Under Singapore’s Income Tax Act 1947, Section 14N permits businesses to claim tax deductions for eligible capital expenditures related to renovating or upgrading their commercial premises (referred to as R&R costs). These deductions, designed to alleviate operational expenses, are typically spread evenly across three consecutive years. Recent revisions effective from the 2025 Year of Assessment (YA) aim to streamline processes and adapt the scheme to modern business needs:
1. Single-Year Deduction Option
Businesses may now permanently opt to claim the full R&R deduction within a single YA, rather than over three years, subject to the existing $300,000 expenditure limit. This permanent flexibility enables companies to better align tax benefits with their cash flow requirements.
2. Broader Eligibility for Expenses
Acknowledging evolving industry practices, the list of qualifying costs now includes design and professional fees, provided these expenses do not involve structural modifications (which would require approval from the Commissioner of Building Control).
3. Standardized Three-Year Claim Window
Previously, the three-year deduction period began when a business first claimed R&R expenses. Starting in YA 2025, this window is standardized to a fixed cycle spanning YA 2025 to YA 2027. As a transitional provision, businesses whose prior claim period (e.g., YA 2023–2025) overlaps with the new cycle will receive a renewed $300,000 cap for YA 2025–2027, even if prior limits were fully utilized.
4. Strategic Implications
Companies planning renovations should consider timing projects to maximize benefits under the expanded eligibility criteria and refreshed expenditure caps. For instance, a firm that exhausted its $300,000 cap in YA 2023–2024 can now access a renewed $300,000 limit from YA 2025 onward.
Additionally, businesses electing the single-year deduction must do so irrevocably for each YA but retain the option to revert to the three-year method in subsequent years if no election is made.
By proactively aligning projects with these updates, businesses can optimize tax efficiencies while adhering to revised guidelines. With careful planning, organizations can navigate these changes smoothly—ensuring a predictable fiscal year without unexpected adjustments.
Next Steps
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