1. Currently, Singapore’s corporate
tax regime allows companies to either carry forward
their unutilised capital allowances (CAs) and trade
losses to offset future incomes (i.e. loss carry-forward)
or transfer these unutilised CAs and trade losses
to related companies (i.e. group relief). However, these
schemes may not provide adequate or timely support to
smaller businesses that run into cash flow problems,
particularly during a cyclical downturn.
2. To address the needs of smaller businesses, a one-year
carry-back of current year unutilised CAs and trade
losses will be introduced with effect from Year of Assessment
(YA) 2006. The main features of the scheme are:
-
Only current year unutilised
CAs and trade losses will be allowed to be carried
back for one YA immediately preceding the YA in
which the CAs were granted or the trade losses incurred.
-
An aggregate amount of $100,000
of current year unutilised CAs and trade losses
can be carried back.
-
The carry-back system will be
available to all businesses, including sole proprietors
and partnerships.
-
The current requirements for
carry-forward of unutilised CAs and trade losses
will similarly apply when these amounts are carried
back i.e. the substantial shareholding and the same
business tests.
-
The carry-back will be given
on due claim.
-
In line with their exclusion
from the loss carry-forward and group relief schemes,
Section 10E companies will be disallowed from carrying
back their losses and CAs.
3. IRAS will provide more details on the implementation
of loss carry-back by June 2005.
