Alvin Soong’s Blog

This year Singapore Budget 2009 was created for a few purposes:

1. JOBS FOR SINGAPOREANS

(A) JOBS CREDIT (in 4 payments: March, June, September and December 2009)
To sustain jobs for Singaporeans, details of the scheme are as follows:
• Employers will receive a 12% cash grant on the first $2,500 of each month’s wages for each employee on their CPF payroll.
• For each payment, employers will receive Jobs Credits on the employees that are on their CPF payrolls at the start of the quarter in which the payment is made. The wages paid to these employees in the previous quarter will be the qualifying wages used to calculate the 12% cash credit that employers will receive.

(B) SPUR FOR WORKERS AND PROFESSIONALS (Skills Programme for Upgrading and Resilience (SPUR) :
• Course fee subsidies for PMET-level courses that are eligible for SPUR will be increased from 80% to 90%, including Specialist and Advanced Diplomas offered by the polytechnics, UniSIM and the three publicly funded universities.

(C) WORKFARE INCOME SUPPLEMENT (WIS) SPECIAL PAYMENT
The WIS Special Payment will provide low-income workers with an additional 50% of the WIS payments that they will receive over the course of this year.

(D) GOVERNMENT HIRING
• The Government will be expanding recruitment.

——————————————————————————————

2. STIMULATING BANK LENDING

(A) SPECIAL RISK-SHARING INITIATIVE (SRI)
Operation for 1 yr. This is to ensure that viable companies continue to have access to credit to sustain their operations and keep jobs. 2 components:

(1) The New Bridging Loan Programme (BLP)
For the mid-sized companies, by improving their access to working capital.

(2) Trade Finance Schemes
Under SRI, there are two schemes which address the trade finance component:
a. Loan Insurance Scheme - Plus (LIS+)
b. Trade Credit Insurance Programme (TCIP)

(B) ENHANCEMENTS TO EXISTING CREDIT MEASURES

(B1) Local Enterprise Finance Scheme (LEFS) - For loans made under LEFS, the Government will increase its risk-share for loans made to local non-SMEs, from 50% to 80%. This will be similar to the Government risk-share for LEFS loans made to SMEs.

(B2) Micro Loan Programme (MLP) - For loans made under the MLP, the Government will increase its risk-share, from 80% to 90%.

(B3) Internationalisation Finance Scheme - The Government will increase the maximum loan quantum per borrower group, from $15 million to $50 million.

(C) OTHER CREDIT-RELATED MEASURES
(C1) Extension of Tax Deduction on Loan Loss Provisions for Banks
To encourage banks to continue making adequate loan impairment provisions and bolster their financial strength to underpin continued lending in the downturn, the Government will extend the tax deduction on loss provisions made pursuant to MAS Notice 612, as well as other equivalent MAS notices for finance companies and merchant banks, for a further 3 Years of Assessment.

——————————————————————————————-
3. ENHANCING BUSINESS CASHFLOW AND COMPETITIVENESS

(A) EASING BUSINESS CASH-FLOW

(A1) Property Tax Rebate for Industrial and Commercial Properties - 40% property tax rebate for industrial and commercial properties for 2009. The Government strongly urges landlords to pass on the benefits of this rebate to their tenants.

(A2) Rental Rebates by JTC, HDB, and SLA - JTC, HDB, and SLA will provide a 15% rental rebate to their tenants and land lessees, exceeding the savings due to the property tax rebate. The rental rebate will also be extended to stallholders who are paying market rents in markets and food centres managed by NEA.

(A3) Enhancements to Loss Carry-Back Scheme - To help businesses with their cash-flow, the loss carry-back relief system will be enhanced for Years of Assessment 2009 and 2010. The cap on losses that can be claimed against past taxable income is increased to $200,000 from $100,000. Businesses will also be allowed to claim losses against the taxable income of their preceding three Years of Assessment, instead of just the immediate preceding year as under the current scheme. IRAS will allow claims for the tax refund to be based on a declaration of estimated losses. This will allow businesses to obtain their cash refunds on taxes paid in previous years instead of having to wait for the finalisation of their chargeable income and taxes.

(A4) Tax exemption on Remittance of Foreign-Sourced Income - The Government will temporarily expand the scope of the Foreign-Sourced Income Exemption scheme to cover all foreign-sourced income, and not just foreign-sourced dividends, branch profits and service income. The Government will also temporarily lift the conditions that are currently required for foreign-sourced income to be exempted from tax when remitted to Singapore. With these temporary enhancements, businesses will be exempt from tax on the foreign-sourced income that they remit between 22 Jan 2009 to 21 January 2010 (both dates inclusive), provided that the remitted income is earned on or before 21 January 2009.

(A5) Transport Rebates and Concessions
The Government will grant the following rebates and concessions on transport-related taxes and fees:
• A 30% road tax rebate for goods vehicles, buses and taxis for one year. This rebate will take effect on 1 July 2009.
• A 20% concession in port dues to be granted to all harbour craft (except pleasure craft for personal use) which will help local companies engaged in commercial activities within Singapore’s port waters. This concession will be for one year and will take effect on 1 April 2009.
• An increase in aircraft landing fee rebate from 15% to 25% for 2009.
• Extension of the special tax exemption for Compressed Natural Gas (CNG) vehicles until December 2011. From 2012 onwards, the CNG special tax will be removed and replaced with a CNG duty of $0.20 per kilogramme of CNG.

(A6) Further Extension of the Government Fee Freeze
The Government will extend the freeze on Government Fees and Charges to December 2009. This will include fees charged on all Government provided services, charges in public carparks, and all license fees. (Regulatory charges, such as those in the transport sector and the development charges applied in the property market, will not be frozen. The Government fee freeze is not applied to fees charged by non-government entities, such as the universities, restructured hospitals and town councils.)

(A7) Measures for Property Developers
Many developers are planning to hold back developments that they had originally planned. To support developers in doing so, the Government will introduce the following measures:
• Defer property tax for commercial developers for land approved for development for up to two years. Land approved for development refers to land with a valid Provisional or Written Permission granted by the URA. The property tax deferral will take effect from 22 January 2009 or the date of Provisional or Written Permission, whichever is later. The deferral will lapse on 21 January 2011, or at Temporary Occupation Permit (TOP), or date of transfer of the land, whichever is the earliest.
• Allow a one-year extension of the project completion period for private residential projects. This would give flexibility to developers to phase out their projects in the current uncertain market conditions.
• Allow re-assignment of Government Land Sales (GLS) sites and private land owned by foreign housing developers for applications made by 22 January 2010.
• Extend the period for developers to dispose of all residential units from two years to four years. Developers may also rent out unsold residential units for a maximum of four years to mitigate holding costs.

(A8) Deferment of Increase in Assessment Rate for Hotels
The Government will defer the increase in assessment rate for hotel rooms, which was due to increase to 25% on 1 January 2009, by one year. Hence, the assessment rate for hotel rooms will remain at 20% for 2009.

(B) REDUCING TAXES TO ENCOURAGE INVESTMENTS

(B1) Corporate Income Tax (CIT) Rate Cut
To promote Singapore’s competitiveness, the Government will reduce the CIT rate from 18% to 17%. This reduction will take effect from the Year of Assessment 2010.

(B2) Accelerated Capital Allowance (CA)
Currently, businesses can generally write down the costs incurred for the acquisition of plants and machinery on a three-year straight line basis. To support businesses intending to invest in preparation for the recovery, the Government will allow plant and machinery acquired during the financial years ended 2009 and 2010 to qualify for an accelerated write-down which will allow businesses to write down the costs of these newly acquired plants and machinery within 2 years with 75% of the write-down taking place in the first year of CA claim alone.

(B3) Writing Down of Renovation and Refurbishment Expenses
To encourage especially small businesses in the service sector to refit their business premises this year and the next, the Government will allow businesses to temporarily write-down qualifying expenses incurred on renovation and refurbishment of business premises fully within 1 year, instead of the current 3 years. This concession will apply to qualifying renovation and refurbishment expenses incurred during the financial years ended 2009 and 2010. The current cap on the amount of qualifying renovation and refurbishment expenses that can be written down will remain at $150,000 every three years per business entity.

(B4) New Tax Framework for Corporate Amalgamations
In a corporate amalgamation, the amalgamated company takes over all assets and liabilities of the amalgamating companies, and the amalgamating companies cease to exist. Under the existing tax treatment, when assets and liabilities are transferred upon amalgamation, tax consequences are often triggered as the amalgamating companies are treated as having ceased business and disposed of their assets and liabilities, and the amalgamated company having acquired or commenced a new business.

To make it easier for companies to restructure and rationalise, the Government will introduce a tax framework for qualifying corporate amalgamations which will alleviate the tax cost associated with corporate amalgamations. A public consultation will be held in February 2009 to seek views on this new tax framework for qualifying corporate amalgamations.

(C) SECTOR SPECIFIC TAXES AND DUTIES

(C1) Enhancements to and Streamlining of Fund Management Incentives (For financial sector activities)

Currently, under the fund management incentives, there are conditions such as the fund cannot be 100% beneficially owned by resident investors and there are limits placed on the holdings by resident corporate investors in these funds. The Government will now remove all these limits on qualifying funds so that they can accept investments freely from resident corporates, in addition to resident individuals. This will allow our resident corporates to enjoy the full benefits of tax exemption on qualifying income derived by the funds, thus encouraging resident corporates to have more of their monies managed by funds in Singapore.

This enhancement of the fund management incentives will also apply to qualifying funds that are constituted in the form of Limited Partnerships. A qualifying fund is one which, amongst other conditions, has at least $50 million under management at the point of application for the tax incentive. Fund managers may apply for the scheme with effect from 1 April 2009. Both the existing and enhanced fund management incentives will also be subject to review after five years. MAS will release the details by April 2009.

(C2) Recovery of GST for Qualifying Local Funds
To promote fund administration and fund management in Singapore, the Government will allow qualifying funds that are managed by a prescribed fund manager in Singapore to recover a substantial portion of the GST incurred on prescribed expenses. This change will be in place from 22 January 2009 to 31 March 2014 (both dates inclusive). MAS will release the details by April 2009.

(C3) Expansion of Scope of Tax Exemption under Fund Management and Trust Incentives
The Government will enhance the lists of specified income and designated investments under the fund management and trusts incentives, thus expanding the scope of tax exemption. For instance, amount payable on qualifying Islamic debt securities will be included in the list of specified income. The enhancements will take effect from 22 January 2009. MAS will release the details by April 2009.

(C4) Enhancements to Financial Sector Incentive - Headquarter Services (FSI-HQ) Scheme
To promote Singapore as the choice location for headquarter functions of financial institutions, the Government will enhance the FSI-HQ scheme by granting withholding tax exemption on interest payable on qualifying loans taken by an FSI-HQ company. The Government will also subsume the current tax incentive scheme for provision of these processing services under the FSI-HQ scheme, thus allowing FSI-HQs to enjoy incentivised income from their provision of high value-added processing services. These enhancements will be effective from 22 January 2009 to 31 December 2013 (both dates inclusive). MAS will release the details by April 2009.

(C5) Extension and Enhancement of Commodity Derivatives Traders (CDT) scheme
To encourage the growth of derivative trading activities in Singapore, the Government will extend the CDT scheme (which is due to expire on 26 February 2009) and subsume it under a new Derivatives Market (Commodity Derivatives Trader) award under the Financial Sector Incentive scheme. The Government will also lift existing counterparty restrictions for trades carried out on exchanges under this scheme. These changes will be effective from 27 February 2009 to 31 December 2013 (both dates inclusive). MAS will release the details by April 2009.

(C6) Zero-Rating for the Aerospace Industry
To support the growth of the Maintenance, Repair and Overhaul (MRO) industry in Singapore, the Government will expand the scope of qualifying aircraft to include all aircraft, including private aircraft, which is wholly used or intended to be wholly used for international transportation of goods and passengers. This is in line with the zero-rating of international transportation.

To ease GST compliance costs for the MRO industry, zero-rating is also extended to cover the sale, maintenance or repair services of aircraft components or systems, as long as they form part of a qualifying aircraft. A new scheme will be introduced to facilitate the import of aircraft components or systems for qualifying aircraft without GST.

These changes will take effect from 1 April 2009. IRAS will release the details by March 2009.

(C7) Suspension of GST and Duty on Goods Temporarily Removed from Zero-GST or Licensed Warehouses
To encourage the growth of the auction and exhibition industry, as well as specialised storage facilities, the Government will, with effect from 1 April 2009, suspend GST and duty on goods (including wine) that are temporarily removed from a zero-GST or Licensed warehouse for auctions or exhibitions, even if the goods are sold during the auction or exhibition, provided that the goods are returned to the warehouses subsequently. Singapore Customs will release the details by March 2009.

(C8) Exemption of Duty to Facilitate Wine Trading Activities
To promote wine trading activities and help develop the wine industry in Singapore, the Government will exempt duty and provide GST relief for a specified quantity of wine for use at approved wine exhibitions and conference events with effect from 1 April 2009. Singapore Customs will release the details by March 2009.

(C9) Withholding Tax Exemption for Maritime Industry
To give support to the maritime industry, the Government will extend the withholding tax exemption on interest payable on qualifying loans taken by shipping enterprises to acquire vessels which are registered with the Singapore Registry of Ships under the Block Transfer Scheme, subject to conditions. This extension will be for a further period of five years with effect from 1 January 2009.

(D) MAKING INNOVATION PERVASIVE
(D1) Accelerated Writing-Down Allowance (WDA) for acquisition of Intellectual Property (IP) rights for Media and Digital Entertainment (MDE) content
To encourage media and digital entertainment (MDE) businesses to create and exploit their intellectual property from Singapore, the Government will enhance the current WDA incentive to allow MDE businesses to write down the costs of their qualifying IP rights for MDE content in two years, instead of five years. This accelerated write- down will apply for qualifying IP for MDE content acquired between 22 January 2009 and 31 October 2013 (both dates inclusive).

(D2) Test-Bedding Fund
To further encourage creation and test-bedding of new ideas, the Government will put $200 million in a Test-Bedding Fund to make Singapore a “living lab” for companies and entrepreneurs to nurture new ideas, test innovative solutions and develop future global businesses. The fund will be managed by the Economic Development Board (EDB).

(D3) Government Taking the Lead in Innovation
In 2008, the Government set up the Core Innovation Fund to help private companies collaborate directly with government agencies to develop innovative solutions for public services. We will set aside $180 million in the fund over the next two years. In addition, the Government will be more proactive in seeking collaboration with the private sector, through the use of Calls-for-Collaboration (CFC). This will bring clusters of companies together to develop solutions for government agencies, businesses and the public.

——————————————————————————————

4. SUPPORTING FAMILIES

The key benefit that Singaporeans will derive from the package will come from the effort to preserve jobs through the Jobs initiatives – the Jobs Credit, the Workfare Income Supplement Scheme (WIS) Special Payment and Skills Programme for Upgrading and Resilience (SPUR). The Government will also complement the Jobs initiatives with the following:
• Direct assistance to households
• Targeted help for the most vulnerable groups
• Support for charitable giving and the community

(A) DIRECT ASSISTANCE TO HOUSEHOLDS
(A1) Goods and Services Tax (GST) Credits and Senior Citizens’ Bonus
To help households cope with their cash-flow problems arising from unemployment or reduced incomes, the Government will double the GST Credits and Senior Citizens’ Bonus that citizens will receive in 2009.
This additional tranche will be paid on 1 March 2009 and will be on top of what citizens will receive in July 2009 as part of the 2007 GST Offset Package. About 2.4 million Singaporeans are eligible for the GST Credits including about 734,000 elderly Singaporeans who will also benefit from the Senior Citizens’ Bonus.
The amount of GST Credits and Senior Citizens’ Bonus citizens can receive in 2009 will like the previous year depend on:
(i) The Annual Value (AV) of their residence in 20081 ; and
(ii) Their Assessable Income (AI) for Year of Assessment 2008; and
(iii) Their age in the year of payout.

* If an individual has already received a payout in previous years, he will not receive the $100. ( NSFs/NSmen will receive the $100 only in the year that they first qualify.).

(A2) Service and Conservancy Charges (S&CC) Rebates
The Government will provide an additional one month of S&CC Rebates to those living in a one-room to three-room HDB flats, who will therefore receive a total of 3 to 4.5 months for 2009. Those in four-room HDB to Executive apartments will receive an additional half-month, or a total of 1 to 2 months of rebates. The additional S&CC rebate will be paid in April 2009. Altogether, about 800,000 eligible HDB households will benefit from the rebates.

(A3) Rental Rebates
The Government will provide an additional month of rental rebates in 2009, to eligible households in public rental flats. The additional rebate, to be paid in March and December 2009, will supplement the existing rental rebates these low-income families are already receiving as part of the 2007 GST Offset Package.

In total, about 35,000 eligible households in public rental flats are expected to benefit from the rebates.

(A4) Personal Income Tax Rebate
The Government will give a personal income tax rebate of 20% (capped at $2,000) for tax-residents for Year of Assessment 2009. This will provide an immediate reduction in the tax payable for these individuals for last year’s income.

(A5) Instalment Option for Personal Income Tax Payment
To help tide taxpayers over the current difficult economic situation, the Government is allowing individual tax-residents who have lost their jobs in 2008 or lose their jobs in 2009 to pay their personal income taxes for year of assessment 2009 in monthly instalments of up to 24 months, up from the current 12 months allowed. Affected taxpayers can apply to IRAS for this extended instalment assistance.

(A6) Property Tax Rebate
The Government is providing a 40% property tax rebate for owner-occupied residential properties for 2009.

(A7) Removal of Tax on Net Annual Value of Property
Currently, taxpayers are required to pay income tax on the Net Annual Value of their dwelling or secondary residences. However, an exemption of up to $150,000 of Net Annual Value for one owner-occupied residential property is granted.
The Government will remove this income tax on Net Annual Value of residential property with effect from Year of Assessment 2010.

(A8) Increase in Additional CPF Housing Grant
The Government will enhance the Additional CPF Housing Grant (AHG) for first time home-buyers. The maximum AHG quantum will be increased from $30,000 to $40,000. At the same time, the household income ceiling will be increased from $4,000 to $5,000.

(A9) Other measures
On top of the 2009 measures, households will also benefit from the following measures, which were announced as part of the 2007 GST Offset Package.
Utilities-Save (U-Save) Rebates: Eligible households will receive U-Save rebates of $70 to $210 in 2009. This will benefit around 800,000 HDB households.

Payout Quantum:

Post-Secondary Education Account (PSEA) top-up: Young Singaporeans aged 7 to 20 will receive a top-up of $100 to $400 to their Post-Secondary Education Accounts (PSEA) in 2009. Those who are older and from less well-off families will get a higher top-up to their PSEA.

(B) TARGETED HELP FOR THE MOST VULNERABLE GROUPS
(B1) Public Transport Fund (PTF) Top-up
The Government will top-up the Public Transport Fund to $10 million to provide public transport vouchers for all low-income households who need help.

(B2) Financial Assistance Schemes for Education
To provide every encouragement to students whose families face financial difficulties during the economic downturn, the Ministry of Education (MOE) will enhance the financial assistance schemes for students in our schools, and introduce a Short-Term Study Assistance Scheme (SSAS) for students in our ITEs, polytechnics and autonomous universities.

(B3) Public Assistance Rate
The Government will increase the Public Assistance Rate for single-person households by $30 per month to $360

(B4) Singapore Allowance
For government pensioners, the Government has decided to increase the Singapore Allowance by $20 per month to $240.

(C) SUPPORT FOR CHARITABLE GIVING AND THE COMMUNITY
(C1) Citizens’ Consultative Committees (CCCs) ComCare Fund and Self-Help Groups (SHGs)
To enhance support for low-income households, the Government is increasing funding to the CCC ComCare Fund to $7 million a year, for the next two years. It will also increase funding to SHGs to $9 million a year, for the next two years.

(C2) Increased Tax Deduction and Additional Grant for Government Funded Voluntary Welfare Organisations (VWOs)
To encourage greater charitable giving this year, the Government will increase the tax deduction for donations made in 2009 to Institutions of Public Character (IPCs) and other approved institutions from 200% to 250%.
To support government-funded voluntary welfare organisations (VWOs), the Government will provide an additional $15 million in funding to them for one year (2009).

(C3) Extending business measures to VWOs
As VWOs also employ workers, the Government is extending the Jobs Credit provided to companies to all VWOs.

(C4) Extending Start-up Exemption to Companies Limited by Guarantee (CLGs)
To support the growth of Companies Limited by Guarantee set up by social entrepreneurs, the Government is extending the start-up tax exemption to Companies Limited by Guarantee. Under this exemption, qualifying start-ups can enjoy full tax exemption on their first $100,000 of chargeable income and 50% exemption for the next $200,000, for their first three Years of Assessment. This extension will take effect from Year of Assessment 2010.

1 This applies to Singaporeans whose NRIC address has changed in 2008, and newly eligible Singaporeans. For Singaporeans whose NRIC address has not changed, the amount of benefits will depend on the Annual Value (AV) of their residence in 2007.

BUILDING A HOME FOR THE FUTURE
The Resilience Package provides a further boost to investments in making Singapore an extremely liveable global city and the best home for Singaporeans.
We are pushing ahead in four areas:
• Expanding and accelerating public sector infrastructural spending;
• Developing suburban nodes and rejuvenating our neighbourhoods;
• Pushing ahead on sustainable development;
• Spending more on our education and health infrastructure.

(A) EXPANDING AND ACCELERATING PUBLIC SECTOR INFRASTRUCTURE SPENDING
The Government will increase public sector construction spending to between $18 billion and $20 billion in 2009. This is significantly higher than the $15 billion contracted in 2008 and $6 billion in 2007.
The increased spending arises from the planned ramp-up in infrastructure development, and bringing forward of $1.3 billion of projects to 2009. The Government had previously deferred some of these projects to avoid exacerbating the over-heating construction sector and adding pressure to construction costs for the economy. Others are projects which had been due over the next two to three years that the Government has decided to bring forward and comprise smaller infrastructure contracts worth up to $50 million each, which can be taken up by our small and medium-sized contractors.

(B) DEVELOPING SUBURBAN NODES AND REJUVENATING NEIGHBOURHOODS
To develop both a distinctive business hub in the centre of the city and new suburban hubs that will decentralise economic activity and create jobs nearer to home, the Government will be:
• Investing in new regional commercial nodes such as Jurong Lake District, the new Kallang Riverside and Paya Lebar Central;
• Rejuvenating our public housing neighbourhoods, including enlivening the public spaces within our estates and pushing ahead with ABC Waters Programme;
• Linking together all parts of the island through a comprehensive road network and developing viable mass transit alternatives by expanding our rail networks;
• Spending more on basic amenities such as our drainage and sewerage network.

(C) PUSHING AHEAD ON SUSTAINABLE DEVELOPMENT
The Government has over the last year been developing our sustainable development blueprint for Singapore. MEWR and MND will be discussing our thinking and plans in further detail during the Committee of Supply (COS).
In total, the Government plans to spend $1 billion over the next five years on sustainable development initiatives. The funds will support programmes such as energy efficiency for industry and households, green transport, clean energy and the greening of our living spaces.

(D) SPENDING MORE ON EDUCATION AND HEALTHCARE
(D1) Enhancing School Education
To enhance education for our students, the Government will be upgrading the hardware and software of the education system, including:
• Providing better facilities for an all-round education in every school, and accelerating some projects like the roll-out of indoor sports halls;
• Enhancing both the size and quality of the teaching force; and
• Bringing in allied educators into our schools to collaborate with teachers in providing better attention for every child.

(D2) Expanding healthcare capacity
The Government is committing to a substantial expansion of the healthcare sector, including:
• Investing $4 billion over the next five years in healthcare infrastructure which will include the redevelopment of older hospitals, medical centres and a new hospital in the west, as well as seeing through existing projects like the Khoo Teck Puat Hospital in the north;
• Building new community hospitals and boosting capabilities in treating chronic diseases (e.g. stroke, heart and kidney failure) and other age-related conditions (e.g. dementia);
• Enhancing capabilities for long-term care (including rehabilitation, home care and palliative services after patients have been discharged from hospitals); and
• Developing an electronic health records system that will be accessible by authorised medical practitioners at hospitals and polyclinics, and eventually extending to the community care sector.

To download this version in pdf, please go to this link to download:
http://www.skcagency.com/blog/investment-and-reports/singapore-budget-2009-details

Compiled, Summarised and Extracted in Jan 2009 from Straits Times and http://www.singaporebudget.gov.sg/

Trackback URI | Comments RSS