NOTES TO THE
FINANCIAL STATEMENTS
Year ended 31 December 2014
3
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.8 Income tax expense (cont’d)
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the
extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred
tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the
related tax benefit will be realised.
In determining the amount of current and deferred tax, the Group takes into account the impact of uncertain
tax positions and whether additional taxes and interest may be due. The Group believes that its accruals for tax
liabilities are adequate for all open tax years based on its assessment of many factors, including interpretations
of tax laws and prior experience. This assessment relies on estimates and assumptions and may involve a series
of judgments about future events. New information may become available that causes the Group to change its
judgment regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense
in the period that such a determination is made.
The Inland Revenue Authority of Singapore (the “IRAS”) has issued a tax ruling on the income tax treatment of the
Trust. Subject to meeting the terms and conditions of the tax ruling which includes a distribution of at least 90.0%
of the taxable income of the Trust, the Trustee is not subject to tax on the taxable income of the Trust. Instead, the
distributions made by the Trust out of such taxable income are subject to tax in the hands of Unitholders, unless
they are exempt from tax on the Trust’s distributions. This treatment is known as the tax transparency treatment.
Qualifying Unitholders are entitled to gross distributions from the Trust. For distributions made to foreign non-
individual Unitholders during the period from 18 February 2010 to 31 March 2020, the Trustee is required to
withhold tax at the reduced rate of 10.0% on distributions made. For other types of Unitholders, the Trustee is
required to withhold tax at the prevailing corporate tax rate on the distributions made by the Trust. Such other
types of Unitholders are subject to tax on the regrossed amounts of the distributions received but may claim a
credit for the tax deducted at source at the prevailing corporate tax rate by the Trustee.
A Qualifying Unitholder refers to a Unitholder who is:
•
An individual;
•
A company incorporated and tax resident in Singapore;
•
A Singapore branch of a company incorporated outside Singapore that has obtained the IRAS’ approval for
distributions to be made to it by the Trust without deduction of tax;
•
A body of persons incorporated or registered in Singapore including a charity registered under the Charities
Act (Cap. 37) or established by any written law, a town council, a statutory board, a co-operative society
registered under the Co-operative Societies Act (Cap. 62) or a trade union registered under the Trade
Unions Act (Cap. 333).
A foreign non-individual Unitholder refers to a Unitholder who is not a resident of Singapore for income tax
purpose and:
•
who does not have any permanent establishment in Singapore; or
•
who carries on any operation through a permanent establishment in Singapore, where the funds used by
that person to acquire the units in that REIT are not obtained from that operation in Singapore.
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