The2010 phase-out and2026 edition
The second edition, published30 January2026, explains grandfathering of industrial building allowance (IBA) after the22 February2010 Budget cut-off. New post-cut-off construction/purchase capital expenditure generally does not qualify. The2026 update is editorial and renumbers Income Tax Act1947 references; it does not restart the2010 commitment deadlines. An industrial building is a building or structure used or intended for a qualifying section18(1) trade/activity.
Existing expenditure and later changes of use
Qualifying expenditure incurred on/before22 February2010 continues under the existing provisions until written down or until the building is disposed of, demolished, destroyed or altogether ceases use; balancing allowance/charge can then apply. A building not used as industrial at the cut-off cannot generally begin further IBA merely by later changing use, unless a transition applies. Temporary disuse under18(2) is different: annual allowance may resume when qualifying use resumes. Existing claims do not automatically extend to later renovation/extension costs.
Buying an existing industrial building
The purchase qualifies under the transition if its purchase option was granted or purchase agreement signed on/before22 February2010. Qualifying purchase cost includes building-title legal fees and stamp duty as well as the building price. The option date can therefore preserve eligibility even if the subsequent purchase agreement is signed later, as AnnexA illustrates. Land price and land-acquisition expenses remain excluded.
Extensions: appointment and application deadlines
An attached or separate extension to an existing industrial building needs a Qualified Person appointed by22 February2010 and a development application submitted to URA by31 December2010. Eligible extension costs end at the earlier of TOP issuance and the last day of the basis period for YA2016. The same dates apply where the original building becomes industrial after extension: the original construction/purchase cost or residue of expenditure can also qualify. QP means a registered architect or professional engineer under the Planning Act schedule. Only submission of the development application by the deadline is required, not URA approval by that date.
Renovations not requiring a development application
For renovations without a URA development-application requirement, engage the contractor by22 February2010. Costs qualify until the earlier of project completion and the last day of the YA2016 basis period. This covers an existing industrial building and a previously non-industrial building converted upon completion; the latter may also bring the original building cost or expenditure residue into eligibility. No agency accreditation or approval of the renovation contractor is required. Keep the appointment letter or contract as evidence.
Constructing or buying a new industrial building
New construction needs one qualifying pre-cut-off land commitment: a private-owner purchase option, signed purchase agreement, signed private-owner lease, or government bid/buy/lease application submitted by22 February2010. In addition, submit the building development application to URA by31 December2010. Construction costs stop qualifying at the earlier of TOP and YA2016 basis-period end. A new-building purchase instead needs an option granted or agreement signed by22 February2010; its eligible purchase price includes title legal fees and stamp duty. A later new land commitment is not cured merely by an early design appointment.
Special approved buildings: eight commitments and22 May2010 approval
Post-cut-off applications under18(1)(f),(i) or(j) may be considered if an existing qualifying condition is also met and one of eight commitments existed by22 February2010: land option, land purchase agreement, private land lease, government land application, building option, building purchase agreement, extension QP appointment or renovation-contractor appointment. The relevant agency approval must be obtained by22 May2010. These provisions concern intensive poultry, tourist-industry projects and other prescribed/approved uses. The guide’s AVA/EDB/MICA/STB agency list is explicitly drawn from its2010 first edition, not a statement of unchanged agency names.
Special approved costs and the TOP distinction
For an approved building, construction costs qualify only to the earlier of TOP or YA2016 basis-period end. Purchased approved buildings may qualify on purchase costs plus initial renovations carried out immediately after purchase, with renovation costs limited to completion or YA2016 basis-period end, whichever is earlier. A TOP is issued by the Commissioner of Building Control when completed work is fit for occupation. A development application seeks URA permission for construction, extension or alteration; Provisional/Written Permission reflects partial/full compliance with planning guidelines. These are distinct documents with different purposes and deadlines.
Related-party transfers and the amalgamation exception
Section24 election is unavailable for related-party transfers where the option is granted or sale/transfer agreement signed after22 February2010. The transferor receives a balancing adjustment and the transferee cannot claim IBA. A qualifying section34C amalgamation is different: transfer on the amalgamation date of a building for which the amalgamating company already received IBA is deemed to carry a section24 election, even after the cut-off. No balancing adjustment applies to that company, and the amalgamated company continues allowance under the applicable rules.
Qualifying cost categories and administration
Purchase costs include building price, title stamp duty and legal fees. Construction includes architectural/design fees, approval-plan preparation, demolition of a pre-existing non-IBA building/structure, piling, construction and other renovation costs. Land and land-acquisition expenses are excluded. Existing allowance rates and other claim procedures remain unchanged. In the tax computation declare that the relevant transitional criteria are met; retain ordinary evidence plus dated option/agreement, QP/contractor appointments, development application and other transition evidence. Do not routinely submit them with the return, but provide them on IRAS request.
Upfront industrial-land premium is separately addressed
The guide states that section14J relief for an upfront designated industrial-land lease premium paid to HDB or JTC continues under its existing conditions unless subsequent changes are announced. The building/structure must be used for a qualifying14J(9) activity. This is a separate land-premium provision, not permission to include land cost in IBA. Its application must be considered independently of the building allowance phase-out.
Example1: early option and renovation, later non-qualifying work
CompanyA has a December year-end, received a S$3m building option on14 February2010 and signed the agreement28 February. It engaged a minor-renovation contractor20 February, spent S$500,000 and began qualifying use after May2010 completion. The S$3.5m qualifies; a new2014 renovation costing S$600,000 does not. The building is sold30 June2020 for S$5m. AnnexA applies25% initial and3% annual allowance to the qualifying amount, assigns sale proceeds proportionately using3.5/(3.5+0.6) and caps the YA2021 balancing charge at previous actual allowances. The complete figures are shown below.
| Calculation item | S$ |
|---|---|
| Qualifying purchase | 3,000,000 |
| Qualifying2010 renovation | 500,000 |
| Qualifying total | 3,500,000 |
| Excluded2014 renovation | 600,000 |
| YA2011 initial25% | 875,000 |
| YA2011 annual3% | 105,000 |
| YA2012–2020 annual105,000×9 | 945,000 |
| Residue31Dec2019 | 1,575,000 |
| YA2021 allocated proceeds3.5/4.1×5m | 4,268,293 |
| Proceeds minus residue | 2,693,293 |
| YA2021 capped balancing charge | 1,925,000 |
Example2: original non-industrial building plus extension
CompanyB bought its non-industrial building31 July2006 for S$1m. A registered architect was appointed31 January2010 and the development application submitted15 August2010. Construction began February2011, cost S$1.5m in2011 and S$3m in2012, and TOP issued31 December2012. The entire building began qualifying use January2013. Both original price and extension qualify. Transfer to a related company31 October2023 for market value S$5.6m cannot use section24; the buyer gets no IBA. The calculation includes seven years’ notional allowance on the original building, actual initial/annual allowances, and a YA2024 balancing charge capped at S$2.775m, not the larger proceeds-minus-residue difference.
| Calculation item | S$ |
|---|---|
| Qualifying original purchase | 1,000,000 |
| Qualifying construction | 4,500,000 |
| Qualifying total | 5,500,000 |
| YA2007–2013 notional3%×1m×7 | 210,000 |
| YA2012 initial25%×1.5m | 375,000 |
| YA2013 initial25%×3m | 750,000 |
| YA2014–2023 annual3%×5.5m×10 | 1,650,000 |
| Residue31Dec2022 | 2,515,000 |
| YA2024 sale proceeds | 5,600,000 |
| Proceeds minus residue | 3,085,000 |
| YA2024 capped balancing charge | 2,775,000 |
Enquiries and the editorial update
The guide prints18003568622 for corporate enquiries and18003568300 for individual enquiries. Its30 January2026 amendment entry records editorial changes and renumbering against the28 April2010 first edition. All historical dates in the transitional tables must be read as grandfathering conditions; existing claimants still need the ordinary IBA conditions, and later disposals, demolition or destruction continue to trigger the ordinary balancing-adjustment rules.
Official source
This article independently explains the substantive contents of the official PDF, including the relevant conditions, procedures and annexes. The linked document remains the authoritative source for its original wording, and later changes should be checked separately.
Read the official PDF ↗