Income Tax (Exemption of Income of Trustee of Trust Fund Arising from Funds Managed by Fund Manager in Singapore) Regulations 2010

No. S 7

Income Tax Act

(Chapter 134)

In exercise of the powers conferred by section 13C of the Income Tax Act, the Minister for Finance hereby makes the following Regulations:

Citation and commencement

1. These Regulations may be cited as the Income Tax (Exemption of Income of Trustee of Trust Fund Arising from Funds Managed by Fund Manager in Singapore) Regulations 2010 and shall be deemed to have come into operation on 1st September 2007.

Definitions

2.—(1) In these Regulations —

“approved start-up fund manager” means a start-up fund manager approved under regulation 3(3);

“designated investments” and “specified income” have the same meanings as in the Income Tax (Exemption of Income of Non-residents Arising from Funds Managed by Fund Manager in Singapore) Regulations 2010 (G.N. No. S 6/2010), with references to the “prescribed person” therein modified to refer to the “trustee of the prescribed trust fund”;

“designated person” has the same meaning as in the Income Tax (Exemption of Income of Non-residents Arising from Funds Managed by Fund Manager in Singapore) Regulations 2010;

“issued securities” means —

(a)

issued debentures, stocks or shares;

(b)

any right, option or derivative in respect of any such debentures, stocks or shares;

(c)

any right under a contract for differences, or under any other contract the purpose or pretended purpose of which is to secure a profit or avoid a loss by reference to fluctuations, in —

(i)	the value or price of any such debentures, stocks or shares;
(ii)	the value or price of any group of any such debentures, stocks or shares; or
(iii)	an index of any such debentures, stocks or shares,

and includes derivatives of a buy-sell nature for funding purpose, but does not include —

(A)	futures contracts which are traded on a futures market;
(B)	bills of exchange;
(C)	promissory notes; or
(D)	certificates of deposit issued by a bank or finance company.

(2) Any reference in these Regulations to the value of issued securities of a company is a reference to the value of those securities —

(a)	at the time of their issue by the company; or
(b)	in the case of derivatives of a buy-sell nature, at the time of their buy-sell transaction.

Prescribed trust fund for tax exemption

3.—(1) For the purposes of exemption from tax under section 13C of the Act, a prescribed trust fund is a trust fund —

(a)

that is administered by a trustee who is resident in Singapore, a permanent establishment in Singapore or a Singapore citizen; and

(b)

of which not more than 20% of its value is beneficially held, directly or indirectly, by one or more of the following:

(i)

an individual who is a citizen of Singapore or is resident in Singapore;

(ii)

a person (other than an individual) who is resident in Singapore or a permanent establishment in Singapore; or

(iii)

a company not resident in Singapore where —

(A)	in the case where the company is incorporated before 15th February 2007, more than 20% of the total number of its issued shares (excluding the total number of its issued shares owned directly by designated persons) are beneficially owned, directly or indirectly, by persons who are citizens of Singapore or resident in Singapore; or
(B)	in the case where the company is incorporated on or after 15th February 2007, more than 20% of the total value of its issued securities (excluding the total value of its issued securities owned directly by designated persons) are beneficially owned, directly or indirectly, by persons who are citizens of Singapore or resident in Singapore.

(2) The requirement in paragraph (1)(b) relating to beneficial holding of the value of a trust fund does not apply to a trust fund for a period of 12 months from the date of its constitution if —

(a)	the fund is constituted at any time between 18th February 2005 and 17th February 2010 (both dates inclusive);
(b)	the date of its constitution is stated in the relevant trust instrument;
(c)	it was constituted by a fund manager who was an approved start-up fund manager at the time of constitution;
(d)	it has been managed by that fund manager since its constitution; and
(e)	it is not constituted with the avoidance or reduction of tax chargeable under the Act as its main purpose or one of its main purposes.

(3) For the purposes of paragraph (2), the Minister or such person as he may appoint may approve a fund manager as an approved start-up fund manager, and such approval shall be for a period not exceeding 3 years.

Prescribed fund manager for tax exemption

4. For the purposes of exemption from tax under section 13C of the Act, a prescribed fund manager is a fund manager within the meaning of section 2 of the Act.

Prescribed income for tax exemption

5. Subject to regulations 5A and 6, the income exempt from tax under section 13C of the Act is the specified income derived by a trustee of a prescribed trust fund from funds managed in Singapore by any fund manager in respect of designated investments.

[S 9/2011 wef 01/09/2007]

No deduction in respect of loss arising from designated investments

5A. Notwithstanding anything in these Regulations, no deduction shall be allowed under the Act to any trustee of a prescribed trust fund in respect of any loss arising from —

(a)	the sale, maturity, redemption or transfer of both legal and beneficial ownership (other than sale or by way of a securities lending and repurchase arrangement) of any designated investments if any gains or profits realised from such sale, maturity, redemption or transfer would have been exempt from tax under regulation 5; and [S 9/2011 wef 22/01/2009]
(b)	any transactions other than those falling under paragraph (a) in respect of any designated investments if any gains or profits from such transactions would have been exempt from tax under regulation 5. [S 9/2011 wef 22/01/2009] [S 9/2011 wef 01/09/2007]

Application

6. These Regulations shall not apply where the trustee of a prescribed trust fund (other than a trust fund referred to in regulation 3(2)), in its capacity as trustee of that prescribed trust fund —

(a)	has a permanent establishment in Singapore (other than due to its functions as the trustee of that prescribed trust fund, or the presence of a fund manager or any other person who acts on behalf of the trustee in carrying out its functions as the trustee of that prescribed trust fund); or
(b)	carries on any other business in Singapore,

unless approval is granted by the Minister or such person as he may appoint.

Saving and transitional provision

7. Notwithstanding the repeal of section 13C of the Act in force immediately before 1st September 2007, where any foreign investor —

(a)	has a basis period ending on a date other than 31st August;
(b)	has derived before, on and after 1st September 2007 specified income from funds managed in Singapore by any fund manager in respect of designated investments specified in the Income Tax (Income from Funds Managed for Foreign Investors) Regulations 2003 (G.N. No. S 640/2003);
(c)	has opted for tax exemption under section 13C of the Act and not section 13CA of the Act to apply in respect of income of the kind referred to in paragraph (b) derived during the period from 1st September 2007 to the date immediately before the first basis period beginning on or after 1st September 2007 (referred to in this regulation as the specified period); and
(d)	has satisfied during the specified period all the conditions in the Income Tax (Income from Funds Managed for Foreign Investors) Regulations 2003,

the Income Tax (Income from Funds Managed for Foreign Investors) Regulations 2003 shall continue to apply and have effect to the income of the kind referred to in paragraph (b) derived during the specified period by the foreign investor.

Made this 4th day of January 2010.

PETER ONG

Permanent Secretary,
Ministry of Finance,
Singapore.

[R032.19.4.V32; AG/LEG/SL/134/2005/29 Vol. 1]