The Inland Revenue Authority of Singapore (IRAS) has released the seventh edition of its updated e-Tax Guide titled “Income Tax: Tax Deduction for Expenses Incurred on Renovation or Refurbishment Works Done to Business Premises”. Primary updates relate to changes introduced in the 2023 and 2024 Budgets.

This e-Tax Guide explains the tax deduction granted under section 14N of the Income Tax Act 1947 (“ITA”) for capital expenses incurred by taxpayers for the renovation or refurbishment works done to their business premises (“R&R expenditure”).

This e-Tax Guide is relevant to a taxpayer carrying on a trade, business or profession and has incurred expenditure on any renovation or refurbishment works for that trade, business or profession.

Certain qualifying capital expenses, up to an expenditure cap, incurred on or after 16 Feb 2008 for the renovation or refurbishment works done to the business premises can be claimed as tax deductions against the income derived from that business.

The deduction is given over a period of three consecutive years on a straight-line basis, starting from the year of assessment (“YA”) for which those expenses were incurred.

For qualifying R&R expenditure incurred in the basis period for YAs 2021, 2022, 2024 and from 2025 onwards (i.e. financial years 2020, 2021, 2023 and from 2024 onwards respectively), a taxpayer has the option to claim the deduction in one year instead of over three years, as announced in Budget 2020, 2021, 2023 and 2024.

S14N deductions can be claimed on qualifying R&R expenditure up to an expenditure cap of SGD 300,000 for every three-year period (“relevant three-year period”), starting from the YA in which the business first incurred R&R expenditure and made a claim.

As announced in Budget 2024, the relevant three-year period will be fixed for all taxpayers from YA 2025 (i.e. financial year 2024) onwards, with the first fixed three-year period being from YA 2025 to YA 2027.