JTC Land Intensification Allowance

What is JTC Land Intensification Allowance (LIA)?

Introduction to JTC Land Intensification Allowance (LIA)

    1. In his Budget Statement 2010, the Minister for Finance introduced the Land Intensification Allowance (LIA) incentive, a targeted scheme to promote the intensification of industrial land use towards more land-efficient and higher value-added activities. Enhancements to the LIA were also made in 2014, 2016 and 2017.
    2. The LIA incentive is available to businesses in manufacturing and logistics sectors which have large land takes and low Gross Plot Ratios (GPR). Approved LIA incentive recipients will enjoy an initial allowance of 25% and annual allowances of 5% on qualifying capital expenditure incurred for the construction or renovation/extension of a qualifying building or structure. Annual allowances of 5% are granted until total allowance amounts to 100% of qualifying capital expenditure.
    3. Approvals for the incentive to these sectors will be granted by the Economic Development Board (EDB) from 1 July 2010 to 30 June 2020 (both dates inclusive).

Summary of Qualifying Criteria

The key qualifying criteria are summarised in the table below.

    • The set of qualifying criteria relevant to each LIA application is dependent on the building’s URA Planning Permission or Conservation Permission (referred to as Planning Permission in this brochure) application date. The Planning Permission must be applied during the period in which the relevant set of qualifying criteria is effective.
    • All prospective LIA applications with Planning Permission application date on or after 25 March 2016 will be assessed against the latest set of qualifying criteria.

Details on Qualifying Criteria

    • A qualifying building or structure (referred to as LIA building in this circular) must be built on land that is zoned as Business 1, Business 2 (excluding Business 1 White or Business 2 White) or Airport/Port under the Urban Redevelopment Authority (URA) Master Plan as at the Planning Permission application date.
    • The specified manufacturing or logistics activities that are conducted within the LIA building must fall within the qualifying SSIC codes listed in Annex A.
    • The minimum GPR benchmarks are reviewed and updated every 3 to 4 years. The relevant GPR shall be the prevailing GPR benchmark at the planning Permission application date. Please refer to relevant columns in Annex A for the respective prevailing GPR benchmarks for each qualifying activity.
    • For LIA buildings that have multiple qualifying trades or businesses that fulfil the minimum 80% GFA requirement, the applicable GPR benchmark for the building will be the highest GPR benchmark among those prescribed for each of the qualifying trade or business.
    • Prior to 25 March 2016, at least 80% of the GFA must be used by a single user and for a single qualifying trade or business. With effect from 25 March 2016, multiple related users conducting multiple qualifying trades or businesses may fulfil this requirement. To be considered related, the users must have at least 75% of their shareholdings held in common (or have entitlement to at least 75% of the income in the case of a partnership), whether directly or indirectly.
    • Prior to 25 March 2016, the LIA applicant (i.e. the building owner) need not be related to the building user(s). With effect from 25 March 2016, the LIA applicant and the user(s) fulfilling the 80% minimum GFA requirement must have at least 75% of their shareholdings held in common (or have entitlement to at least 75% of the income in the case of a partnership), whether directly or indirectly.
    • The Planning Permission application date refers to the date of first submission to URA or relevant agency and does not include any amendment application dates.

Qualifying expenditure

  • Capital expenditure incurred from the start of the relevant policy effective date to the date of completion of the approved LIA building can qualify for the LIA. The date of completion refers to the Temporary Occupation Permit (TOP) of the approved LIA building. For construction where no TOP is or will be issued, the date of completion can refer to the date of Certificate of Statutory Completion (CSC).
  • Capital expenditure incurred on the construction or renovation/extension of the building to increase the GPR to meet or exceed the relevant minimum GPR can qualify for the LIA. This excludes the purchase price of any existing building or structure. In cases in which there is an existing building or structure, only the additional capital expenditure incurred on renovation/extension would qualify for the LIA.
  • The following are examples of capital expenditure that can qualify for the LIA:
      • (a) cost of feasibility study on the layout of the building or structure;
      • (b) design fees of the building or structure;
      • (c) cost of preparing plans for obtaining approval for the building or structure;
      • (d) piling, construction and renovation/extension costs;
      • (e) demolition costs of an existing building or structure;
      • (f) legal and other professional fees in relation to the approved construction or approved renovation/extension; and
      • (g) stamp duties payable in respect of title of the building or structure.

What is the Incentive for JTC land Intensification Allowance (LIA)?

The LIA Incentive

    • An initial allowance at 25% of the qualifying capital expenditure incurred on the construction or renovation/extension of the approved LIA building will be granted in the year of assessment relating to the basis period during which the capital expenditure is incurred. Upon issuance of the TOP for the completed LIA building and where it meets all qualifying criteria, annual allowance at 5% of the qualifying capital expenditure incurred will be granted until total allowance amounts to 100% of qualifying capital expenditure. Please refer to Annex B on the example of how the initial and annual allowances will be computed.
    • LIA Applicant is only eligible if conditions can be met at the point of TOP. LIA applicants must comply with all approved conditions (i.e. GPR condition and 80% GFA requirement) upon the completion of their building works and throughout the duration of the LIA incentive. EDB reserves the right to revoke the incentive by recovering initial and/or annual allowances if conditions are not met.
    • In cases where the completed building or structure fails to meet the relevant GPR benchmark, the initial and/or annual allowances will be recovered through reassessment of preceding tax years.
    • For any basis period where there are any changes to qualifying user(s) and/or use(s) that count towards the minimum 80% GFA requirement, the applicant shall inform EDB of the change, and the change shall be assessed by EDB according to prevailing criteria and benchmarks at the time of application. If approval is granted by EDB, the taxpayer shall be allowed to continue to claim the LIA under the new qualifying use(s). Otherwise, the annual allowance will not be granted for the year of assessment relating to that basis period. If change is permanent, no further annual allowances will be granted to the taxpayer from the year of assessment relating to the basis period during which the permanent change occurs and the LIA incentive shall be terminated with effect from that year of assessment.
    • When the approved LIA building is sold at any time when there is still a balance of qualifying capital expenditure remaining to be claimed or after the qualifying capital expenditure has been fully claimed, any balance of the qualifying capital expenditure still remaining will be disregarded and there will not be any balancing adjustment on the seller of the building.
    • Where the LIA building is transferred to an amalgamated company under a qualifying amalgamation under section 34C of the Income Tax Act (ITA), the annual allowances will be given to the amalgamated company until the remaining qualifying capital expenditure is fully claimed, subject to the amalgamated company meeting the same conditions for the LIA incentive. The taxpayer is required to notify the EDB of the amalgamation.
    • When there is insufficient income in any year of assessment to absorb the initial or annual allowances, any unutilised LIA can be carried forward to offset against the taxpayer’s income in future years of assessment, subject to the taxpayer meeting the prevailing conditions for carry forward of unutilised allowances. Any unutilised allowances can also qualify for carry back under the Carry-Back Relief System or for transfer under the Group Relief System, subject to the taxpayer meeting the prevailing conditions under those systems.

Application and Claim Processes

    • A building owner who proposes to construct or renovate/extend a building or structure that meets the above qualifying criteria may apply to the EDB for the LIA incentive. All applications must be made to the EDB not later than 3 months from the date of TOP issuance for the approved LIA building, with the completed application form and a copy of the Planning Permission issued by URA. Please refer to Annex C for a flowchart of the application process.
    • Upon approval by EDB, the applicant will receive a letter of offer (LOF) from EDB, stating the terms and conditions attached to the offer. The approval is subject to the completed building or structure meeting the relevant GPR benchmark.
    • Upon the issuance of the Temporary Occupation Permit (TOP) of the LIA building, the approved applicant is required to submit a verification form (attached to LOF) within 3 months to the EDB. The verification form should have a declaration made by a qualified person (either a registered architect or a registered professional engineer) to confirm the GPR of the completed LIA building, and that at least 80% of the GFA is used by the approved user(s) and use(s).
    • Taxpayers will claim the LIA when submitting their income tax returns to the Inland Revenue Authority of Singapore (IRAS) and are not required to submit any supporting documents. However, they should still maintain the following documents as the IRAS may request for them when reviewing the tax returns:
      • (a) a copy of the LOF from EDB;
      • (b) details of qualifying capital expenditure incurred on the construction or renovation/extension of the approved LIA building or structure and a computation of the amounts of initial or annual allowance to be claimed;
      • (c) a copy of the verification form(s) submitted to EDB previously
    • The LIA applicant must not file with IRAS any annual allowance claims under LIA for the basis period in which there are any changes to approved conditions and fulfilment of qualifying criteria. The applicant must also indicate these changes in EDB’s annual request for conditions declaration, and EDB reserves the right to revoke the incentive and recover any allowances previously granted if the above conditions are not met.

Qualifying Activities and GPR Benchmarks

QUALIFYING ACTIVITIES AND GPR BENCHMARKS.pdf