Accounting and Transfer Price Treatment for Land Use and Land Ownership Changes across Government Agencies
Ministry of FinanceSpeakers
Summary
This question concerns the accounting and transfer price treatment for land use and ownership changes across government agencies, as raised by MP Chua Kheng Wee Louis. Prime Minister and Minister for Finance Lawrence Wong clarified that while land remains state-owned during Ministry allocations without payment, alienation to Statutory Boards occurs at fair market value based on approved use. These disposals are recorded as land sales proceeds for the state and expenditure for Statutory Boards. Subsequent ownership changes typically involve returning land to the state, where buy-back costs are recorded as development expenditure. Re-alienation for new uses continues to be conducted at fair market value, ensuring state land is managed as a physical asset within the reserves.
Transcript
35 Mr Chua Kheng Wee Louis asked the Prime Minister and Minister for Finance in the event of a change in land use and consequent change in land ownership across Ministries and Statutory Boards (a) whether the transfer price is conducted at fair market value based on the intended land use and intensification; and (b) whether the land cost is accounted for as an income and development expenditure of the relevant Ministries respectively.
Mr Lawrence Wong: State land is a physical asset that forms part of our reserves. Whether it is rented out for a short tenure or sold for longer-term development, the principle is to transact at fair market value (FMV). FMV is determined via tender or through valuation by the Chief Valuer or other professional valuers.
No change in land ownership takes place when state land is allocated to a Government Ministry for public infrastructure purposes, such as for Government schools and bus interchanges. The land remains in the state's possession. Likewise, there is no disposal and no payment arises when there is a change in land allocation from one Ministry to another.
State land may also be alienated to Statutory Boards to enable them to discharge their statutory functions. When state land is alienated to a Statutory Board, it is disposed of at FMV, determined based on the approved land use and intensification. The proceeds of the disposal are collected and accounted for as land sales proceeds. The transaction is reflected in the Statutory Board's accounts as an expenditure.
After the land has been alienated to a Statutory Board, any changes in land use leading to a change in land ownership will typically involve a transfer of the land to the state before it is alienated or allocated for its new, intended use. When land is transferred, the cost incurred for buying the land is accounted for as Development Expenditure. The Statutory Board giving up the land, correspondingly, records the transaction as cash proceeds from disposal of fixed assets and a reduction in land assets.
When the Singapore Land Authority alienates the state land for its new, intended use, the state land is disposed of at FMV, determined based on the approved land use and intensification, no different from the alienation of any other form of state land.