of such part of the building or structure which is not in use for any qualifying activity.

(6) No deduction is allowed under this section to any person for any year of assessment if the building or structure constructed on any industrial land under a designated lease is not in use for any qualifying activity at the end of the basis period for that year of assessment.

(7) The following provisions apply where a designated lease is assigned:(a)

where the consideration received by the assignor for the remaining term of the designated lease is less than the residual expenditure immediately before the assignment, the difference is allowed as a deduction to the assignor for the year of assessment in the basis period in which the assignor assigns the remaining term of the designated lease;

(b)

where the consideration received by the assignor for the remaining term of the designated lease is more than the residual expenditure immediately before the assignment, the difference is deemed to be income subject to tax under section 10(1)(g) and is included as income of the assignor for the year of assessment in the basis period in which the assignor assigns the remaining term of the designated lease.

(8) The amount deemed to be income of an assignor for the purposes of subsection (7)(b) must not exceed the total amount of deduction allowed to the assignor under subsection (1), (2) or (3), as the case may be.

(9) In this section —“designated lease” means any lease in respect of any industrial land granted to a lessee by a relevant body —(a)

for a period of 30 years or less during the period from 1 January 1998 to the last day of the basis period for the year of assessment 2003 of the lessee (both dates inclusive); or

(b)

for a period of 60 years or less on or after the first day of the basis period for the year of assessment 2004 of the lessee and before 28 February 2013,

and includes an assignment of such a lease;

“industrial land” means any land permitted to be used for industrial purposes under the Planning Act 1998;

“qualifying activity” means —(a)

any activity in respect of any of the purposes referred to in section 18(1) other than the activities for purposes referred to in section 18(1)(h) and (i);

(b)

any activity in respect of any prescribed purposes under section 18(1)(j) other than any activity relating to postal services or to the organisation or management of exhibitions and conferences; and

(c)

any activity relating to the examination of motor vehicles for the purposes of section 90 of the Road Traffic Act 1961 and the rules made under that Act;

“relevant body” means —(a)

the Housing and Development Board constituted under the Housing and Development Act 1959; or

(b)

the Jurong Town Corporation constituted under the Jurong Town Corporation Act 1968;

“residual expenditure”, in relation to an assignment of a designated lease, is the amount of expenditure available for deduction to the assignor reduced by —(a)

the amount of any deduction allowed to the assignor under this section; and

(b)

the amount of any deduction not allowed to the assignor under subsection (5) or (6),

and increased by any amount deemed to be income of the assignor under subsection (7)(b);

“upfront land premium”, in relation to a designated lease, means the lump sum payment paid by a lessee to a relevant body at the commencement of the term of the designated lease.[14N

[37/2014]