Option to Accelerate Claims on Renovation and Refurbishment (R&R) Costs

Singapore Budget 2020

15/03/2020
Corporate Income Tax Rebate

To help businesses cushion the economic impact of the COVID-19 outbreak, the “Stabilisation and Support Package” was announced in the Budget Statement for the financial year 2020. As the name suggests, the relief package seeks to stabilise the economy and support industries in this period of economic uncertainty. There are industry-specific and broad-based measures to support employers retain their employees and help businesses cope with cash flow difficulties precipitated by the COVID-19 outbreak.

The table below summarizes the measures introduced in Budget 2020 with regards to the Option to Accelerate Claims on R&R Costs, its impact on businesses and the action required in order to reap its benefits: 
 

Option to Accelerate Claims on R&R Costs

Measures Introduced in Budget 2020

Impact

Action Required

Currently, under Section 14Q of the Income Tax Act, a tax deduction can be claimed over three consecutive Years of Assessment (YAs) on qualifying expenditure incurred by a taxpayer on R&R for the purposes of its trade, profession or business. This will be temporarily enhanced to allow qualifying R&R expenses incurred in the financial year 2020 (i.e. YA 2021) to be claimed over one YA.

 

The accelerated 1-year deduction under Section 14Q will result in more tax deductions available in YA 2021 for taxpayers who have incurred qualifying R&R expenditure in the financial year 2020.

This measure will only have a cash flow impact as there is no change to the amount of R&R costs that qualify for tax deduction which is capped at S$300,000 for every relevant three-year period starting from the year in which the R&R costs are incurred.

Businesses that have not closed their financial year for 2020 and have the financial resources, may consider using any downtime due to the economic slowdown to renovate or refurbish their business premises. 

For businesses that have already renovated or refurbished their business premises in the financial year 2020, they can review their tax position for YA 2021 to ascertain if they should be electing for the 1-year tax deduction.


For further information on this measure, watch our Singapore Budget 2020 Insights video:

Helping businesses cope with economic uncertainty.

If you wish to know in detail how your business can benefit from the measures announced in Budget 2020, please contact our tax team at tax@crowe.sg
Crowe Singapore Budget 2020 Newsletter

Singapore Budget 2020 Newsletter