Income Tax – A Closer Look of Section 10(1)(g) of the Income Tax Act

Unlike jurisdictions such as Australia, the UK, the US, Singapore does not have a capital gains tax regime.  Gains of a capital nature do not attract any Singapore income tax.  Accordingly, the characterization of the nature of a gain for Singapore income tax purposes has always been a contentious matter in our Singapore tax practice.

In GBU v  Comptroller of Income Tax [2017] SGITBR 3, the ITBR had an opportunity in determining the proper construction of Section 10(1)(g) of the Income Tax Act (“ITA”).  This statutory provision is well known as the “catch-all” provision in that any gains or profits of an income nature would be charged with Singapore income tax even if they do not fall within the heads of charge under Section 10(1)(a) to (f).   The gains in GBU arose from the disposal of share counters by a Singapore company whose principal business is the operation of supermarkets.

Facts of the case and the CIT’s contention

In Years of Assessment 2010 and 2011, the taxpayer derived gains from the disposal of various share counters and the Comptroller of Income Tax (“CIT“) opined that these shares were acquired as part of a profit-making scheme and thus fall under “gains or profits of an income nature” under Section 10(1)(g) of the ITA. The CIT considered the following:


  • There was no feasibility study carried out by the taxpayer before the shares acquisition.
  • The taxpayer was concerned with the appreciation of the value of the shares and whether it was able to afford to hold the shares till they had appreciated in value.
  • The taxpayer had a definite holding horizon in respect of the shares – i.e. it had the intention to dispose of the shares before its proposed listing on the Singapore Stock Exchange or when the respective share values “sufficiently appreciate”.  Therefore it could not be considered a long-term investment.

Decision of the ITBR

The Board held that the taxpayer’s acquisition of the shares was for the purpose of long-term investment, and the gains concerned do not fall within Section 10(1)(g) of the ITA. In doing so, the ITBR rejected the CIT’s arguments that these shares were not long-term investments as it reasoned that the listing of the company was not a fixed event at the time of the share acquisition.  Instead, the ITBR was convinced that the taxpayer had taken a long-term perspective towards the appreciation of shares.

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