§ 14L — Deduction for treasury shares transferred under employee equity‑based remuneration scheme

14L.—(1) Where a company transfers, in the basis period for the year of assessment 2007 or any subsequent year of assessment, treasury shares held by it to any person under a stock option scheme or a share award scheme by reason of any office or employment held in Singapore by that person, there is allowed a deduction to that company for that year of assessment.(2) Subject to subsection (8), the amount of deduction to be allowed to a company under subsection (1) is the cost to the company of acquiring the treasury shares transferred to the person less any amount payable by that person for the treasury shares.

(3) For the purpose of subsection (2), the cost to the company of acquiring the treasury shares is determined by any of the methods referred to in subsection (4), being (if the company has previously been allowed a deduction under this section) the method consistently adopted by it when ascertaining its cost of acquiring shares under this section.

(4) The methods referred to in subsection (3) are as follows:(a)

on the basis that the treasury shares acquired by the company at an earlier point in time are deemed to be transferred first;

(b)

on the basis of the formula

where A

is the number of the treasury shares transferred;

B

is the total number of treasury shares held by the company immediately before the transfer; and

C

is the total cost to the company of acquiring the treasury shares held by it immediately before the transfer;

(c)

on the basis of the aggregate cost of all treasury shares transferred under subsection (1) within every regular interval in the basis period during which the transfer in question occurred, where the cost of all treasury shares so transferred within a regular interval is ascertained by the formula

where D

is the total number of treasury shares transferred under subsection (1) within that interval;

E

is the total number of treasury shares held by the company at the end of the period equal in length to the regular interval immediately preceding that interval;

F

is the total number of treasury shares acquired by the company within that interval;

G

is the total cost to the company of acquiring the treasury shares held by it at the end of the period equal in length to the regular interval immediately preceding that interval; and

H

is the total cost to the company of acquiring treasury shares within that interval.

(5) Where any amount payable by a person for any treasury shares transferred to the person exceeds the cost to the company of acquiring the treasury shares transferred as determined under subsection (3), the amount of the excess must be credited to an account to be kept by the company for the purpose of this section.

(6) Where there is any balance in the account kept by the company under subsection (5) and any treasury shares are subsequently transferred by the company to any person under subsection (1), the cost to the company of acquiring the treasury shares as determined under subsection (3) is reduced —(a)

where the amount of the balance is equal to or exceeds the amount of the cost, to zero; or

(b)

where the amount of the balance is less than the amount of the cost, by the amount of the balance,

and the amount of the reduction must be debited to the account.

(7) For the purpose of this section, a company transfers treasury shares held by it to a person when the person acquires the legal and beneficial interest in the treasury shares.

(8) Where a holding company transfers treasury shares held by it to any person employed at any time by a subsidiary of the holding company under a stock option scheme or a share award scheme —(a)

no deduction is allowed to the holding company under subsection (1);

(b)

if any amount is paid or payable by the subsidiary to the holding company for the transfer of the treasury shares, there is allowed to the subsidiary for the year of assessment which relates to the basis period in which the shares are transferred or in which the payment to the holding company for the shares becomes due and payable (whichever is the later), a deduction under subsection (1) of the lower of —(i)

the amount, less any amount paid or payable by the person for the treasury shares, to the extent the amount so paid or payable has not been deducted from the firstmentioned amount; and

(ii)

an amount equal to the cost to the holding company of acquiring the treasury shares transferred to that person as determined under subsection (8A) less any amount paid or payable by the person for the treasury shares; and[Act 33 of 2022 wef 04/11/2022]

(c)

subsections (5) and (6) do not apply to a company to which this subsection applies.[Act 33 of 2022 wef 04/11/2022]

(8A) For the purpose of subsection (8)(b), the amount equal to the cost to the holding company of acquiring the treasury shares transferred to a person is determined —(a)

in accordance with subsection (3); or

(b)

where the holding company is incorporated outside Singapore and the following conditions are satisfied, on the basis that the treasury shares acquired by the holding company at the latest point in time are deemed to be transferred first:(i)

the basis is in accordance with the accounting policy of the group of companies of which the holding company is a member;

(ii)

if there are applicable accounting principles which are generally accepted in the country in which the holding company is incorporated, the basis is in accordance with those principles;

(iii)

the basis is consistently adopted by the holding company unless otherwise allowed by the Comptroller; and

(iv)

the Comptroller is satisfied that the basis is not adopted for the purposes of deriving any tax benefit or obtaining any tax advantage.

(9) In this section —[Deleted by Act 33 of 2022 wef 04/11/2022]

“regular interval”, in relation to a basis period, means one of a number of equal periods within the basis period —(a)

where the aggregate of all of those equal periods is equal to the basis period; and

(b)

where the duration of each equal period —(i)

in a case where the company has previously been allowed a deduction under this section, is the one previously adopted by the company for the purpose of this section; or

(ii)

in any other case, is any duration adopted by the company for the purpose of this section.[14P

—(1) Where a company transfers, in the basis period for the year of assessment 2007 or any subsequent year of assessment, treasury shares held by it to any person under a stock option scheme or a share award scheme by reason of any office or employment held in Singapore by that person, there is allowed a deduction to that company for that year of assessment.

(2) Subject to subsection (8), the amount of deduction to be allowed to a company under subsection (1) is the cost to the company of acquiring the treasury shares transferred to the person less any amount payable by that person for the treasury shares.

(3) For the purpose of subsection (2), the cost to the company of acquiring the treasury shares is determined by any of the methods referred to in subsection (4), being (if the company has previously been allowed a deduction under this section) the method consistently adopted by it when ascertaining its cost of acquiring shares under this section.

(4) The methods referred to in subsection (3) are as follows:(a)

on the basis that the treasury shares acquired by the company at an earlier point in time are deemed to be transferred first;

(b)

on the basis of the formula

where A

is the number of the treasury shares transferred;

B

is the total number of treasury shares held by the company immediately before the transfer; and

C

is the total cost to the company of acquiring the treasury shares held by it immediately before the transfer;

(c)

on the basis of the aggregate cost of all treasury shares transferred under subsection (1) within every regular interval in the basis period during which the transfer in question occurred, where the cost of all treasury shares so transferred within a regular interval is ascertained by the formula

where D

is the total number of treasury shares transferred under subsection (1) within that interval;

E

is the total number of treasury shares held by the company at the end of the period equal in length to the regular interval immediately preceding that interval;

F

is the total number of treasury shares acquired by the company within that interval;

G

is the total cost to the company of acquiring the treasury shares held by it at the end of the period equal in length to the regular interval immediately preceding that interval; and

H

is the total cost to the company of acquiring treasury shares within that interval.

(5) Where any amount payable by a person for any treasury shares transferred to the person exceeds the cost to the company of acquiring the treasury shares transferred as determined under subsection (3), the amount of the excess must be credited to an account to be kept by the company for the purpose of this section.

(6) Where there is any balance in the account kept by the company under subsection (5) and any treasury shares are subsequently transferred by the company to any person under subsection (1), the cost to the company of acquiring the treasury shares as determined under subsection (3) is reduced —(a)

where the amount of the balance is equal to or exceeds the amount of the cost, to zero; or

(b)

where the amount of the balance is less than the amount of the cost, by the amount of the balance,

and the amount of the reduction must be debited to the account.

(7) For the purpose of this section, a company transfers treasury shares held by it to a person when the person acquires the legal and beneficial interest in the treasury shares.

(8) Where a holding company transfers treasury shares held by it to any person employed at any time by a subsidiary of the holding company under a stock option scheme or a share award scheme —(a)

no deduction is allowed to the holding company under subsection (1);

(b)

if any amount is paid or payable by the subsidiary to the holding company for the transfer of the treasury shares, there is allowed to the subsidiary for the year of assessment which relates to the basis period in which the shares are transferred or in which the payment to the holding company for the shares becomes due and payable (whichever is the later), a deduction under subsection (1) of the lower of —(i)

the amount, less any amount paid or payable by the person for the treasury shares, to the extent the amount so paid or payable has not been deducted from the firstmentioned amount; and

(ii)

an amount equal to the cost to the holding company of acquiring the treasury shares transferred to that person as determined under subsection (8A) less any amount paid or payable by the person for the treasury shares; and[Act 33 of 2022 wef 04/11/2022]

(c)

subsections (5) and (6) do not apply to a company to which this subsection applies.[Act 33 of 2022 wef 04/11/2022]

(8A) For the purpose of subsection (8)(b), the amount equal to the cost to the holding company of acquiring the treasury shares transferred to a person is determined —(a)

in accordance with subsection (3); or

(b)

where the holding company is incorporated outside Singapore and the following conditions are satisfied, on the basis that the treasury shares acquired by the holding company at the latest point in time are deemed to be transferred first:(i)

the basis is in accordance with the accounting policy of the group of companies of which the holding company is a member;

(ii)

if there are applicable accounting principles which are generally accepted in the country in which the holding company is incorporated, the basis is in accordance with those principles;

(iii)

the basis is consistently adopted by the holding company unless otherwise allowed by the Comptroller; and

(iv)

the Comptroller is satisfied that the basis is not adopted for the purposes of deriving any tax benefit or obtaining any tax advantage.

(9) In this section —[Deleted by Act 33 of 2022 wef 04/11/2022]

“regular interval”, in relation to a basis period, means one of a number of equal periods within the basis period —(a)

where the aggregate of all of those equal periods is equal to the basis period; and

(b)

where the duration of each equal period —(i)

in a case where the company has previously been allowed a deduction under this section, is the one previously adopted by the company for the purpose of this section; or

(ii)

in any other case, is any duration adopted by the company for the purpose of this section.[14P