MOF Accepts 9 Changes to Draft Income Tax Bill14 Oct 2004
1. The Ministry of Finance (MOF) ran a consultation exercise from 15 July to 11 August 2004 to seek feedback on how the draft Income Tax (Amendment No. 2) Bill 2004 could be improved for greater clarity and easier compliance. This is part of the series of public consultation exercises on the different tax legislative changes planned for the year.
2. This consultation pertained to the tax legislation for Limited Liability Partnerships ("LLPs"). A total of 27 comments were received from 6 respondents. MOF has accepted 9 suggested amendments to the draft Bill.
3. Most of the comments were on:
a. Grouping the provisions relating to ascertaining taxable income instead of setting them apart in a specific section for LLPs;
b. Defining the term "partnership" in the Income Tax Act; and
c. Deemed continuation of capital allowance claims by the purchaser (section 24) where a sale of assets takes place in connection with the exit of a partner.
4. Most of the comments which were not accepted suggested repositioning certain sections relating to the LLP to other parts of the Act. The suggestions were to group the provisions by function rather than placing them in a specific section for LLPs. Although both styles of drafting would achieve the same purpose, MOF, in consultation with the Attorney-General's Chambers, decided to not adopt these suggestions. This is because having a specific section for LLPs would allow the layman facility of looking in one place for a more complete understanding on the tax treatment of LLPs, which is new to businesses.
5. Some comments went beyond the purpose of the exercise to suggest changes in tax policy, in particular the deemed election for continuation of capital allowance claims by the purchaser where a sale of assets is made in connection with the transfer of business of a LLP or partnership. Nevertheless, MOF accepted these comments and revised the policy to not impose the deemed election for such sales.
6. MOF thanks all respondents in this consultation exercise. MOF's responses to the major comments received are summarised on MOF's website.
MINISTRY OF FINANCE