Singapore's Ministry of Finance Seeks To Reassure Homeowners

by Mary Swire, Tax-News.com, Hong Kong

24 July 2009

The Singaporean Ministry of Finance has sought to reassure homeowners worried by a proposed change flagged up in a recent consultation on changes to income tax legislation.

In the consultation, launched on June 22 until July 14, 2009, the Ministry unveiled plans for a "provision to disregard, for tax purposes, certain gains and losses from disposal of real properties", amongst other measures.

In a statement released on July 9, the MoF announced that:

"The Ministry of Finance wishes to clarify that the proposed change in the Income Tax public consultation document involves no tightening of the current income tax policy for individuals who sell their properties. The only change proposed involves a relaxation of income tax treatment aimed at giving certainty of non-taxation to individuals who do not sell properties frequently. This has been in response to public feedback over the years as under existing practice, such certainty of non-taxation has not been provided."

It went on to explain that:

"The proposed change is therefore not an anti-speculation measure. It does not mean that individuals who have sold more than one property within a four year period will automatically be subject to income tax. There is no change to the current and long-standing income tax treatment in this regard. Whether individuals who sell properties more frequently are subject to income tax depends on the facts and circumstances of each case. IRAS has in the past brought to tax a small number of individuals -- who regularly transact in property, and whose gain from the disposals is assessed to be income."

"Singapore does not have a capital gains tax, unlike many countries. Its income tax rules are merely aimed at taxing persons who make an income out of their property transactions. This income tax policy is common among tax authorities internationally, and our local practices are not unique."

The Ministry's statement concluded:

"(W)hen individuals sell their properties, they will be certain that the gains made from selling their properties will not be subject to income tax if they have not sold any properties in the preceding four years. The lack of certainty in the current rules presently for individuals who sell their properties had led to public feedback for more clarity of income tax treatment."

Other changes proposed in the consultation on the draft Income Tax (Amendment) Bill 2009 included the planned cut in the corporate income tax rate from 18% to 17% from the 2010 fiscal year, changes to the capital allowance regime for plant and machinery in the 2010 and 2011 basis periods, changes to the loss carryback regime for the 2009 and 2010 years of assessment, and liberalized exemption for the remittance of foreign-sourced income, with effect from January 22, 2009 to January 21, 2010.

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