§ 34I — Adjustments arising from adoption of FRS 115 or SFRS(I) 15

34I.—(1) This section applies where —(a)

a person prepares or maintains the person’s financial accounts for any basis period for a year of assessment in accordance with FRS 115 or SFRS(I) 15 for the first time (called in this section the initial year of assessment);

(b)

as a result of the application of FRS 115 or SFRS(I) 15 (as the case may be), an adjustment has to be made to the amount of revenue in the person’s financial accounts in any previous basis period (called in this section the adjusted revenue amount); and

(c)

the amount W of the person (or, if the person is a partnership, a partner of the person) for the year of assessment for that previous basis period arrived at using an amount of profit that includes the adjusted revenue amount (called in this section amount A) as the starting point, is different from the amount arrived at using an amount of profit that does not include the adjusted revenue amount (called in this section amount B) as the starting point.[39/2017; 45/2018]

(1A) In subsection (1)(c), the amount W of a person or partner for a year of assessment is ascertained by the formula X + Y – Z, where —(a)

X is the chargeable income of the person or partner for that year of assessment;

(b)

Y is all exempt income of the person or partner for that year of assessment; and

(c)

Z is the sum of each deduction or allowance for any expenditure, donation or loss, that remains unabsorbed after ascertaining the chargeable income or any exempt income.[45/2018]

(2) Despite any provision of this Act, if amount A exceeds amount B, the excess amount is treated as income of the person or partner (as the case may be) for the initial year of assessment and is subject to one or more tax treatments in accordance with subsection (3).[39/2017]

(3) For the purposes of subsection (2) —(a)

if the income amount C of the person or partner for the initial year of assessment is subject to a single tax treatment, then the excess amount is subject to that tax treatment;

(b)

if different parts of the income amount C of the person or partner for the initial year of assessment are subject to different tax treatments, then different parts of the excess amount are subject to the different tax treatments, and the part of the excess amount that is subject to each of those tax treatments is computed by the formula where —(i)

D is the sum of —(A)

the part of the income amount C of the person or partner for that year of assessment that is subject to that tax treatment; and

(B)

the deduction allowed or allowance made for each expenditure, donation or loss in ascertaining the chargeable income or any exempt income of the person or partner for that year of assessment, and attributable to the production of, or apportioned to, that part;

(ii)

E is the sum of —(A)

the income amount C of the person or partner for that year of assessment; and

(B)

the deduction allowed or allowance made for each expenditure, donation or loss in ascertaining the chargeable income or any exempt income of the person or partner for that year of assessment, and attributable to the production of, or apportioned to, the income amount C or a part of it; and

(iii)

F is the excess amount.[39/2017; 45/2018]

(4) Despite any provision of this Act, if amount B exceeds amount A, a deduction of the excess amount must be made against the total income of the person or partner (as the case may be) or one or more parts of it for the initial year of assessment according to subsection (5).[39/2017]

(5) For the purposes of subsection (4) —(a)

if the income amount C of the person or partner for the initial year of assessment is subject to a single tax treatment, then the excess amount must be deducted against the income amount C;

(b)

if different parts of the income amount C of the person or partner for the initial year of assessment are subject to different tax treatments, then different parts of the excess amount must be deducted against the different parts of the income amount C, and the part of the excess amount that must be deducted against each part of the income amount C is computed by the formula where —(i)

D is the sum of —(A)

the part of the income amount C of the person or partner for that year of assessment that is subject to that tax treatment; and

(B)

the deduction allowed or allowance made for each expenditure, donation or loss in ascertaining the chargeable income or any exempt income of the person or partner for that year of assessment, and attributable to the production of, or apportioned to, that part;

(ii)

E is the sum of —(A)

the income amount C of the person or partner for that year of assessment; and

(B)

the deduction allowed or allowance made for each expenditure, donation or loss in ascertaining the chargeable income or any exempt income of the person or partner for that year of assessment, and attributable to the production of, or apportioned to, the income amount C or a part of it; and

(iii)

F is the excess amount.[39/2017; 45/2018]

(5A) To avoid doubt, the deduction or allowance mentioned in subsection (3)(b)(i)(B) or (ii)(B), or subsection (5)(b)(i)(B) or (ii)(B), excludes any deduction or allowance (or any part of any deduction or allowance) that remains unabsorbed after ascertaining the chargeable income or exempt income mentioned in that provision.[45/2018]

(6) In this section —(a)

income is subject to a tax treatment if it is —(i)

subject to tax at one rate of tax; or

(ii)

exempt from tax;

(b)

a reference to the income amount C of a person or partner for a year of assessment is a reference to the amount of income computed by the formula G + H, where —(i)

G is the part of the chargeable income of the person or partner for the year of assessment that is of the type of income governed by FRS 115 or SFRS(I) 15, as the case may be; and

(ii)

H is the part of the exempt income of the person or partner for the year of assessment that is of the type of income governed by FRS 115 or SFRS(I) 15, as the case may be; and

(c)

a reference to deducting an amount against any income that is subject to a tax treatment is —(i)

if the tax treatment is that mentioned in paragraph (a)(i), allowing that amount as a deduction against the income; or

(ii)

if the tax treatment is that mentioned in paragraph (a)(ii), reducing the income by that amount.[39/2017; 45/2018]

(7) In this section —“FRS 115” means the financial reporting standard known as Financial Reporting Standard 115 (Revenue from Contracts with Customers) issued by the Accounting Standards Committee under the Accounting Standards Act 2007;[Act 36 of 2022 wef 01/04/2023]

“person” has the meaning given by section 2(1), and includes a partnership;

“SFRS(I) 15” means the financial reporting standard known as Singapore Financial Reporting Standards (International) 15 (Revenue from Contracts with Customers), issued by the Accounting Standards Committee under the Accounting Standards Act 2007.[39/2017; 45/2018]

[Act 36 of 2022 wef 01/04/2023]

—(1) This section applies where —(a)

a person prepares or maintains the person’s financial accounts for any basis period for a year of assessment in accordance with FRS 115 or SFRS(I) 15 for the first time (called in this section the initial year of assessment);

(b)

as a result of the application of FRS 115 or SFRS(I) 15 (as the case may be), an adjustment has to be made to the amount of revenue in the person’s financial accounts in any previous basis period (called in this section the adjusted revenue amount); and

(c)

the amount W of the person (or, if the person is a partnership, a partner of the person) for the year of assessment for that previous basis period arrived at using an amount of profit that includes the adjusted revenue amount (called in this section amount A) as the starting point, is different from the amount arrived at using an amount of profit that does not include the adjusted revenue amount (called in this section amount B) as the starting point.[39/2017; 45/2018]

(1A) In subsection (1)(c), the amount W of a person or partner for a year of assessment is ascertained by the formula X + Y – Z, where —(a)

X is the chargeable income of the person or partner for that year of assessment;

(b)

Y is all exempt income of the person or partner for that year of assessment; and

(c)

Z is the sum of each deduction or allowance for any expenditure, donation or loss, that remains unabsorbed after ascertaining the chargeable income or any exempt income.[45/2018]

(2) Despite any provision of this Act, if amount A exceeds amount B, the excess amount is treated as income of the person or partner (as the case may be) for the initial year of assessment and is subject to one or more tax treatments in accordance with subsection (3).[39/2017]

(3) For the purposes of subsection (2) —(a)

if the income amount C of the person or partner for the initial year of assessment is subject to a single tax treatment, then the excess amount is subject to that tax treatment;

(b)

if different parts of the income amount C of the person or partner for the initial year of assessment are subject to different tax treatments, then different parts of the excess amount are subject to the different tax treatments, and the part of the excess amount that is subject to each of those tax treatments is computed by the formula where —(i)

D is the sum of —(A)

the part of the income amount C of the person or partner for that year of assessment that is subject to that tax treatment; and

(B)

the deduction allowed or allowance made for each expenditure, donation or loss in ascertaining the chargeable income or any exempt income of the person or partner for that year of assessment, and attributable to the production of, or apportioned to, that part;

(ii)

E is the sum of —(A)

the income amount C of the person or partner for that year of assessment; and

(B)

the deduction allowed or allowance made for each expenditure, donation or loss in ascertaining the chargeable income or any exempt income of the person or partner for that year of assessment, and attributable to the production of, or apportioned to, the income amount C or a part of it; and

(iii)

F is the excess amount.[39/2017; 45/2018]

(4) Despite any provision of this Act, if amount B exceeds amount A, a deduction of the excess amount must be made against the total income of the person or partner (as the case may be) or one or more parts of it for the initial year of assessment according to subsection (5).[39/2017]

(5) For the purposes of subsection (4) —(a)

if the income amount C of the person or partner for the initial year of assessment is subject to a single tax treatment, then the excess amount must be deducted against the income amount C;

(b)

if different parts of the income amount C of the person or partner for the initial year of assessment are subject to different tax treatments, then different parts of the excess amount must be deducted against the different parts of the income amount C, and the part of the excess amount that must be deducted against each part of the income amount C is computed by the formula where —(i)

D is the sum of —(A)

the part of the income amount C of the person or partner for that year of assessment that is subject to that tax treatment; and

(B)

the deduction allowed or allowance made for each expenditure, donation or loss in ascertaining the chargeable income or any exempt income of the person or partner for that year of assessment, and attributable to the production of, or apportioned to, that part;

(ii)

E is the sum of —(A)

the income amount C of the person or partner for that year of assessment; and

(B)

the deduction allowed or allowance made for each expenditure, donation or loss in ascertaining the chargeable income or any exempt income of the person or partner for that year of assessment, and attributable to the production of, or apportioned to, the income amount C or a part of it; and

(iii)

F is the excess amount.[39/2017; 45/2018]

(5A) To avoid doubt, the deduction or allowance mentioned in subsection (3)(b)(i)(B) or (ii)(B), or subsection (5)(b)(i)(B) or (ii)(B), excludes any deduction or allowance (or any part of any deduction or allowance) that remains unabsorbed after ascertaining the chargeable income or exempt income mentioned in that provision.[45/2018]

(6) In this section —(a)

income is subject to a tax treatment if it is —(i)

subject to tax at one rate of tax; or

(ii)

exempt from tax;

(b)

a reference to the income amount C of a person or partner for a year of assessment is a reference to the amount of income computed by the formula G + H, where —(i)

G is the part of the chargeable income of the person or partner for the year of assessment that is of the type of income governed by FRS 115 or SFRS(I) 15, as the case may be; and

(ii)

H is the part of the exempt income of the person or partner for the year of assessment that is of the type of income governed by FRS 115 or SFRS(I) 15, as the case may be; and

(c)

a reference to deducting an amount against any income that is subject to a tax treatment is —(i)

if the tax treatment is that mentioned in paragraph (a)(i), allowing that amount as a deduction against the income; or

(ii)

if the tax treatment is that mentioned in paragraph (a)(ii), reducing the income by that amount.[39/2017; 45/2018]

(7) In this section —“FRS 115” means the financial reporting standard known as Financial Reporting Standard 115 (Revenue from Contracts with Customers) issued by the Accounting Standards Committee under the Accounting Standards Act 2007;[Act 36 of 2022 wef 01/04/2023]

“person” has the meaning given by section 2(1), and includes a partnership;

“SFRS(I) 15” means the financial reporting standard known as Singapore Financial Reporting Standards (International) 15 (Revenue from Contracts with Customers), issued by the Accounting Standards Committee under the Accounting Standards Act 2007.[39/2017; 45/2018]

[Act 36 of 2022 wef 01/04/2023]